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  • Hablas vielleicht un peu la mia language?

    A Comprehensive Overview of the Role of Language Differences in Headquarters-Subsidiary Communication Anne-Wil Harzing Markus Pudelko Version June 2013 Accepted for The International Journal of Human Resource Management Copyright 2010-2013 Anne-Wil Harzing & Markus Pudelko. All rights reserved. Prof. Anne-Wil Harzing Email: anne-wil@harzing.com University of Melbourne Web: www.harzing.com Department of Management & Marketing Faculty of Business & Economics Parkville Campus Melbourne, VIC 3010 Australia

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    HABLASVIELLEICHTUNPEULAMIALANGUAGE?

    ACOMPREHENSIVEOVERVIEWOFTHEROLEOFLANGUAGEDIFFERENCESINHEADQUARTERS

    SUBSIDIARYCOMMUNICATIONABSTRACT

    The management of human resources in headquarters (HQ)subsidiary relationships requires intensivecommunication,buteffective communicationoftendependsonhavinga shared language.Hence, languagedifferences can be a serious threat to the successful management of human resources in multinationalcorporations(MNCs).Inthislargescalequantitativestudy,encompassingdatafrommorethan800subsidiariesin thirteen countries, we investigated four related issues. First, in terms of the importance of languagedifferences,wefoundthatHQsubsidiaryrelationshipsareclearlyaffectedbylanguagedifferencesandthatthelatterformadistancecategoryoftheirown,whichshouldnotbesubsumedundertherelated,butseparateconcept of cultural differences. Second, regarding the consequences of language differences forcommunication outcomes,we found that a lack of a shared language is associatedwithmisunderstanding,conflictandparallel informationnetworkswhichcouldharmHQsubsidiary interactions.Third,withregardtothe impactof languagedifferencesoncommunicationmethods,wefoundthata lackofashared language isassociatedwith a significantly lower leveloforal (facetoface andphone) communication,butnotwrittencommunication. Fourth, and finally, in termsof apotential solution to communicationproblems causedbylanguagedifferences,we found that expatriates can facilitateboth communication and knowledge transferbetweenHQandsubsidiaries.

    Key words: language differences, headquarterssubsidiary relationship, multinational corporations,expatriation,communication.

    INTRODUCTION

    Effective communication has been identified as a prerequisite for effective management in MNCs (e.g.Ghoshal, Korine& Szulanski, 1994;Nobel& Birkinshaw, 1998). Yet effective communication relies upon ashared language,aconditionthat isnoteasily fulfilled inmanyMNCs.AsthetitleofLuo&Shenkars (2006)articleThemultinationalcorporationasamultilingualcommunitysuggests,MNCsaremultilingualalmostbydefinition. It is therefore rathersurprising thatuntil fairly recently language,andmorespecifically, languagedifferences,havereceivedsuchscantattentionintheInternationalBusiness(IB)literatureand,evenlessso,inthe International Human Resource Management (IHRM) literature, especially when considering theoverwhelmingattentionpaidtocultureandculturaldifferences.

    Language differenceswere only put firmly on the agenda after the pioneeringwork ofMarschanPiekkari,Welch&Welch(1997,1999a/b),whichledtoagrowingliteratureontheroleoflanguageinMNCsinthefirstdecadeofthe21stcentury.However,asillustratedbelow,thisliteraturehasbeenlargelyqualitativeinnature.MostofthesestudieswerecasestudiesofoneortwoMNCsandstudiedonlya limitednumberofcountries

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    andlanguages.ResearcherstypicallylookedatinteractionsinwhichanativeEnglishspeakinggroupinteractedwithnonnativespeakers (e.g.SanAntonio,1987;Wright,Kumagai,&Bonney,2001;Harzing&Feely,2008;Lauring,2008)orstudiedtheoverseassubsidiariesofNordiccompanies(Andersen&Rasmussen,2004;BarnerRasmussen&Bjrkman,2005,2007, Lauring,2008).Even the few studies that includeda largernumberofMNCs (e.g. BarnerRasmussen & Aarnio, 2011; Harzing, Kster &Magner, 2011) focused only on specificlanguagepairs,suchasGermanandJapanese,orlookedatjustonehomecountrylanguage,suchasFinnish.

    Qualitativeresearchclearlyhasstrongadvantagesoverquantitativeresearch ingetting indepth insights intonew and underresearched phenomena. However, we argue that the language theme in MNCs, whilepractically nonexistent before the end of the 1990s, has now reached a certain degree of maturity inexploratoryqualitativestudies.Consequently,itistimeforaconsolidationoftheseinitialandfrequentlycasebasedfindings.WethereforeagreewithBarnerRasmussen&Aarnio(2011:288)whoarguedthat:[..]largescalequantitativestudieswouldatthispointprovideusefuldescriptiveinformationthathasnotbeenavailablebefore, and confer empirical stability upon the diverse claims that are being made. Hence, the primaryintention of this paperwas not to generate theory or to provide an indepth investigation of a particularphenomenon,butrathertorespondtothecallforquantitativedescriptiveresearchinthisfield.Indoingso,weintended to test the empirical stability of a variety of potentially idiosyncratic results of prior qualitativeresearchwhichmighthavebeen company, industry or countryspecific. Consequently, our contribution ismeant toprovide a comprehensiveoverviewof the roleof languagedifferences inheadquarterssubsidiarycommunication.

