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Confirmation bias in individual-level perceptions of psychic distance: An experimental investigation

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Abstract

In this article we draw from social cognition theory to explore the influence of confirmation bias on perceptions of psychic distance. Despite the prominence of psychic distance, and other forms of distance, as potential predictor variables in international business (IB) research, very little work has been done exploring the factors and processes that shape a decision maker’s perceptions of distance. We argue in this article that social cognition theory can help fill that void. Specifically, we hypothesize that confirmation bias may influence managers’ processing of information concerning differences between cultures. Such a bias may cause managers to attend more to information that confirms pre-existing beliefs, and discount information that contradicts pre-existing beliefs, thus biasing their perceptions of psychic distance. Using an experimental approach, the impact of confirmation bias on perceptions of psychic distance is confirmed in a sample of 200 Australian managers. The observed changes in perceptions are also associated with changes in perceptions of risk and preferences for entry modes in a hypothetical business scenario. As a result this article demonstrates how the application of social psychology theories and methods can provide new theoretical perspectives to explain when, how, and why individual-level perceptions of psychic distance might diverge from national-level averages.

Abstract

Dans cet article, nous utilisons la théorie de la cognition sociale pour étudier l’influence du biais de confirmation sur les perceptions de la distance psychique. Malgré l’importance de la distance psychique et d’autres formes de distance comme variables prédictives potentielles pour la recherche en management international, peu de travaux ont tenté d’explorer les facteurs et les processus qui conditionnent la perception de la distance chez un dirigeant d’entreprise. Nous avançons dans cet article que la théorie de la cognition sociale peut aider à remplir ce vide théorique. Plus spécifiquement, nous posons l’hypothèse que le biais de confirmation est susceptible d’influencer le traitement d’informations des dirigeants concernant les différences entre cultures. Ce biais peut conduire les dirigeants à accorder plus d’attention aux informations qui confirment des croyances préexistantes et à écarter des informations qui contredisent les croyances préexistantes, ayant pour effet de biaiser leurs perceptions de la distance psychique. A partir d’une approche expérimentale, l’impact du biais de confirmation sur les perceptions de la distance est confirmé par un échantillon de 200 dirigeants d’entreprise australiens. Les changements observés dans les perceptions sont aussi associés, dans un scenario hypothétique de situations de gestion, à des changements dans les perceptions des risques et des préférences en termes de modes d’entrée. Comme résultat, cet article montre comment l’application de théories et de méthodes de psychologie sociale peuvent fournir de nouvelles perspectives théoriques pour expliquer quand, comment et pourquoi les perceptions au niveau individuel de la distance psychique pourraient diverger des moyennes au niveau national.

Abstract

En este artículo nos basamos en la teoría de la cognición social para explorar la influencia del sesgo de confirmación en la percepción de la distancia psíquica. A pesar de la importancia de la distancia psíquica, y otras formas de distancia, como posibles variables predictivas en la investigación en negocios internacionales, muy poco se ha hecho explorando los factores y procesos que forman las percepciones de distancia de un tomador de decisiones. Sostenemos en este artículo que la teoría de cognición social puede ayudar a llenar este vacío. Específicamente, la hipótesis de que el sesgo de confirmación puede influir en el procesamiento de la información de los directivos sobre las diferencias entre las culturas. Este sesgo puede ocasionar que los gerentes otorguen más atención a la información que confirma las creencias preexistentes, y descarten la información que contradice las creencias preexistentes, sesgando así sus percepciones de distancia psíquica. Usando un enfoque experimental, el impacto de sesgos de confirmación de la distancia psíquica se confirma para una muestra de 200 gerentes australianos. Los cambios observados en percepciones también se asocian con cambios en la percepción de riesgo y preferencias de modo de entrada en un escenario de negocios hipotético. Como resultado este artículo demuestra cómo la aplicación de teorías y métodos de la psicología social puede proporcionar nuevas perspectivas teóricas para explicar cuándo, cómo y por qué las percepciones sobre distancia psíquica a nivel individual pueden discrepar de los promedios a nivel nacional.

