Skip to main content
SpringerLink
Log in

The Role of Language on Affiliates’ Competence Creation: Evidence from the MNE Linkage Across 45 Countries

  • Chapter
The Changing Geography of International Business

Part of the book series: The Academy of International Business ((AIB))

Abstract

Does a ‘common language’ matter when it comes to knowledge and competence creation of affiliates by multinational enterprises (MNEs)? While there are signs that knowledge and competencies are diffusing and equilibrating throughout the world (Ernst and Kim, 2002), the development of innovation pockets suggests that the diffusion process has remained far from equal. This chapter aims to examine the reasons behind such unequal geographical dispersion of innovation by focusing on a specific contextual factor, namely, the role of a common language in the process of diffusion. Specifically, this chapter focuses on how a common language between a parent and its affiliates facilitates or hinders the development of knowledge and competencies within the latter. Whilst a number of host country factors have been thoroughly explored in the literature (Yamawaki, 2004), there has been little attempt thus far to link the effect of multinational parents’ home country to the knowledge and competence development of affiliates. Arguably, with the exception of several qualitative papers (Buckley et al., 2005; Marschan et al., 1997; Welch et al., 2005), the role of common language on innovation development of affiliates has not been adequately explored within the international business (IB) literature. In particular, no study that we are aware of examines such a linkage using quantitative analysis.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • P. Almeida, ‘Knowledge sourcing by foreign multinationals: patent citation analysis in the U.S. semiconductor industry’, Strategic Management Journal, 17(Winter Special Issue) (1996) 155–65.

    Google Scholar 

  • H. Andersen and E. Rasmussen, ‘The role of language skills in corporate communication’, Corporate Communications: An International Journal, 9(3) (2004) 231–42.

    Article  Google Scholar 

  • P. Athukorala and A. Kohpaiboon, ‘Globalisation of R&D by US-based multinational enterprises’, Research Policy, 39(10) (2010) 1335–47.

    Article  Google Scholar 

  • W. Barner-Rasmussen, ‘Knowledge Sharing in Multinational Corporations. A Social Capital Perspective’, Doctoral Dissertation, Hanken School of Economics, Helsinki, 2003.

    Google Scholar 

  • W. Barner-Rasmussen and I. Björkman, ‘Language fluency, socialization and inter-unit relationships in Chinese and Finnish subsidiaries’, Management and Organization Review, 3(1) (2007) 105–28.

    Article  Google Scholar 

  • S. Bhaumik, N. Driffield and S. Pal, ‘Does ownership structure of emerging-market firms affect their outward FDI & quest: the case of the Indian automotive and pharmaceutical sectors?’, Journal of International Business Studies, 41 (2010) 437–50.

    Article  Google Scholar 

  • J. Birkinshaw, U. Holm, P. Thilenius and N. Arvidsson, ‘Consequences of perception gaps in the headquarters-subsidiary relationship’, International Business Review 9 (2000) 321–44.

    Article  Google Scholar 

  • J. Birkinshaw and N. Hood, ‘Unleash innovation in foreign subsidiaries’, Harvard Business Review, 79(3) (2001) 131–37.

    Google Scholar 

  • A. Björkman and R. Piekkari, ‘Language and foreign subsidiary control: an empirical test’, Journal of International Management, 15(1) (2009) 105–17.

    Article  Google Scholar 

  • P. Buckley, M. Carter, J. Clegg and H. Tan, ‘Language and social knowledge in foreign knowledge transfer to China’, International Studies of Management and Organisation, 35(1) (2005) 47–56.

    Google Scholar 

  • J. Cantwell and G. Santangelo, ‘Capitalism, profits and innovation in the new techno-economic paradigm’, Journal of Evolutionary Economics, 10(1) (2000) 131–57.

    Article  Google Scholar 

  • W. Cohen and D. Levinthal, ‘Absorptive capacity: a new perspective on learning and innovation’, Administrative Science Quarterly, 35(1) (1990) 128–52.

    Article  Google Scholar 

  • I. Dierickx and K. Cool, ‘Asset stock accumulation and sustainability of competitive advantage’, Management Science, 35(12) (1989) 1504–11.

    Article  Google Scholar 

  • J. Doh, G. Jones, R. Mudambi and H. Teegen, ‘foreign research and development and host country environment: an empirical examination of U.S. International R&D’, Management International Review, 45(2) (2005) 121–54.

    Google Scholar 

  • N. Driffield, J. Love and S. Menghinello, ‘The multinational enterprise as a source of international knowledge flows: direct evidence from Italy’, Journal of International Business Studies, 41(2) (2010) 350–59.