    Tomeet this objective, this paper is based on the largest quantitative data set relating to the impact oflanguageoncommunication.Morespecifically,wecollecteddatafrommorethan800subsidiariesinthirteencountries representing four broad clusters,whichwere purposefully selected in terms of varying levels ofEnglish language skills: Anglo (Australia, New Zealand, UK), Nordic (Denmark, Finland, Norway, Sweden),ContinentalEuropean(France,Germany,Spain)andAsian(China,Japan,Korea).ThesubsidiariesinoursampleoperateinarangeofdifferentindustriesandtheirHQsrepresentwellover25homecountries.

    The first specific issue we addressed in our study was that of the relevance of the language barrier incomparisontootherbarriers.AlthoughtheconceptofdistanceasanobstacleforsuccessfulmarketentryorthetransferofHRpracticesfromHQtosubsidiarieshasbeenanimportantthemeintheIBandIHRMliteraturesince the 1980s, the main focus has been on the role of cultural distance. Institutional distance wassubsequentlyputonthemapasafurtherdistancemeasureofsimilarrelevance.However,untilrecentlyIBandIHRM researchers have been almost completely silent on language differences in the context of distancemeasures. Although prior research has identified the existence of language barriers in HQsubsidiaryrelationships(seee.g.Harzing,Kster&Magner,2011),whatwedonotknowishowrelevantabarriercreatedbylanguagedifferencesisincomparisontootherbarriers,suchasthosecreatedbycultural,institutional,legalandgeographicaldistance.Hence,inordertoaddressthisimportantresearchgap,ourfirstresearchquestionaskshowimportantlanguagedifferencesareperceivedtobeasabarrierbetweenHQandsubsidiarymanagersincomparisontoothersourcesofdifference.

    Furthermore,althougha significantamountofprior research (e.g.,MarschanPiekkarietal.,1997,1999a/b;Harzing&Feely,2008;Harzingetal.,2011)hasassumed that languagedifferences result incommunicationproblems betweenHQ and subsidiaries, thiswas never confirmed on a large scale basis. Therefore, in oursecondresearchquestionwefocusontheconsequencesoflanguagedifferencesforcommunicationoutcomes,andmorespecificallytheextenttowhichthelackofasharedlanguageleadstomisunderstanding,conflictandparallel information networks. In addition, prior research (e.g., Charles&MarschanPiekkari, 2002; BarnerRasmussen & Bjrkman, 2005; Mkel, Kalla & Piekkari, 2007; Shachaf, 2008; Harzing et al., 2011) hassuggestedthattheimpactoflanguagedifferencesoncommunicationmightdifferaccordingtocommunicationmethods,suchasoralorwrittencommunication.Ourthirdresearchquestionthereforestudieshowthelackof

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    ashared language impactson theuseofdifferentcommunicationmethods,suchas facetoface interaction,phoneandemailcontact.

    Finally,tofocusnotonlyontheproblemof languagedifferencesandtheresultingcommunicationproblems,but also on its solutions, we looked at one potentially promising solution: expatriation. Prior literature(MarschanPiekkarietal.,1999b;Yoshihara,Okabe&Sawaki,2001;Feely&Harzing,2003;BarnerRasmussen& Bjrkman, 2005) has already identified the importance of expatriates as bridge persons. However, thisliteraturehasfocusedmoreonculturalthanonlanguagegaps(MarschanPiekkarietal.(1999b).Consequently,in our fourth and final research question we investigate a potentially very important way to bridgecommunicationproblemsresultingfrom languagedifferencesbetweenheadquartersandsubsidiaries,namelytheuseofexpatriatemanagers.

    LITERATURE REVIEW AND HYPOTHESES

    LANGUAGE DIFFERENCES IN COMPARISON TO OTHER SOURCES OF PERCEIVED BARRIERS IN THE HQSUBSIDIARY RELATIONSHIP

    Theroleofdistanceasabarriertodoingbusinessandmanaginghumanresources internationallyhasbeenakey theme in the IB and, to a lesser extent, in the IHRM literature for decades, startingwith Johanson&Vahlnes (1977) seminal publication on psychic distance. However, researchers have traditionally focusedmostlyon the roleofoneelementofpsychicdistance: culturaldistance (e.g.,Hofstede,1980;Brouthers&Brouthers,2001).Tung&Verbeke(2010)arguethatthisresearchhasbeenhamperedbyaseriesofcommon(misplaced)assumptionsonculturaldistancedimensionsandmeasuresand,amongstotherrecommendations,callforresearchthatincludesamoredifferentiatedsetofdistancemeasures.Morerecentcontributionshavehighlightedthe importanceofanotherdistancemeasure: institutionaldistance (seee.g.Kostova,1999;Xu&Shenkar,2002).Afurtherdistancemeasure,geographicdistance,istypicallyonlyincludedasacontrolvariable,withitsuseasanindependentvariableinitsownrightlargelylimitedtostudiesonforeigndirectinvestmentandinternationaltrade(e.g.Dow,2000;Terpstra&Yu,1988).Legaldistancehas,tothebestofourknowledge,notbeenstudiedasasep