Abstract

Neste artigo, utilizamos a teoria da cognição social para explorar a influência do viés de confirmação sobre a percepção da distância psíquica. Apesar da proeminência de distância psíquica e outras formas de distância como potenciais variáveis ​​preditoras em pesquisas em negócios internacionais (IB), muito pouco tem sido feito para explorar os fatores e processos que moldam as percepções de um decisor em relação à distância. Argumentamos neste artigo que a teoria da cognição social pode ajudar a preencher essa lacuna. Especificamente, nós supomos que o viés de confirmação pode influenciar os gestores no processamento de informações relativas a diferenças entre as culturas. Tal viés pode fazer com que gestores atentem mais para informações que confirmam crenças pré-existentes, e desconsiderem informações que contradizem crenças pré-existentes, dessa forma enviesando suas percepções de distância psíquica. A partir de uma abordagem experimental, o impacto do viés de confirmação na percepção da distância psíquica é confirmado em uma amostra de 200 gerentes australianos. As mudanças observadas nas percepções também estão associadas com mudanças na percepção de risco e com as preferências para modos de entrada em um cenário de negócios hipotético. Como resultado, este artigo demonstra como a aplicação de teorias e métodos da psicologia social pode fornecer novas perspectivas teóricas para explicar quando, como e por que percepções de distância psíquica em nível individual podem divergir das médias em nível nacional.

Abstract

在这篇文章中我们从社会认知理论来探讨确认偏见对心理距离感知的影响。尽管在国际商务研究中, 心理距离以及其他各种形式的距离, 作为潜在的预测变量得到突显, 关于影响决策者感知距离的原因和过程却少有研究。在本文中, 我们认为社会认知理论有助于填补这个空白。确切的说, 我们假定确认偏见有可能影响管理人员对关于文化差异性信息的处理。这种偏见可能导致管理人员更多的关注证实预先存在信念的信息, 而不重视与预先存在信念相矛盾的信息, 从而使他们对心理距离的感知发生偏置。通过运用实验方法, 对澳大利亚200名管理人员的样本分析, 确认偏见对心理距离感知的影响得到证实。这些已发现的在感知上的改变也与风险意识的改变和在一个假定的商业场景中对进入模式的偏好相关联。本文在结论处展示了如何通过对社会心理学理论和方法的应用可以提供新的理论视角来解释个人层面的心理距离感知在什么时候、以何种方式、以及为什么有可能偏离国家层面的平均水平。

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Notes

  1. We note that in the field of International Business (IB) the terms perception, belief and attitude are used more interchangeably than in the field of psychology. In order to better reflect the usage in work on confirmation bias, in this article we use the term belief whenever possible.

  2. For the purposes of our literature review, we group together the concepts of psychic distance, cultural distance and institution distance because numerous authors tend to use them interchangeably, and in particular because the same metrics are often used to measure all three constructs.

  3. It should be noted that this article is only reporting on part of a larger research project, which includes an additional dimension (i.e., the overall design is 2 × 3x2). The additional dimension – the nature of the fictitious firm’s competitive advantage – was a within-subject variable. Appropriate controls were put in place and tests conducted to confirm that the additional dimension did not confound the results presented in this article. Additional information concerning this aspect of the study is available on request.

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Author information

Authors and Affiliations

  1. Daniels College of Business, University of Denver, Denver, USA

    Daniel W Baack & Donald R Bacon

  2. Melbourne Business School, The University of Melbourne, Carlton, Australia

    Douglas Dow

  3. Department of Management and International Business, College of Business Administration, Florida International University, and FGV/EBAPE, Miami, USA

    Ronaldo Parente

Authors
  1. Daniel W Baack
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  2. Douglas Dow
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  3. Ronaldo Parente
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  4. Donald R Bacon
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Corresponding author

Correspondence to Douglas Dow.

Additional information

Accepted by David C. Thomas, Area Editor, 26 April 2015. This article has been with the authors for four revisions.

Appendices

APPENDIX A

Table A1

Table A1 Descriptive statistics concerning respondents (n=200)
Full size table

APPENDIX B

Script for Australia–China Neutral Video

Introduction

This brief segment focuses on China. The goal of this presentation is to inform you on various aspects of that country, in preparation for your upcoming investment decision.

Language

There are many aspects of a country that may be relevant to a potential investment decision; and the various languages of a country are the first of such issues. Similarities and/or differences in languages can have a substantial impact on a firm’s ability to communicate with local customers, suppliers, and even employees.

