Distances in an Age of Globalization
Anneke Zwart, Student (University), Netherlands, Moderator
Although globalization has increased global interconnectedness and interdependence of countries, and even if distances seem to vanish, in doing global business there are 4 types of distances that certainly still matter. Ghemawat clearly outlines these four types of distances:
1. Cultural Distance: This is about the way people interact with each other and with business and institutions. Cultural attributes can be very apparent such as religions, languages, races or more subtle such as norms and values deeply rooted in countries. All of these factors can greatly influence trade, because cultural distances that influence personal preferences affect the choice between substitute products. Minimizing cultural distance facilitates the trade process.
2. Political/Administrative Distance: Trade between countries is strongly influenced by both historical and political associations. One example is that of colonizers and its colonies: if this link exist, then trade is us...