    Article  Google Scholar 

  • J. H. Dunning, Multinational Enterprises and the Global Economy, (Wokingham: Addison Wesley, 1993).

    Google Scholar 

  • J. H. Dunning and M. Lundan, Multinational Enterprises and the Global Economy, (Cheltenham: Edward Elgar, 2008).

    Google Scholar 

  • D. Ernst and L. Kim, ‘Global production networks, knowledge diffusion, and local capability formation’, Research Policy, 31(8-9) (2002) 1417–29.

    Article  Google Scholar 

  • F. Fai and R. Marschan-Piekkari, ‘Language issues in cross-border strategic alliances: an investigation of technological knowledge transfers’, Annual Meeting of the European International Business Academy, Copenhagen, 10–13 December 2003.

    Google Scholar 

  • A. Feely and A. Harzing, ‘Language management in multinational companies’, Cross Cultural Management: An International Journal, 10(2) (2003) 37–52.

    Article  Google Scholar 

  • P. Figueiredo, ‘The role of dual embeddedness in the innovative performance of MNE subsidiaries: evidence from Brazil’, Journal of Management Studies, 48(2) (2011) 417–40.

    Google Scholar 

  • R. Florida, ‘The globalisation of R&D: results survey of foreign-affiliated R&D laboratories in the USA’, Research Policy, 26(1) (1997) 85–103.

    Article  Google Scholar 

  • O. Gassmann and M. von Zedtwitz, ‘New concepts and trends in international R&D organization’, Research Policy, 28(1) (1999) 231–50.

    Article  Google Scholar 

  • A. Gerybadze and G. Reger, ‘Globalization of R&D: recent changes in the management of innovation in transnational corporations’, Research Policy, 28(2-3) (1999) 251–74.

    Article  Google Scholar 

  • H. Giles and P. Johnson, ‘The role of language in ethnic group relations’, in J. Turner and H. Giles (eds), Inter group behavior, (Oxford: Blackwell, 1981), pp. 199–243.

    Google Scholar 

  • R. Griffith, R. Hanison and J. Reenen, ‘How special is the special relationship? Using the impact of U.S. R&D spillovers on U.K. firms as a test of technology sourcing’, The American Economic Review, 96(5) (2006) 1859–75.

    Article  Google Scholar 

  • W. Gudykunst, ‘Anxiety/Uncertainty Management (AUM) Theory: Cunent Status’, in R. Wiseman (ed.), Intercultural Communication Theory, (Thousand Oaks, CA: Sage, 1995), pp. 8–58.

    Google Scholar 

  • A. Harzing and A. Feely, ‘The language banier and its implications for HQ-subsidiary relationships’, Cross Cultural Management: An International Journal, 15(1) (2008) 49–61.

    Article  Google Scholar 

  • P. Hill, ‘Language and National Identity’, in A. Liddicoat and K. Muller (eds), Perspectives on Europe: Language Issues and Language Planning in Europe, (Melbourne: Language Australia, 2002), pp. 11–20.

    Google Scholar 

  • A. Hogenbirk and H. van Kranenburg, ‘Roles of foreign owned subsidiaries in a small economy’, International Business Review, 15(1) (2006) 53–67.

    Article  Google Scholar 

  • B. Ito and R. Wakasugi, ‘What factors determine the mode of overseas R&D by multinationals?’, Research Policy, 36(8) (2007) 1275–87.

    Article  Google Scholar 

  • T. Iwasa and H. Odagiri, ‘Overseas R&D, knowledge sourcing, and patenting: an empirical studies of Japanese R&D investment in the US’, Research Policy, 33(5) (2004) 807–28.

    Article  Google Scholar 

  • M. Janssens, J. Lambert and C. Steyaert, ‘Developing language strategies for international companies: the contribution of translation studies’, Journal of World Business, 39(4) (2004) 414–30.

    Article  Google Scholar 

  • J. Johanson and F. Wiedersheim-Paul, ‘The internationalization of the firm — four Swedish cases’, Journal of Management Studies, 12(3) (1975) 305–23.

    Article  Google Scholar 

  • W. Johnson and J. Medcof, ‘Motivating proactive subsidiary innovation: agent-based theory and socialization models in global R&D’, Journal of International Management, 13(4) (2007) 472–87.

    Article  Google Scholar 

  • B. Kedia and D. Mukherjeeb, ‘Understanding off shoring: a research framework based on disintegration, location and externalization advantages’, Journal of World Business, 44(3) (2009) 250–61.