While Australia and China have distinctly different dominant languages, many Australians might not be aware that even within China, there are huge linguistic variations. What we nominally refer to as “Chinese” actually includes six very different languages. Fortunately, it is also true that the use of the English language in China is widespread and growing rapidly. The Economist reported in 2006 that up to one-fifth of the population is learning English.

Religion

A second issue which can influence a firm’s ability to conduct business in a foreign country is the dominant religion. Religion has a potentially powerful impact on people’s value systems, and can influence how they behave and interact with one another.

In terms of religious affiliation and attitudes, Australia and China are quite distinct. While a very large proportion of the Chinese population has no religious affiliation, the remaining portion of the population is heavily skewed to a mixture of Chinese-folk religions, Taoism and Buddhism (approximately 17%). Nevertheless, many Australians may not realize that Christianity has gone through several cycles of popularity in China since first being introduced in 635 AD, and it is once again on the increase. Independent estimates of the number of practicing Christians in China range from 40 million to 54 million people.

Industrial development

A third factor which may influence a company’s ability to conduct business in a foreign country is the level of development. This not only influences the cost of labor in a country and consumption patterns, but it also arguably shapes the attitudes, beliefs, values, and behaviors of the population in general.

Despite its miraculous industrial growth over the past decade, the differences between Australia and China in terms of economic and industrial development are still substantial. In particular, China is still a heavily rural agrarian society with almost 40% of its workforce in agricultural production compared with 5% for Australia. However, in the major coastal cities of China, the overall standard of living, the consumption of consumer goods, and prominence of the service economy are rapidly approaching Australian standards.

Education

A fourth important issue is the similarities and/or differences in the educational systems of countries.

China has recently implemented major reforms in education intended to produce more able people and in turn develop an education system more like Australia where education is available to all people. However, China’s education system is a substantially more varied, and is still in need of much modernization.

Political and legal systems

A fifth critical issue with respect to doing business in another country is similarities and/or differences in the legal and political systems.

In contrast to Australia, China is only nominally a democratic government. While the President and Vice-President are elected by the National People’s Congress (NPC) for a 5-year term, machinations behind the scenes truly determine who serves in these positions. In China, the NPC is deemed to be the highest organ of state power as per the Chinese constitution and is partially composed of a permanent body called Standing Committee of the NPC. Nevertheless, in recent years, Chinese political system has become more open and democratic, and the country has started legal reforms to shift their system to one more similar to Australia.

Business practices

A sixth but potentially more subtle issue is similarities and/or differences in actual business practices. This can involve simple, but potentially embarrassing issues such as how to properly greet people, and attitudes toward time.

While Chinese culture obviously is different from Australia’s it is important to be just as aware of the similarities as of the differences. For example, being extremely late for an appointment is considered an insult in both cultures. Dress is also similar, and jeans are acceptable casual wear for both men and women. Business meetings over food are also common. During a meal, expressing enthusiasm about the food you are eating is a welcome, and usually expected, topic of conversation.

However, there are also some striking differences in business practices between the countries. As an initial example, most Chinese workers take a break between 12:00 p.m. and 2:00 p.m. practically everything "shuts down" during this period, including elevator and phone services. A common problem in communication revolves around the word “no.” Negative replies are considered impolite. Instead of saying “no,” answer “maybe,” “I’ll think about it,” or “We’ll see” and get into specifics later. You’ll find that the Chinese will do the same. The Chinese also tend to be driven more by emotions than figures during negotiations and for business decisions.

Culture

The seventh and final issue is the broader set of cultural values which are commonly shared by a large portion of a country’s population. Countries can vary in terms of the emphasis placed on individuality (vs conformity), attitudes toward uncertainty and ambiguity, attitudes toward authority and social inequities, and not the least, attitudes concerning how gender roles are allocated in society.

Not surprisingly, the Chinese are different from Australians in terms of many cultural values. The largest difference is in terms of the role of the individual vs the importance of the group. China is strongly collectivist and individuals are expected to subsume their own wants for the benefit of the group. Interestingly, these differences do not include masculinity or relationships between genders. Women in China enjoy opportunities and status similar to women in Australia.

This concludes our brief presentation on China.

APPENDIX C

Table C1

Table C1 Perceived psychic distance by countrya
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Baack, D., Dow, D., Parente, R. et al. Confirmation bias in individual-level perceptions of psychic distance: An experimental investigation. J Int Bus Stud 46, 938–959 (2015). https://doi.org/10.1057/jibs.2015.19

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