Confirmation bias in individual-level perceptions of psychic distance: an experimental investigation

Abstract

In this article we draw from social cognition theory to explore the influence of confirmation bias on perceptions of psychic distance. Despite the prominence of psychic distance, and other forms of distance, as potential predictor variables in international business (IB) research, very little work has been done exploring the factors and processes that shape a decision maker's perceptions of distance. We argue in this article that social cognition theory can help fill that void. Specifically, we hypothesize that confirmation bias may influence managers' processing of information concerning differences between cultures. Such a bias may cause managers to attend more to information that confirms pre-existing beliefs, and discount information that contradicts pre-existing beliefs, thus biasing their perceptions of psychic distance. Using an experimental approach, the impact of confirmation bias on perceptions of psychic distance is confirmed in a sample of 200 Australian managers. The observed changes in perceptions are also associated with changes in perceptions of risk and preferences for entry modes in a hypothetical business scenario. As a result this article demonstrates how the application of social psychology theories and methods can provide new theoretical perspectives to explain when, how, and why individual-level perceptions of psychic distance might diverge from national-level averages.