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

Authors: Alfredo Jimenez; Mesut Eren; Secil Bayraktar

Addresses: Department of Management, Kedge Business School, 680 cours de la Liberation 33405, Talence, France ' European Union Institute, Marmara University, Istanbul, Turkey ' TBS Business School, Department of Human Resources Management and Business Law, 1 Place Alphonse Jourdain - CS 66810, Toulouse 31068, France

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.

Keywords: psychic distance; foreign direct investment; emerging economies; Turkey; OECD countries.

DOI: 10.1504/EJIM.2020.109816

European Journal of International Management, 2020 Vol.14 No.5, pp.775 - 795

Received: 12 Apr 2017
Accepted: 09 Nov 2017

Published online: 25 Sep 2020 *

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