    Article  Google Scholar 

  • L. Kim, ‘Organizational innovation and structure’, Journal of Business Research, 8(2) (1980) 225–45.

    Article  Google Scholar 

  • B. Kogut, ‘A note on global strategies’, Strategic Management Journal, 10(4) (1989) 383–89.

    Article  Google Scholar 

  • B. Kogut and H. Singh, ‘The effect of national culture on the choice of entry mode’, Journal of International Business Studies, 19(3) (1988) 411–32.

    Article  Google Scholar 

  • D. Kogut and U. Zander, ‘Knowledge of the firm and the evolutionary theory of the multinational corporation’, Journal of International Business Studies, 24(4) (1993) 625–45.

    Article  Google Scholar 

  • N. Kumar, ‘Determinants of location of overseas R&D activity of multinational enterprises: the case of US and Japanese corporations’, Research Policy, 30(1) (2001) 179–93.

    Article  Google Scholar 

  • A. Lam, ‘Organizational learning in multinationals: R&D networks of Japanese and US MNEs in the UK’, Journal of Management Studies, 40(3) (2003) 673–703.

    Article  Google Scholar 

  • C. Lee, W. Miller, M. Hancock and H. Rowen, The Silicon Valley Edge: A Habitat for Innovation and Entre preneur ship, (Stanford, CA: Stanford University Press, 2000).

    Google Scholar 

  • T. Lester, ‘Pulling down the language barrier’, International Management, 49(6) (1994) 42–4.

    Google Scholar 

  • J. Levinsohn and A. Petrin, ‘Estimating production functions using inputs to control for unobservables’, Review of Economic Studies, 70(2) (2003) 317–41.

    Article  Google Scholar 

  • R. Marschan, D. Welch and L. Welch, ‘Language: the forgotten factor in multinational management’, European Management Journal, 15(5) (1997) 591–98.

    Article  Google Scholar 

  • R. Marschan-Piekkari, D. E. Welch and L. S. Welch, ‘In the shadow: the impact of language on structure, power and communication in the multinational’, International Business Review, 8(4) (1999a) 421–40.

    Article  Google Scholar 

  • R. Marschan-Piekkari, D. Welch and L. Welch, ‘Adopting a common corporate language: IHRM implications’, The International Journal of Human Resource Management, 10(3) (1999b) 377–90.

    Article  Google Scholar 

  • P. Martins and Y. Yang, ‘The impact of exporting on firm productivity: a meta-analysis of the learning-by-exporting hypothesis’, Review of World Economics, 145(3) (2009) 431–45.

    Article  Google Scholar 

  • K. McRae, Conflict and Compromise in Multilingual Societies: Finland, (Waterloo, ON: Wilfrid Laurier University Press, 1997).

    Google Scholar 

  • K. Meyer, R. Mudambi and R. Narula, ‘Multinational enterprises and local contexts: The opportunities and challenges of multiple embeddedness’, Journal of Management Studies, 48(2) (2011) 235–52.

    Google Scholar 

  • G. Morgan, ‘The Multinational Firm: Organizing Across Institutional and National Divides’, in G. Morgan, P. H. Rristensen and R. Whitley (eds), The Multinational Firm: Organizing Across Institutional and National Divides, (Oxford: Oxford University Press, 2001), pp. 1–26.

    Google Scholar 

  • R. Narula and J. Dunning, ‘Multinational enterprises, development and globalisation: some clarifications and a research agenda’, Oxford Development Studies, 38(3) (2010) 263–87.

    Article  Google Scholar 

  • L. Oakes, Language and National Identity: Comparing France and Sweden, (Philadelphia, PA: Benjamins Publishing, 2001).

    Book  Google Scholar 

  • G. Olley and A. Pakes, ‘The dynamics of productivity in the telecommunications equipment industry’, Econometrica, 64(6) (1996) 1263–97.

    Article  Google Scholar 

  • A. Pakir, ‘Medium-of-Instruction Policy in Singapore’, in J. Tollefson and A. Tsui (eds), Medium of Instruction Policies: Which Agenda? Whose Agenda?, (Mahwah, NJ: Lawrence Erlbaum Publishers, 2003), pp. 117–33.

    Google Scholar 

  • R. Pearce, ‘Decentralised R&D and strategic competitiveness: globalised approaches to generation and use of technology in multinational enterprises (MNEs)’, Research Policy, 28(2/3) (1999) 157–78.

