You are on page 1of 23

LANGUAGE POLICIES AND

COMMUNICATION IN
MULTINATIONAL COMPANIES
Alignment With Strategic Orientation and Human
Resource Management Practices

Floor van den Born


Vesa Peltokorpi
HEC School of Management, Paris, France

This article focuses on the degree of alignment among multinational company (MNC) strategic ori-
entation, human resource management (HRM) practices, and language policies. On the one hand, the
authors propose that the coherent, tight alignment among the HRM practices, language policies, and
MNC strategic orientation, in terms of ethnocentricity, polycentricity, or geocentricity, is beneficial.
On the other hand, they use international business research on language in MNCs to illustrate that
what is good in theory is often more difficult in practice. For example, HRM practices and language
policies in foreign subsidiaries may not be tightly aligned with the corporate-level activities, and
some hybridization tends to occur, for example, because of contextual reasons in host countries.

Keywords: communication; human resource management; strategy; language policy; social identity


theory

As companies expand internationally and their foreign operations become


more dispersed, language differences begin to influence interunit and
intraunit communication (Louhiala-Salminen, 1997; Rogerson-Revell,
2007, 2008). To reduce the negative effects of language diversity, multi-
national companies (MNCs) have formulated language policies, that is,

Floor van den Born is a PhD candidate at HEC School of Management, Paris, France. Vesa Peltokorpi
is an assistant professor of human resource management at HEC School of Management, Paris,
France. His research interests include intercultural communication and cross-cultural adjustment.

An earlier version of this article was presented at the Academy of Management, August 7-11, 2009.
Correspondence concerning this article should be addressed to Floor van den Born, Department of
Management and Human Resources, HEC School of Management, 1, Rue de la Libération, Paris
78351, France; e-mail: floor.van-den-born@mailhec.net.

Journal of Business Communication, Volume 47, Number 2, April 2010 97-118


DOI: 10.1177/0021943610364515
© 2010 by the Association for Business Communication
98   JOURNAL OF BUSINESS COMMUNICATION

formal ways to decide which language is used in corporate communica-


tion and documentation (Marschan-Piekkari, Welch, & Welch, 1999a). To
maximize their effectiveness, language policies should be aligned with the
MNC strategy (Luo & Shenkar, 2006; Marschan, Welch, & Welch, 1997).
For example, to balance the benefits of local responsiveness and global
integration (see Bartlett & Ghoshal, 1989), scholars have argued that
MNCs should use a common corporate language for internal communica-
tion and local language(s) in host country market(s) (Luo & Shenkar,
2006). This strategy, requiring a substantial portion of employees to be
bilingual, is reflected in human resource management (HRM) practices.
In this article, we discuss the degree of alignment among MNC strate-
gic orientations, HRM practices, and language policies. The focus here is
on headquarters and wholly-owned foreign subsidiaries. We start by pro-
posing that language policies in MNCs should be aligned with HRM
practices and strategic orientations for control, coordination, and commu-
nication purposes in terms of ethnocentricity (i.e., home country orienta-
tion), polycentricity (i.e., host country orientation), or geocentricity (i.e.,
international orientation; Tayeb, 1998; Taylor, Beechler, & Napier, 1996).
On the other hand, we draw from the research on language and HRM in
MNCs to demonstrate that what is good in theory is often more difficult
in practice. For example, HRM practices and language policies in foreign
subsidiaries may not be tightly aligned with the MNC strategies, and some
hybridization tends to occur because of contextual reasons in host coun-
tries (e.g., lack of linguistically competent employees in the local labor
markets and/or language-based social identification; Rosenzweig &
Nohria, 1994; Tayeb, 1998).
This article contributes to the international HRM, international business,
and international business communication literature in several ways. First,
connecting HRM literature with international business research on lan-
guage, we increase understanding in the consequences of language diversity
for international business communication. Despite the existing arguments
that language should be part of MNC strategy (Luo & Shenkar, 2006;
Marschan et al., 1997), the importance of linking language policies with
HRM practices has not yet been sufficiently emphasized. In contrast to the
few existing studies considering the implications of international HRM on
language diversity in MNCs (e.g., Marschan-Piekkari et al., 1999a), we tie
language diversity to different MNC strategic orientations and critically
discuss drawbacks of each. In addition, we not only propose ways in which
language could become part of flexible HRM practices, but we also con-
sider how an integrated and flexible approach contributes to lowering inter-
group boundaries, which are detrimental for intergroup communication.
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   99

The rest of this article is structured as follows. The following section


reviews the literature on language in international business and HRM
practices. The second section discusses the implications of recruitment and
selection practices for intergroup communication (i.e., members of differ-
ent language groups communicating over language boundaries). The third
section treats the influence of training and development for local employ-
ees and expatriates. The way performance appraisals affect intergroup com-
munication is discussed in the fourth section. The fifth section comprises the
discussion, and the sixth section discusses implications, limitations, and
provides suggestions for future research.

LANGUAGE POLICIES, STRATEGIES, AND HRM IN MNCs

Language, as the generally agreed-on, learned symbol system, used to


represent the experiences within a geographic or cultural community
(Samovar, Porter, & Jain, 1981), acts as a carrier of cultural values (Agar,
1994). Employees in MNCs consequently interact and make interpreta-
tions within their cultural and linguistic context (Von Glinow, Shapiro, &
Brett, 2004). Employees also differ in terms of their native languages and
proficiency in the official corporate language, often English. For example,
60 percent of Citygroup’s employees worldwide do not speak English [as
their native language], challenging the dissemination of headquarter direc-
tives, the communication of local concerns, and value creation across
subsidiary boundaries (Luo & Shenkar, 2006, p. 321). To reduce the nega-
tive effects of language diversity and provide a common ground for corpo-
rate communication, MNCs have formulated language policies
(Marschan-Piekkari et al., 1999a). A common corporate language has been
argued to facilitate coordination, interunit learning and value creation (Luo
& Shenkar, 2006), formal reporting and access to documents, and reducing
the need for translations and potential for miscommunication (Fredriksson,
Barner-Rasmussen, & Piekkari, 2006; Marschan-Piekkari et al., 1999a).
According to Luo and Shenkar (2006), language policies at the subsid-
iary level are based on three scenarios. First, the official language is the par-
ent’s language, such as the Japan-based Panasonic’s subsidiary in the United
States, which uses Japanese. Second, the official language is the local lan-
guage, such as with the German-based Siemens’ subsidiary in the United
States, which uses English. Third, the official language is a third language.
For example, a Mexican subsidiary of Airbus, headquartered in France,
uses English. At the corporate level, the official corporate language may
or may not be the home country language. For example, several MNCs
100   JOURNAL OF BUSINESS COMMUNICATION

