WOA2025 Conference Proceedings

This study explores how individual perceptions of cultural differences – termed "psychic distance" – influence the structure of international contracts. Drawing on theories of interfirm governance and cultural coordination, we analyze 15 commercial contracts between a medium-sized Italian firm and its foreign partners using fuzzy-set Qualitative Comparative Analysis (fsQCA) to uncover how combinations of conditions – e.g., the cultural experience of managers and legal advisors – affect whether contracts emphasize transactional or procedural clauses. The findings reveal multiple pathways to each contract type, highlighting the complex and context-dependent nature of international contracting in small and medium-sized enterprises (SMEs). In particular, the cultural perception of internal and external actors emerge as important determinants of contractual structure. This research introduces a configurational perspective to contract analysis and suggest that individual-level perceptions and experiences significantly shape how cross-border business relationships are formally governed. As such, the results offer insights for scholars and practitioners navigating international SME partnerships.