    Article  Google Scholar 

  • J. Penner-Hahn and M. Shaver, ‘Does international research and development increase patent output? An analysis of Japanese pharmaceutical firms’, Strategic Management Journal, 26(2) (2005) 121–40.

    Article  Google Scholar 

  • R. Phillipson, English-only Europe? Challenging Language Policy, (London: Routledge, 2003).

    Google Scholar 

  • S. P. Ribeiro, S. Menghinello and K. D. Backer, ‘The OECD ORBIS database: responding to the need for firm-level micro-data in the OECD’, OECD Statistics Working Papers (2010/11).

    Google Scholar 

  • J. Selmer, ‘Language ability and adjustment: Western expatriates in China’, Thunderbird International Business Review, 48(3) (2006) 347–68.

    Article  Google Scholar 

  • J. Singh, ‘Asymmetry of knowledge spillovers between MNCs and host country firms’, Journal of International Business Studies, 38(5) (2007) 764–86.

    Article  Google Scholar 

  • J. Singh, ‘Distributed R&D, cross-regional knowledge integration and quality of innovative output’, Research Policy 37(1) (2008) 77–96.

    Article  Google Scholar 

  • J. H. Sohn, ‘social knowledge as a control system: a proposition and evidence from the Japanese FDI behavior’, Journal of International Business Studies, 25(2) (1994) 295–324.

    Article  Google Scholar 

  • J. Song, K. Asakawa and Y. Chu, ‘What determines knowledge sourcing from host locations of overseas R&D operations? A study of global R&D activities of Japanese multinationals’, Research Policy, 40(3) (2011) 380–90.

    Article  Google Scholar 

  • J-C. Usunier, International and Cross-Cultural Management Research, (London: Sage, 1998).

    Google Scholar 

  • D. Welch and L. Welch, ‘The importance of language in international knowledge transfer’, Management International Review, 48(3) (2008) 339–60.

    Article  Google Scholar 

  • D. Welch, L. Welch and R. Piekkari, ‘speaking in tongues — the importance of language in international management process’, International Studies of Management and Organisation, 35(1) (2005) 10–27.

    Google Scholar 

  • R. Whitley, Divergent Capitalisms, (Oxford: Oxford University Press, 1999).

    Google Scholar 

  • R. Whitley, ‘How and Why Are International Finns Different? The Consequences of Crossborder Managerial Coordination for Firm Characteristics and Behaviour’, in G. Morgan, P. H. Kristensen and R. Whitley (eds), The Multinational Firm: Organizing Across Institutional and National Divides, (Oxford: Oxford University Press, 2001), pp. 27–68.

    Google Scholar 

  • H. Yamawaki, ‘Who survives in Japan? An empirical analysis of European and U.S. multinational firms in Japanese manufacturing industries’, Journal of Industry, Competition and Trade, 4(2) (2004) 135–53.

    Article  Google Scholar 

  • A. Zanfei, ‘Transnational firms and the changing organization of innovation activities’, Cambridge Journal of Economics, 24(5) (2000) 515–42.

    Article  Google Scholar 

  • M. C. Zejan, ‘R&D activities in affiliates of Swedish multinational enterprises’, Scandinavian Journal of Economics, 92(3) (1990) 487–500.

    Article  Google Scholar 

  • R. Zmud, ‘Diffusion of modern software practices: influence of centralization and formalization’, Management Science, 28(12) (1982) 1421–31.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Business, Management and Economics, University of Surrey, UK

    Yong Yang (Senior Lecturer in Strategy)

  2. Essex Business School, University of Essex, UK

    Caleb C. Y. Kwong (Senior Lecturer in Entrepreneurship and small Business Management)

Authors
  1. Yong Yang
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Caleb C. Y. Kwong
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. University of Liverpool Management School, UK

    Gary Cook (Senior Lecturer in Applied Economics and Head of Economics, Finance and Accounting) & Jennifer Johns (Senior Lecturer) (Senior Lecturer in Applied Economics and Head of Economics, Finance and Accounting) &  (Senior Lecturer)

Copyright information

© 2013 Yong Yang and Caleb C. Y. Kwong

About this chapter

Cite this chapter

Yang, Y., Kwong, C.C.Y. (2013). The Role of Language on Affiliates’ Competence Creation: Evidence from the MNE Linkage Across 45 Countries. In: Cook, G., Johns, J. (eds) The Changing Geography of International Business. The Academy of International Business. Palgrave Macmillan, London. https://doi.org/10.1057/9781137277503_8

Download citation

Publish with us

Policies and ethics

Search

Navigation