from small non-English-speaking European countries, such as Electrolux,


Nokia, and Phillips, use English as their corporate language. In addition,
a study conducted at Siemens shows that MNCs may use two or more lan-
guages in internal communication and leave the issue of formal corporate
language ambiguous to avoid negative reactions from dominant language
groups (Fredriksson et al., 2006). At Siemens, English and German are used
for internal communication. Although the parent language is often chosen
as the unifying language at the corporate and subsidiary levels, research
shows that a low proficiency in the corporate language in subsidiaries
hinders intraunit communication within corporate units and interunit com-
munication among corporate units (see Piekkari, 2006). The usage of local
languages in foreign subsidiaries can also be important, for example, for
customer relations and to recruit functionally competent employees.

Language, as the generally agreed-on


learned symbol system, used to repre-
sent the experiences within a geo-
graphic or cultural community, acts as
a carrier of cultural values.

How can MNCs solve the language-related problems and facilitate inter-
unit and intraunit communication? To manage the tension between global
integration and local adaptation (Bartlett & Ghoshal, 1989), we start by
proposing that official language policies should be aligned with HRM prac-
tices and strategic orientations in terms of ethnocentricity, polycentricity, or
geocentricity. First, emphasizing global integration through common HRM
practices and corporate language, ethnocentric MNCs seek to extend best
practices to foreign subsidiaries through home country expatriates
(Perlmutter, 1969). Formal language policies are reinforced for control,
coordination, and communication purposes. Ethnocentric policies tend to
be found in cultures that are concerned with value homogeneity rather than
foreign language proficiency (e.g., in Japan and France; Luo & Shenkar,
2006). This explains why Japanese MNCs often use Japanese as informal
and formal language at the managerial level throughout globally dispersed
subsidiaries despite the scarcity of locals fluent in the language. In con-
trast, polycentric MNCs emphasize local adaptation and have differentiated
practices that reflect the local subsidiary environment with limited control
from the headquarters. Although the managerial-level employees need to
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   101

be competent in the corporate language for reporting and interunit com-


munication, local languages are often used in subsidiaries. Finally, geocen-
tric MNCs embrace both the local and the global context to transfuse local
and parent HRM practices. Geocentric recruitment policies articulate the
search for managers from a global pool of workers (Perlmutter, 1969).
Such an approach amplifies the importance of an international business
lingua franca and demands for language competences of managers.
The research on language in MNCs, however, suggests that various
context-specific reasons challenge the applicability and feasibility of the
MNC strategic orientation, HRM practice, and language policy alignment
(Marschan-Piekkari et al., 1999a; Peltokorpi, 2007, 2008b). For example,
a study on intercultural communication patterns and strategies in Japan
indicates that small foreign subsidiaries face challenges to recruit linguis-
tically competent Japanese employees (Peltokorpi, 2007). Recruiting
managers were also not able or willing to take into account language
policies when hiring Japanese employees because of the possible mis-
alignment of language and functional skills. In addition, Japanese manag-
ers are found to pay little attention to official language policies when
hiring employees from the local labor market (Peltokorpi, 2008b). In
some countries, the legalistic environment prohibits MNCs to disseminate
information in the corporate language. For example, a U.S. Fortune 10
MNC was fined about US$ 800,000 for issuing English-language HR and
benefits documents to subsidiary employees in France (Dowling, 2009).
Because of various context-specific reasons, MNCs are found to hybridize
their HRM activities (i.e., simultaneously to standardize and localize) to
cope with the local and global pressures (Tayeb, 1998). For example, an
MNC may apply an ethnocentric HRM approach to one subsidiary and a
polycentric one to others. This may explain why a study in a Finnish
MNC, Kone Elevators, shows that intraunit and interunit communication
was hindered by varying native languages and a lack of competence in the
corporate language, English (Marschan-Piekkari, Welch, & Welch,
1999b).
In addition to the difficulties in intraunit and interunit communication cre-
ated by the lack of a common language, social identity theory (Tajfel &
Turner, 1979) helps explain why language diversity may separate people into
groups based on a shared language, giving rise to language boundaries. Social
identities are derived from in-group membership. In-group bias may occur
through the emphasis of positive self-images in reference to out-groups.
Consequently, in-group members may enjoy high levels of trust, interaction,
support, and rewards amongst each other, whereas out-group members are
met with negative attitudes and negative emotions (Lauring, 2008). Although
102   JOURNAL OF BUSINESS COMMUNICATION

visible (e.g., gender) and underlying diversity (e.g., values) can influence
social categorization, there are social identity theory–based arguments in
sociolinguistics that argue that language is a more important and powerful
marker of an individual’s identity than age, gender, and race (e.g., Giles &
Johnson, 1981). As a consequence of language and cultural diversity, local
employees able to speak the company language may not be willing to speak
with expatriates in foreign subsidiaries (Von Glinow et al., 2004).

Research shows that a low proficiency


in the corporate language in subsidiar-
ies hinders intraunit communication
within corporate units and interunit
communication among corporate units.

Integrating the above literature, we use the global standardization and


local adaptation paradigm to illustrate that both alignment between HRM
practices and language policies to maintain internal coherence and flexi-
bility to cope with local communicative environments are needed. We
propose that flexible language policies aligned with HRM practices can
help in reducing some of the negative effects of language diversity. For
example, on the one hand, ethnocentric language policies and HRM prac-
tices enable MNCs to facilitate internal consistency and communication
flows. On the other hand, for language policies and HRM practices to cor-
respond to the host country context, those policies and practices need to
be flexible and hybrid. Foreign subsidiaries may have to make compromises
because of the high cost of recruiting linguistically competent people in the
local labor markets or training linguistically incompetent local employees.

