Objective: The papers objective is to create a deeper understanding for whether or not cultural and psychic distance affects corporate establishments in the EU.

Method: The results have been gathered through intense data collection through interviews with ScaniaAB and Business Sweden. There has also been extensive research of 36 different companies and their first establishments in different countries. We have then analyzed the results through cultural and psychic distance and through Uppsala University's internationalization process model.

Conclusion: The conclusions of this paper are:

• Corporate establishment often occurs in neighboring countries because of the similarity to the domestic markets which contribute with a greater security.
• Since the introduction of the EU single market, corporate establishments have become easier within the single market.
• The cultural and psychic distance does exist within the EU, however the internal market decreases these distances and the impact on corporate establishments.
• The market commitment is essential to the corporates survival within the new market.
• Cultural and psychic distance affects small firms more often since their lack of network and experience.
• Cultural and psychic distances are two different but related phenomena.