Is the glass half full or half empty? Underestimating versus overestimating institutional distance and the importance of managerial cognition

Article

Azar, G., Batsakis, G., Drogendijk, R. and Sousa, C.M.P 2026. Is the glass half full or half empty? Underestimating versus overestimating institutional distance and the importance of managerial cognition. Long Range Planning. 59 (5). https://doi.org/10.1016/j.lrp.2026.102663
TypeArticle
TitleIs the glass half full or half empty? Underestimating versus overestimating institutional distance and the importance of managerial cognition
AuthorsAzar, G., Batsakis, G., Drogendijk, R. and Sousa, C.M.P
Abstract

This study draws on a microfoundational view of international business to examine how managerial misperceptions of institutional distance, specifically, the underestimation and overestimation of formal and informal institutional differences between home and host markets, shape expansion strategies, in particular, location choice. Further, using the cognitive appraisal theory as a lens, it examines the moderating role of managerial cognitive styles, focusing on how traits, e.g., sensing versus intuiting and judging versus perceiving, influence these managerial misperceptions and their impact on foreign location choice. Using data from a vignette experiment with 208 international managers, the findings reveal that misperceptions of institutional distance can significantly skew managers’ perceptions of a foreign location, with cognitive traits playing a crucial role in mitigating these biases. By exploring the role managerial cognition plays in international strategic decision-making, this research contributes to understanding the microfoundational underpinnings of foreign location choice and provides practical implications for achieving managerial decision objectivity in complex institutional environments.

Keywordsinstitutional distance; managerial perception; managerial cognitive style; foreign location choice; microfoundations
Sustainable Development Goals9 Industry, innovation and infrastructure
Middlesex University ThemeCreativity, Culture & Enterprise
Research GroupInternational Business group
PublisherElsevier
JournalLong Range Planning
ISSN0024-6301
Electronic1873-1872
Publication dates
Online17 Jul 2026
Print01 Oct 2026
Publication process dates
Submitted17 Dec 2024
Accepted14 Jul 2026
Deposited20 Jul 2026
Output statusPublished
Publisher's version
License
File Access Level
Open
Copyright Statement

Crown Copyright © 2026 Published by Elsevier Ltd.
This is an open access article under the CC BY license
( http://creativecommons.org/licenses/by/4.0/ ).

Digital Object Identifier (DOI)https://doi.org/10.1016/j.lrp.2026.102663
LanguageEnglish
Permalink -

https://repository.mdx.ac.uk/item/368wv9

Log in to edit

Download files

Publisher's version
1-s2.0-S0024630126000609-main.pdf
License: CC BY 4.0
File access level: Open

  • 23
    total views
  • 10
    total downloads
  • 2
    views this month
  • 2
    downloads this month