RECRUITMENT AND SELECTION

Recruitment and selection of employees is of strategic importance, because


hiring a qualified work force is a key source of competitive advantage
(Som, 2006). Recruitment policies are partially formulated at the head-
quarters to maintain internal consistency, but local adaptation is needed to
facilitate communication with the host environment and within foreign
subsidiaries.
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   103

Ethnocentric Recruitment and Selection Policies

Ethnocentric recruitment and selection policies seek to ensure internal


consistency in the global MNC network (Perlmutter, 1969). As ethnocen-
tric policies also aim to strengthen coordination, control, and interunit
communication (Ghoshal, Korine, & Szulanski, 1994), local employees
are expatriated to occupy senior positions in foreign subsidiaries
(Boyacigiller, 1990). When home country expatriates dominate subsidiary
management, pressure builds toward using the company language also in
intraunit communication. For example, Japanese subsidiaries in Western
countries are frequently managed by Japanese personnel, particularly in the
initial establishment phase (Martinez & Jarillo, 1989). Those expatriate
managers are reported often to have low foreign language proficiency
(Wright, Kumagai, & Bonney, 2001). The parent language increases global
integration (Luo & Shenkar, 2006) and plays a significant role in the stimu-
lation of a corporate culture within foreign subsidiaries (Nickerson, 1998).
However, an extensive reliance on home country expatriates and the
reinforcement of the parent language in foreign subsidiaries may nega-
tively affect intraunit relationships. Ethnocentric recruitment and language
policies are expected to have a negative impact on the local employee-
expatriate relations, particularly when language skills are unaligned. For
example, only a few home country expatriates were found to be proficient
in the host country language in Nordic subsidiaries in Japan, making it
more challenging for the expatriates to communicate with local employees
and to implement headquarters’ directives in subsidiaries (Peltokorpi,
2006, 2007). Inadequate host country language skills and possible catego-
rization of expatriates as out-group members can make much information
inaccessible to them and foster feelings of rejection and psychological
distress, leaving them without a sense of control over their situation
(Harzing & Feely, 2008). As for local employees, exclusion from commu-
nication due to imposed language bound can cause a desire for interper-
sonal dissociation (Hogg & Abrams, 1988) proving language as a power
wielding instrument (Charles, 2007).
Localization is one way to reduce language barriers in a low-competency
linguistic environment. Whereas at the France-based L’Oréal the parent lan-
guage (French) is used in expatriate-local employee communication in labo-
ratories in China, in Japan localization led to the adoption of Japanese.
Another way is to address language competences in recruitment policies for
local emp­loyees and expatriates. Peltokorpi (2007) observes that expatriate
presidents incompetent in the local language in Nordic ­subsidiaries in Japan
104   JOURNAL OF BUSINESS COMMUNICATION

emphasize English language skills in recruiting local employees. Alternatively,


language proficiency can be addressed in expatriate recruitment and selec-
tion. For example, a recent study of 136 MNCs located in Germany, the
United States, Japan, and the United Kingdom shows that language compe-
tences are considered an increasingly important issue in expatriate recruit-
ment for international assignments (Tungli & Peiperl, 2009). The simultaneous
increase of local employees’ proficiency in the corporate language and expa-
triates’ proficiency in the host country language not only increases language
fluency in two languages, but mutual appreciation for the effort in ameliorat-
ing language skills is likely to reduce intergroup boundaries.
Proposition 1a: Ethnocentric MNCs should place high importance on pro-
ficiency in the corporate language in foreign subsidiaries. However,
foreign subsidiaries should increase localization and use a business lin-
gua franca when language competences between expatriates and stake-
holders in the local environment are unaligned.
Proposition 1b: To decrease unfavorable effects of ethnocentric recruitment
policies on communication between local employees and expatriates,
corporate language competences should be considered in recruitment of
local employees, whereas host country language competence should be
considered in recruitment of expatriates.

Polycentric Recruitment and Selection Policies

Polycentric MNCs emphasize the strategic importance of embedded-


ness within host country environments (Andersson, Fosgren, & Holm,
2001). Recruitment of competent local employees is considered to be
important partly because they are knowledgeable about local markets and
government policies. In a polycentric approach, local employees are
recruited to manage local operations, and only a minimal number of home
country expatriates are present at foreign subsidiaries (Harvey, Speier, &
Novecevic, 2001). When local control is considered important, the rele-
vance of using local languages for communication in subsidiaries increases
as it benefits local adaptation and legitimacy in the various local environ-
ments in which it operates (Luo & Shenkar, 2006). This facilitates recruit-
ment because focus can be more on functional rather than language
competences. In addition to these internal reasons, the use of host country
languages at the subsidiary is proposed to help an MNC establish legiti-
macy in the various local environments in which it operates (Luo & Shenkar,
2006), for example, vis-à-vis customers (Feely, 2003).
Despite those benefits, the polycentric approach also has some
drawbacks. First, the usage of local managers may cause interunit
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   105

communication barriers to increase. For example, a study shows that


the overstaffing of local managers in foreign subsidiaries in Japan leads to
isolation of those subsidiaries because those managers spoke little English
(Boyacigiller, 1990). Deeply embedded subsidiary managers may further
be overfocused on local operations and resist implementation of globally
defined practices in subsidiaries (Ferner et al., 2004). Especially when
headquarter and subsidiary interests divert, interunit communication
becomes disrupted (Szulanski, 1996). Thus, polycentric recruitment prac-
tices can create intergroup boundaries and language clusters at the inter-
unit level (Marschan-Piekkari et al., 1999b; Zander, 2005). One of the
main challenges with polycentric recruitment policies is, therefore, the
management of interunit boundaries impeding communication flows
throughout the MNC.
To cope with the interunit communication problems created by a lack
of a common language, MNCs are shown to increase centralization of
HRM practices (Björkman & Piekkari, 2009). The transfer of home coun-
try expatriates to foreign subsidiaries is another way to facilitate interunit
communication (Barner-Rasmussen & Björkman, 2005; Edström &
Galbraith, 1977). For example, in attempts to reverse negative effects of
localization in Japan, foreign MNCs are found to use expatriates to report
to the headquarters (Boyacigiller, 1990). However, as discussed above, the
usage of home country expatriates can generate problems of its own. An
additional challenge for home country expatriate managers of polycentric
MNCs is to span language boundaries in order to stimulate interunit com-
munication. MNCs may insist using of a common corporate language
(often English) for internal communication (Marschan-Piekkari et al.,
1999a). English is often considered as a logical choice for business com-
munication in international settings because of the dominance of the United
States in the world economy and in international education (Charles &
Marschan-Piekkari, 2002; Nickerson, 2005; Rogerson-Revell, 2007).
Considering language competences in recruitment may enhance interunit
communication flows.

