Observations of internationalizing manufacturing firms, in the late seventies, revealed that the order in which firms enter foreign countries is influenced by psychic distance (perceived closeness based on factors such as culture, language and development level). Since then, the world has undergone rapid globalization and services have replaced manufacturing as the dominant sector of the world economy. To ascertain whether (a) psychic distance is still relevant and (b) industry sector impacts the relationship between psychic distance and order of entry, this paper analyzed the order of entry into foreign countries by US multinationals in manufacturing and services sectors since 1965. Results indicate that cultural and language differences still play a role and the effect is very similar across sectors.
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