Export as

Related outputs

Organizational change in action
Boulter, L., Calvard, T. and Azar, G. 2025. Organizational change in action. London, UK Bloomsbury Publishing.
The detrimental effect of institutional forces on green innovations and customer cooperation
Geng, R., Yen, D., Azar, G. and Di Benedetto, A. 2025. The detrimental effect of institutional forces on green innovations and customer cooperation. Asia Pacific Journal of Marketing and Logistics. https://doi.org/10.1108/APJML-06-2025-1110
Institutional distance and location choice: an experimental approach to the perception puzzle
Azar, G., Batsakis, G., Drogendijk, R., PakSeresht, A. and Geng, R. 2024. Institutional distance and location choice: an experimental approach to the perception puzzle. International Marketing Review. https://doi.org/10.1108/IMR-12-2022-0282
Drivers of green cooperation between Chinese manufacturers and their customers: An empirical analysis
Guo, Y., Yen, D., Geng, R. and Azar, G. 2021. Drivers of green cooperation between Chinese manufacturers and their customers: An empirical analysis. Industrial Marketing Management. 93, pp. 137-146. https://doi.org/10.1016/j.indmarman.2021.01.004
Ex-post performance implications of divergence of managers’ perceptions of ‘distance’ from ‘reality’ in international business
Azar, G. and Drogendijk, R. 2019. Ex-post performance implications of divergence of managers’ perceptions of ‘distance’ from ‘reality’ in international business. Management International Review. 59 (1), pp. 67-92. https://doi.org/10.1007/s11575-018-0360-4
The contingent effect of product relatedness on B2B firms pricing strategy. Evidence from India
Batsakis, G., Theoharakis, V., Azar, G., Singh, S. and Singh, R. 2019. The contingent effect of product relatedness on B2B firms pricing strategy. Evidence from India. Industrial Marketing Management. 83, pp. 266-274. https://doi.org/10.1016/j.indmarman.2019.04.012
Do MNEs from developed and emerging economies differ in their location choice of FDI? A 36-year review
Li, X., Quan, R., Stoian, M. and Azar, G. 2018. Do MNEs from developed and emerging economies differ in their location choice of FDI? A 36-year review. International Business Review. 27 (5), pp. 1089-1103. https://doi.org/10.1016/j.ibusrev.2018.03.012
Use and non-use values as motivational construct dimensions for farm animal welfare: impacts on the economic outcome for the farm
Hansson, H., Lagerkvist, C. and Azar, G. 2018. Use and non-use values as motivational construct dimensions for farm animal welfare: impacts on the economic outcome for the farm. Animal. 12 (10), pp. 2147-2155. https://doi.org/10.1017/S175173111700372X
International diversification and firm performance in the post-acquisition period: a resource dependence perspective
Batsakis, G., Wood, G., Azar, G. and Singh, S. 2018. International diversification and firm performance in the post-acquisition period: a resource dependence perspective. Journal of Business Research. 93, pp. 151-159. https://doi.org/10.1016/j.jbusres.2018.02.025
Organizational innovation, technological innovation, and export performance: The effects of innovation radicalness and extensiveness
Azar, G. and Ciabuschi, F. 2017. Organizational innovation, technological innovation, and export performance: The effects of innovation radicalness and extensiveness. International Business Review. 26 (2), pp. 324-336. https://doi.org/10.1016/j.ibusrev.2016.09.002
Cultural distance, innovation and export performance: an examination of perceived and objective cultural distance
Azar, G. and Drogendijk, R. 2016. Cultural distance, innovation and export performance: an examination of perceived and objective cultural distance. European Business Review. 28 (2), pp. 176-207. https://doi.org/10.1108/EBR-06-2015-0065
Food culture distance as a predictor of foreign market selection: the case of Swedish food exporters
Azar, G. 2014. Food culture distance as a predictor of foreign market selection: the case of Swedish food exporters. Journal of Food Products Marketing. 20 (1), pp. 75-97. https://doi.org/10.1080/10454446.2013.739121
Psychic distance, innovation, and firm performance
Azar, G. and Drogendijk, R. 2014. Psychic distance, innovation, and firm performance. Management International Review. 54 (5), pp. 581-613. https://doi.org/10.1007/s11575-014-0219-2
How congruent are managers' perceptions of cultural distance with objective reality?
Azar, G. 2014. How congruent are managers' perceptions of cultural distance with objective reality? Cross Cultural Management: An International Journal. 21 (4), pp. 400-421. https://doi.org/10.1108/CCM-03-2013-0041
Inpatriates and expatriates: sources of strategic human capital for multinational food and beverage firms
Azar, G. 2012. Inpatriates and expatriates: sources of strategic human capital for multinational food and beverage firms. International Food and Agribusiness Management Review. 15 (A), pp. 73-79.
Food culture distance: an antecedent to export marketing strategy adaptation - an empirical examination of Swedish and Finnish food processing companies
Azar, G. 2011. Food culture distance: an antecedent to export marketing strategy adaptation - an empirical examination of Swedish and Finnish food processing companies. International Food and Agribusiness Management Review. 14 (3), pp. 17-44.