Proposition 2a: Polycentric MNCs are expected to emphasize the impor-


tance of communication in local languages in foreign subsidiaries.
However, foreign subsidiaries should centralize HRM practices while
using a business lingua franca when communication problems arise
between business units and interunit relationships weaken.
Proposition 2b: To decrease unfavorable effects of polycentric recruitment
policies on interunit communication, corporate language competences
should be considered in recruitment of local employees and expatriates.
106   JOURNAL OF BUSINESS COMMUNICATION

Geocentric Recruitment and Selection Policies

Adopting elements of global integration and localization, geocentric


MNCs seek to generate both global coherence and local responsiveness.
In contrast to ethnocentric HRM policies that assigns home country
nationals to management positions, a geocentric HRM policy staffs man-
agement positions at headquarters and subsidiaries from a global pool of
workers, regardless of the color of the passport (Perlmutter, 1969). A geo-
centric approach includes the usage of third country nationals (i.e., man-
agers from neither the parent nor the host country) in foreign subsidiaries
because they may be more familiar with the local language and less expen-
sive than home country expatriates (Tungli & Peiperl, 2009). In addition,
inpatriation (i.e., host and third country employees who are transferred to
the headquarters on a semipermanent to permanent basis) is used to
facilitate information flows in the MNC network (Harvey & Buckley,
1997). An international lingua franca consequently fits best to the geocen-
tric approach in a “truly” international firm. Because of the functional and
language competence-based staffing, the geocentric approach is proposed
to be the most efficient one to avoid intergroup communication problems
in MNCs (Toh & DeNisi, 2003).
However, the extensive application of a lingua franca throughout the
MNC may create concerns at both the intraunit and interunit level. Despite
its widespread usage in international business communication, English is
identified to be far from being “neutral” or “culture-less” (e.g., Charles, 2007;
Henderson, 2005; Kankaanranta & Louhiala-Salminen, 2007; Rogerson-
Revell, 2007, 2008). First, communication difficulties stemming from a lingua
franca are caused by limited language skills (Charles & Marschan-Piekkari,
2002). For example, Mexican subsidiary personnel of Kone Elevators were
found to face difficulties understanding corporate communication
(Marschan-Piekkari et al., 1999b). The employees therefore communicated
with those they could instead of should (Charles, 2006). Second, communi-
cation problems are caused because of the difficulty of understanding differ-
ent types of English used by nonnative speakers or poor translation of written
material (Charles & Marschan-Piekkari, 2002). For example, a middle-level
manager at Kone Elevators reports that it is sometimes difficult to know
whether the Finnish staff really understands the local Singaporean English
and whether the Singaporean employees understand the Finnish-English
(Charles & Marschan-Piekkari, 2002). Unequal distribution of language
skills across linguistic boundaries tends to increase language-based inter-
group boundaries (Lauring, 2008; Marschan-Piekkari et al., 1999b).
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   107

To reduce some of these difficulties caused by an extensive use of a


lingua franca, geocentric MNCs may choose to include different languages
for formal communication. While one audible, visible “surface” language
could be used to facilitate communicative exchanges, employees usually
continue to use local languages (e.g., Henderson, 2005; Peltokorpi, 2007,
in press). Enabling employees to use their local languages confirms their
memberships within language communities but decreases the need to
defend intergroup boundaries and decreases uncertainty. Acknowledging
the presence of different languages allows those individuals who speak
different languages to move between different communication zones (e.g.,
Babcock & Du-Babcock, 2001; Du-Babcock & Babcock 1996, 2007).

Proposition 3a: Geocentric MNCs are expected to emphasize the impor-


tance to communicating in a lingua franca in foreign subsidiaries.
However, foreign subsidiaries should localize and increase the use of
local languages when communication in the lingua franca causes com-
munication problems.
Proposition 3b: To decrease unfavorable effects of geocentric recruitment
policies on communication at intra- and interunit levels, the use of dif-
ferent languages should be considered besides the lingua franca.

TRAINING AND DEVELOPMENT

In addition to considering language skills in recruitment and selection,


communication across linguistic boundaries can be enhanced by language
training for both local employees and expatriates in MNCs (e.g., Barner-
Rasmussen & Björkman, 2007; Charles & Marschan-Piekkari, 2002). Our
discussion on the importance of language training for local employees and
expatriates is founded on the observation that unequal language compe-
tences lead to increased in-group and out-group categorization.

