Psychic distance and FDI in Turkey: the role of industrial development and religion


Jimenez A., EREN T. M. , Bayraktar S.

EUROPEAN JOURNAL OF INTERNATIONAL MANAGEMENT, vol.14, no.5, pp.775-795, 2020 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 14 Issue: 5
  • Publication Date: 2020
  • Doi Number: 10.1504/ejim.2020.109816
  • Title of Journal : EUROPEAN JOURNAL OF INTERNATIONAL MANAGEMENT
  • Page Numbers: pp.775-795

Abstract

Our paper analyses the critical role of psychic distance on Foreign Direct Investments (FDI) in an emerging economy, Turkey. Our results demonstrate that two psychic distance dimensions are significant when analysing FDI flows from OECD countries. First, psychic distance in industrial development has a positive effect, namely, greater industrial development distance between the investor country and Turkey increases FDI flows. Second, psychic distance in religion plays a negative role whereby greater distance between the investor country and Turkey reduces FDI flows. In addition, home country Gross Domestic Product (GDP) and European Union (EU) membership positively affect foreign investments in Turkey. By contrast, and as expected, geographic distance has a negative effect.