Language Training for Local Employees

For local employees, proficiency in the corporate language is often a pre-


condition for promotion to managerial positions in foreign subsidiaries because
of increased interactions with expatriates, headquarters, and other foreign sub-
sidiaries (Fredriksson et al., 2006; Marschan-Piekkari et al., 1999a; Peltokorpi,
2008a). Promotion tends to include spending time at the corporate head-
quarters, which makes parent language ability indispensable for those local
employees envisioning career development, especially in ethnocentric firms.
108   JOURNAL OF BUSINESS COMMUNICATION

From a social identity perspective, local employees with relevant lan-


guage skills play an important role in bridging intergroup boundaries.
They often function as brokers between their in-group and expatriates,
who are dependent on those intermediaries to reach out to local employees
(Du-Babcock & Babcock, 1996, 2007). The possession of relevant language
skills can be an important source of informal power for local employees
(Peltokorpi, 2007; San Antonio, 1987). In some cases, such power can be
delivered to employees whose formal status would not allow them to have
access to confidential or strategic company information (Du-Babcock &
Babcock, 1996). Those few linguistically competent employees may receive
visibility and increase their opportunities for promotion (San Antonio,
1987). Conversely, local employees who lack language skills can become
excluded from formal communication and feel isolated within the subsid-
iary. Within ethnocentric MNCs, decreased chances to develop international
careers for local employees may limit a sense of urgency in increasing lan-
guage skills. We suspect that this may lower local employees’ motivation
to engage in or finish language courses and increase language skills,
which negatively affects intergroup communication.
Recognizing the importance of corporate language proficiency in engen-
dering network integration and central control, ethnocentric MNCs often
provide language courses for local employees in the corporate language.
When using a business lingua franca is considered to lower intergroup
boundaries, language courses should become available. However, lan-
guage training provided either at the headquarters or at the subsidiary may
not be equally accessible for all employees. Despite the fact that particularly
lower level employees may be influenced by communication in a second
language (Marschan-Piekkari et al., 1999b), language training is often
available from managerial level upwards.
Proposition 4: When ethnocentric MNCs emphasize MNC integration,
language training for local employees should be of high strategic impor-
tance. However, limited access to language training and reduced possi-
bilities of local employees to develop international careers could delimit
the perceived importance of attending and finalizing language courses.

The possession of relevant language


skills can be an important source of
informal power for local employees.
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   109

To polycentric MNCs who emphasize assimilation of their foreign sub-


sidiaries in local environments, language training is likely to be of less
importance than to ethnocentric MNCs. According to this localization
approach, training needs of different workforces vary depending on local
conditions and thus should be localized (Rosenzweig & Nohria, 1994).
Extensive localization, however, may cause subsidiaries to become iso-
lated from the MNC network (Boyacigiller, 1990). The social identity
theory further suggests that language-based intergroup boundaries will be
situated at the interunit level (Harzing & Feely, 2006), decreasing organi-
zational identity, knowledge transfer, control, coordination, and communi-
cation in MNCs.
Language training can be an important factor in lowering interunit lan-
guage boundaries if it is made available in different languages to local
employees in all units. HRM policies should thus encourage participation
in language courses, organized at subsidiaries or in professional training
centers. In addition, local employees’ participation in training programs
organized at the headquarters intensifies interunit communication as staff
gets the opportunity to meet face-to-face (Barner-Rasmussen & Björkman,
2005). When functional training programs organized at the parent company
are important to local employees, language training should be encouraged
to make those programs accessible to local employees.
Proposition 5: When polycentric MNCs emphasize assimilation in the host
local environment, language training is expected to be of less strategic
importance to local employees. However, local employee language
training should be emphasized in HRM policies and practices to increase
access to corporate-wide training programs and lower interunit commu-
nication barriers.

For geocentric MNCs embracing employee diversity, language training


programs for local employees should be both important and widely provided.
A wider flow of employees between regions and parent country increases
the demands for multiple language competence as communication can take
place in the host, parent, or third country language. In contrast to ethnocentric
and polycentric MNCs, local employees may regard training in diverse
languages as necessary as the linguistic diversity can be considerable, both
at the foreign subsidiaries as well as the headquarters. Motivation to complete
language courses lies partly in international career development opportunities.

Proposition 6: When geocentric MNCs emphasize the international character


of the firm, language training is expected to be of high strategic importance
to local employees, and should be available in parent, corporate, and host
country languages.
110   JOURNAL OF BUSINESS COMMUNICATION

Language Training for Expatriates

Ethnocentric MNCs emphasize inter-unit over intra-unit communica-


tion because it enables home country nationals to be expatriated to coun-
tries where they do not speak the local language. Because of the
importance of corporate language skills in formal policies, local employ-
ees are frequently expected to possess sufficient language competences to
interact with expatriates. However, studies show that such language com-
petences may not exist, especially in countries with low general second
language proficiency (e.g., Marschan-Piekkari, 1999b; Peltokorpi, 2007).
Expatriates who use intermediaries to communicate in foreign subsidiar-
ies may experience isolation and exclusion from local employees (e.g.,
Du-Babcock & Babcock, 2007; Harzing & Feely, 2008). Lower-quality
relationships and decreased understanding of organizational occurrences
may be experienced as frustrating. The use of intermediaries for transla-
tion may lead to feelings of dependence and lack of information.
To reverse this tendency, MNCs are shown to make language training
increasingly available to expatriates (Tungli & Peiperl, 2009). This is
important because host country language skills positively influence cross-
cultural adjustment of expatriates (Peltokorpi, 2008a; Selmer, 2006), dec­
rease isolation of expatriates in foreign subsidiaries (Park, Hwang, &
Harrison, 1996), and increase the quality of interpersonal relationships and
communication. Expatriates who acquire the local subsidiary language will
improve understanding of local occurrences. Those expatriates are able to
direct information flows with a minimum loss of information because they
have contextual knowledge of local practices and routines (Von Glinow
et al., 2004). Ultimately, MNC integration is enhanced because expatriates
themselves can collect local knowledge available at the intraunit level and
strengthen ties within subsidiaries, lowering intergroup boundaries.

Proposition 7: When ethnocentric MNCs emphasize integration, host


county language training is expected to be of less strategic importance
to expatriates than corporate language training to local employees.
However, host country language training for expatriates should be
emphasized to decrease intraunit communication boundaries.

When expatriation is considered in polycentric MNCs, knowledge of


the local environment and language is important and can be considered as
part of predeparture training. Prior knowledge and predeparture training are
important in facilitating expatriation (Selmer, Torbiörn, & de Leon, 1998).
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   111

Expatriates with limited host country language skills are dependent on the
use of a business lingua franca for interactions with customers and local
stakeholders. Direct communication with outsiders is only possible if
expatriates possess sufficient language skills of the common second
language of the country in question and when local stakeholders’ language
skills are sufficiently elevated to maintain quality of communication
content (Du-Babcock & Babcock, 2007). Increasing knowledge about the
host country culture and language facilitates adaptation and expatriate
performance and is thus expected to be of key importance.

Proposition 8: When polycentric MNCs emphasize assimilation in the host


country environment, host country language training for expatriates is
expected to be of high strategic importance. Integrating host country
language training in predeparture training will contribute to expatriate
assimilation in the host environment.

Geocentric MNCs assign expatriates at multiple levels of the organization


and use expatriates not only from headquarters but also from third countries
(Toh & DeNisi, 2003). The presence of different linguistic backgrounds is
expected to make language competences crucial in expatriate performance.

Proposition 9: The orientation toward an international identity of geocen-


tric MNCs is expected to cause language training programs in different
languages to be widely provided for expatriates.

PERFORMANCE APPRAISAL

Performance appraisal is a tool to assess the job performance and dev­


elopment of employees through scales, questionnaires, and progress reviews
filled out by the employee’s direct supervisor and/or peers. The feedback
obtained is used in estimating salary increase, bonuses, or training needs.
The prospect of remuneration for accomplishing language tests can
increase the rate of successful examination because language courses tend
to work only for those who are already motivated (Huhta, 1997, as cited
in Charles & Marschan-Piekkari, 2002). Even in face of limited interna-
tional career opportunities in ethnocentric MNCs, compensation for suc-
cessfully accomplishing language tests may increase motivation for taking
tests. However, sometimes extrinsic rewards limit intrinsic motivation
(Deci, 1975). Therefore, focusing on compensation in return for success-
ful examination might replace feelings of play potentially rel­ated to the
112   JOURNAL OF BUSINESS COMMUNICATION

learning process for feelings of competition. Initial intrinsic motivation


may, over time, become replaced by goals of extrinsic rewards. Some emp­
loyees are not acquainted with the process of formal examination and might
look up to examinations, causing increasing stress levels during training and
examination.
Proposition 10: When MNCs integrate successful examination of language
tests into performance appraisal schemes, the rate of accomplishment
should increase. However, perceived pressure to perform could lower
intrinsic motivation with those employees not used to the potential for-
mal structures of those tests.

DISCUSSION

In this article, we proposed that a coherent alignment between HRM


practices, language policies, and MNC strategic orientation can be benefi-
cial. We did not only acknowledge that language policy should be a part
of MNC strategy because it “permeates virtually every aspect of their
business activities” (Marschan et al., 1997, p. 591), but we also suggested
that they should be aligned with HRM practices. On the other hand, we
drew from empirical research on language diversity in MNCs to illustrate
that what is good in theory is often more difficult in practice. Various
particularities in the host country environment, such as the average level
and distribution of language skills, are likely to increase the demand for
adaptation and reconsideration of formal policies. When policies do not fit
the local context, in addition to practical problems, intergroup boundaries
may arise, causing expatriates and local employees to be divided in in-
groups and out-groups. HRM practices can increase people’s tendency for
social categorization if those practices are not fitted on the local host
country context. Drawing on social identity theory (Tajfel & Turner, 1979),
we proposed that language differences act as markers for social identities.
Emphasizing the role of language as a dividing factor, Andersen and
Rasmussen (2004) concluded that no matter what language is chosen as
an official corporate language, communication problems will always pre-
vail. While agreeing with these scholars, we also argued that increasing
flexibility in HRM strategy and practices and integrating language poli-
cies into HRM strategies while considering an MNC’s language system as
an open system helps reduce communication difficulties. For example, inter-
group differences tend to become emphasized when ethnocentric staffing
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   113

policies are executed, delivering important positions to home country


nationals while understaffing local employees at managerial positions.
Intergroup differences are, as such, replicated within the formal subsidiary
structure and can increase in-group and out-group categorization between
expatriates and local employees. When intergroup communication occurs
in the parent language in subsidiaries, expatriates are likely to dominate
communication whereas local employees can be kept aloof from inter-
group interactions. Intergroup boundaries are caused not only by HRM
policies and practices but reaffirmed in intergroup communication through
language choice. Allowing for some hybridization of staffing policies and
a mixing of different languages is likely to decrease intergroup boundaries.
Considering language skills in recruitment and selection of local employ-
ees and expatriates is further expected to increase the quality and fre-
quency of communication in different languages as linguistic competences
increase within both groups. For example, social identity theory–based
discussions hold that language becomes a question of self-representation
once individuals attach value to their language group (e.g., Giles &
Johnson, 1981). As a source for social identification, language differences
may cause individuals to defend their in-group boundaries, with exclusion
of out-group members as a consequence. HRM practices that stimulate
local employees and expatriates to invest in their respective language com-
petences through participation in language training can equilibrate some
informal power inequalities resulting from language differences. Thus,
depending on the importance of the subsidiary-headquarter relationship,
headquarters could include the subsidiary language within the headquarters’
language policies, increasing flexibility of language policies and practices
of headquarters. Those subsidiaries that choose English as corporate lan-
guage in countries where the educative systems promotes, for example,
Arab, Spanish, Hindu/Urdu, or Mandarin as second language are likely to
encounter communication difficulties when English is the lingua franca
and language policies are functional and standardized. Training of staff in
the second languages might increase the centrality of the subsidiary in the
MNC network and secure information flows to the headquarters.

Allowing for some hybridization of


staffing policies and a mixing of differ-
ent languages is likely to decrease
intergroup boundaries.
114   JOURNAL OF BUSINESS COMMUNICATION

IMPLICATIONS, LIMITATIONS, AND


SUGGESTIONS FOR FURTHER RESEARCH

We argue that to consider HRM practices as flexible and language sys-


tems as open demands flexibility from MNC staff: both at the headquar-
ters and at foreign subsidiaries. We consequently argue for increasing the
use of multiple languages throughout the MNC network, which implies
that MNC staff should possess multiple language skills or a willingness to
attend language training when language skills are considered underdevel-
oped. This has important managerial implications: As a consequence of
the recognition of language as a unique skill, time must be made available
to individuals to develop language competences. As for expatriates, insist-
ing on the importance of host country language skills, the length of expa-
triate assignments must make time invested in language training worthwhile.
Reconsidering the rhythm of expatriate rotation implies that instead of
developing broad skills as a result of lateral career development, expatri-
ates develop specific, unique skill sets fit on the host country environment.
This article has some limitations that should be taken into account in
future research. First, while associating HRM practices with language, we
somewhat neglected the discussion on the interrelationships of language
and culture (see, e.g., Babcock & Du-Babcock, 2001; Janssens, Lambert,
& Steyaert, 2004; Musson & Tietze, 2004; Von Glinow et al., 2004;
Peltokorpi, in press). However, language competence alone does not suf-
fice in enhancing communication; cultural competences are indispensable
(Babcock & Du-Babcock, 2001; Peltokorpi, 2008a). Second, while shift-
ing between the functional role of language in MNCs as a strategic macro-
level tool to the role of languages as markers of social identities in a
subsidiary context, the social identity theory perspective may be seen as
too deterministic and static (Lauring, 2008). The focus on intergroup
boundaries delimits complexities at play at the individual level and reduces
groups to homogenous entities. However, intergroup dynamics are more
complex and cannot always be reduced to generalizations at the group
level. Third, our argument is built on secondary literature although pri-
mary data linking HRM practices and language policies are lacking.
Future research should thus empirically inquire about the relationships
between HRM practices and language policies, and investigate how they
are executed in foreign subsidiaries, to more precisely identify where poli-
cies differ from practices and why. Furthermore, future research could
look into the combined influence of language and culture on communication
between linguistically and culturally diverse groups. Individuals confirm
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   115

and reaffirm localized identities, which they exert in a multilingual and


culturally plural context by resorting to communication in their native
language. In times of ongoing internationalization of firms, the importance
of individual employees’ attachment to local languages and cultures to
assume group identities may not be overlooked.

References

Agar, M. (1994). Language shock: Understanding the culture of conversation. New York:
Quill.
Andersen, H., & Rasmussen, E. S. (2004). The role of language skills in corporate com-
munication. Corporate Communications, 9, 231-243.
Andersson, U., Fosgren, M., & Holm, U. (2001). Subsidiary development and competence
development in MNC: A multilevel analysis. Organization Studies, 22, 1013-1034.
Babcock, R. D., & Du-Babcock, B. (2001). Language-based communication zones in inter-
national business communication. Journal of Business Communication, 38, 372-412.
Barner-Rasmussen, W., & Björkman, I. (2005). Surmounting interunit barriers. International
Studies of Management and Organization, 35, 28-46.
Barner-Rasmussen, W., & Björkman, I. (2007). Language fluency, socialization and inter-
unit relationships in Chinese and Finnish subsidiaries. Management and Organization
Review, 3, 105-128.
Bartlett, C. A., & Ghoshal, S. (1989). Managing across borders: The transnational solu-
tion. Boston: Harvard Business School Press.
Björkman, A., & Piekkari, R. (2009). Language and foreign subsidiary control: An empir-
ical test. Journal of International Management, 15, 105-117.
Boyacigiller, N. (1990). The role of expatriates in the management of interdependence:
Complexity and risk in multinational corporations. Journal of International Business
Studies, 21, 357-381.
Charles, M. (2007). Language matters in global communication. Journal of Business
Communication, 44, 260-282.
Charles, M., & Marschan-Piekkari, R. (2002). Language training for enhanced horizontal
communication: A challenge for MNCs. Business Communication Quarterly, 65, 9-29.
Deci, E. L. (1975). Intrinsic motivation. New York: Plenum Press.
Dowling, D. C. (2009). English is not a multinational company’s exclusive language.
Labor & Employment Law, 37, 5-10.
Du-Babcock, B., & Babcock, R. D. (1996). Patterns of expatriate–local personnel commu-
nication in multinational corporations. Journal of Business Communication, 33, 141-164.
Du-Babcock, B., & Babcock, R. D. (2007). Genre patterns in language-based communica-
tion zones. Journal of Business Communication, 44, 340-373.
Edström, A., & Galbraith, J. R. (1977). Transfer of managers as a coordination and control
strategy in multinational organizations. Administrative Science Quarterly, 22, 248-263.
Feely, A. J. (2003). Communication across language boundaries. In M. Tayeb (Ed.),
International management: Theories and practices (pp. 206-235). London: Pearson
Education.
116   JOURNAL OF BUSINESS COMMUNICATION

Ferner, A., Almond, P., Clark, I., Colling, T., Holden, L., Muller-Camen, M., et al. (2004).
The dynamics of central control and subsidiary autonomy in the management of human
resources: Case-study evidence from US MNCs in the UK. Organization Studies, 25,
363-391.
Fredriksson, R., Barner-Rasmussen, W., & Piekkari, R. (2006). The multinational corporation
as a multilingual organization: The notion of a common corporate language. Corporate
Communications: An International Journal, 11, 406-423.
Ghoshal, S., Korine, H., & Szulanski, G. (1994). Interunit communication in multinational
corporations. Management Science, 40, 96-110.
Giles, H., & Johnson, P. (1981). The role of language in ethnic group relations. In J. C. Turner &
H. Giles (Eds.), Intergroup behavior (pp. 199-243). Oxford, UK: Blackwell.
Harvey, M. G., & Buckley, M. R. (1997). Managing inpatriates: Building a global core
competency. Journal of World Business, 32, 35-52.
Harvey, M., Speier, C., & Novecevic, M. M. (2001). A theory-based framework for strate-
gic global human resource staffing policies and practices. International Journal of
Human Resource Management, 12, 898-915.
Harzing, A., & Feely, A. J. (2008). The language barrier and its implications for
HQ-subsidiary relationships. Cross Cultural Management, 15, 49-61.
Henderson, J. K. (2005). Language diversity in international management teams.
International Studies of Management & Organization, 35, 66-82.
Hogg, M. A., & Abrams, D. (1988). Social identifications: A psychology of intergroup
relations and group processes. London: Routledge.
Janssens, M., Lambert, J., & Steyaert, C. (2004). Developing language strategies for inter-
national companies: The contribution of translation studies. Journal of World Business,
39, 414-430.
Kankaanranta, A., & Louhiala-Salminen, L. (2007). Business communication in BELF.
Business Communication Quarterly, 70, 1, 55-59.
Lauring, J. (2008). Rethinking social identity theory in international encounters: Language
use as a negotiated object for identity making. International Journal of Cross Cultural
Management, 8, 343-361.
Louhiala-Salminen, L. (1997). Investigating the genre of a business fax: A Finnish case
study. Journal of Business Communication, 34, 3, 316-333.
Luo, Y., & Shenkar, O. (2006). The multinational corporation as a multilingual commu-
nity: Language and organization in a global context. Journal of International Business
Studies, 37, 321-339.
Marschan, R., Welch, D., & Welch, L. (1997). Language: The forgotten factor in multina-
tional management. European Management Journal, 15, 591-598.
Marschan-Piekkari, R., Welch, D., & Welch, L. (1999a). Adopting a common corporate
language: IHRM implications. International Journal of Human Resource Management,
10, 377-390.
Marschan-Piekkari, R., Welch, D., & Welch, L. (1999b). In the shadow: The impact of
language on structure, power and communication in the multinational. International
Business Review, 8, 421-440.
Martinez, J. I., & Jarillo, J. C. (1989). The evolution of research on coordination mechanisms
in multinational corporations. Journal of International Business Studies, 20, 489-514.
Musson, G., & Tietze, S. (2004). Places and spaces: The role of metonymy in organiza-
tional talk. Journal of Management Studies, 41, 1301-1323.
van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION   117

Nickerson, C. (1998). Corporate culture and the use of written English within British
subsidiaries in the Netherlands. English for Specific Purposes, 17, 281-294.
Nickerson, C. (2005). English as a lingua franca in international business contexts
[Editorial]. English for Specific Purposes, 24, 367-380.
Park, H., Hwang, S. D., & Harrison, J. K. (1996). Sources and consequences of commu-
nication problems in foreign subsidiaries: The case of United States firms in South
Korea. International Business Review, 5, 79-98.
Peltokorpi, V. (in press). Linguistic and cultural barriers of intercultural communication in
foreign subsidiaries, Scandinavian Journal of Management, 26(2).
Peltokorpi, V. (2006). The impact of relational diversity and socio-cultural context on inter-
personal communication: Nordic subsidiaries in Japan. Asian Business & Management,
5, 333-356.
Peltokorpi, V. (2007). Intercultural communication patterns and tactics: Nordic expatriates
in Japan. International Business Review, 16, 68-82.
Peltokorpi, V. (2008a). Cross-cultural adjustment of expatriates in Japan. International
Journal of Human Resource Management, 19, 1588-1606.
Peltokorpi, V. (2008b, July). The impact of cultural and language differences on intra-unit
information flows: A case of Nordic subsidiaries in Japan. Paper presented at the
Academy of International Business Conference, Milan, Italy.
Perlmutter, H. V. (1969). The tortuous evolution of the multinational corporation. Columbia
Journal of World Business, 10, 9-18.
Piekkari, R. (2006). Language effects in multinational corporations: A review from inter-
national human resource perspective. In G. Stahl & I. Björkman (Eds.), Handbook of
research in international human resource management (pp. 536-550).Cheltenham,
UK: Edward Elgar.
Rogerson-Revell, P. (2007). Using English for international business: A European case
study. English for Specific Purposes, 26, 103-120.
Rogerson-Revell, P. (2008). Participation and performance in international business meet-
ings. English for Specific Purposes, 27, 338-360.
Rosenzweig, P., & Nohria, N. (1994). Influences of human resource management practices
in multinational firms. Journal of International Business Studies, 20, 229-252.
Samovar, L., Porter, R., & Jain, N. (1981). Understanding intercultural communication.
Belmont, CA: Wadsworth.
San Antonio, P. M. (1987). Social mobility and language use in an American company in
Japan. Journal of Language and Social Psychology, 6, 191-200.
Selmer, J. (2006). Language ability and adjustment: Western expatriates in China. Thunderbird
International Business Review, 48, 3, 347-368.
Selmer, J., Torbiörn, I., & de Leon, C. T. (1998). Sequential cross-cultural training for
expatriate business managers: Pre-departure and post-arrival. International Journal of
Human Resource Management, 9, 832-840.
Som, A. (2006). Bracing for MNC competition through innovative HRM practices: The
way ahead for Indian firms. Thunderbird International Business Review, 48, 207-237.
Szulanski, G. (1996). Exploring internal stickiness: Impediments to the transfer of best
practice within the firm. Strategic Management Journal, 17, 27-44.
Tajfel, H., & Turner, J. C. (1979). An integrative theory of intergroup conflict. In W. G. Austin &
S. Worchels (Eds.), The social psychology of intergroup relations (pp. 33-47). Monterey, CA:
Brooks/Cole.
118   JOURNAL OF BUSINESS COMMUNICATION

Tayeb, M. (1998). Transfer of HRM policies and practices across cultures: An American com-
pany in Scotland. International Journal of Human Resource Management, 9, 332-358.
Taylor, S., Beechler, S., & Napier, N. (1996). Toward an integrative model of strategic inter-
national human resource management. Academy of Management Review, 21, 959-985.
Toh, S. M., & DeNisi, A. S. (2003). Host country national reactions to expatriates pay
policies: A model and implications. Academy of Management Review, 28, 606-621.
Tungli, Z., & Peiperl, M. (2009). Expatriate practices in German, Japanese, U.K., and U.S.
multinational companies: A comparative survey of changes. Human Resource Management,
48, 153-171.
Von Glinow, M. A., Shapiro, D. L., & Brett, J. M. (2004). Can we talk, and should we?
Managing emotional conflict in multicultural teams. Academy of Management Review,
29, 578-592.
Wright, C., Kumagai, F., & Bonney, N. (2001). Language and power in Japanese trans-
plants in Scotland. Sociological Review, 49, 236-255.
Zander, L. (2005). Communication and country clusters: A study of language and leader-
ship preferences. International Studies of Management & Organization, 35, 83-103.
Copyright of Journal of Business Communication is the property of Association for Business Communication
and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright
holder's express written permission. However, users may print, download, or email articles for individual use.