Language Management of Multinational Companies

Language Management of Multinational Companies

1. Introduction

Language barriers between headquarters and subsidiaries have become important elements which affect interunit and intraunit communication as companies are expanding operations internationally. To decrease the negative effects of language barriers, Multinational Companies (MNCs) have created language policies as formal ways to make decisions which language should be applied in corporate communication and documentation (Maraschino, Welch and Welch, 1999). Besides, Maraschino, Welch and Welch (1999) suggest that language policies should be coordinated with the MNC strategy. The fact that language should be a part of MNC strategy has been emphasized by many scholars, however, far too little attention has been paid to the importance of aligning language policies with HRM practices.

This essay focuses on how language policies can be coordinated with human resource policies, especially recruitment, selection and training of local employees and expatriates, in order to reduce language barriers between headquarters and subsidiaries. Different language policies in multinational companies have an important effect on the choice of strategies of Human Resource Management (HRM).

The essay has been organised in the following way. The first section of this paper defines ‘language barrier’ and describes the elements of the language barrier. The second section shows the three types of language policies and discusses the relationship between the language policies and human resource policies. The third section analyses strategies of HRM processes in recruitment, selection and training of local employees and expatiates according to different language policies. Finally, the conclusion is drawn.

2.  The language Barrier in MNCs

2.1 Definition

The term ‘language barrier’ is generally understood to mean a problem of ‘miscommunication’ which is defined as effects that explain how the miscommunication occurs and how it can escalate (Johanson and Vahlne, 1977). Nordstrom and Vahlne (1992) argue that ‘language barrier’ refers to factors preventing firms from understanding and learning about a foreign environment’’. For the purposes of this essay, ‘language barrier’ will be defined as obstacles which disturb the communication process, impede the flow of information and distort understanding between a parent and subsidiary company (Harzing and Feely, 2008).

2.2 Language Barrier Components

The lack of rhetorical skills which means humor, symbolism, sensitivity, negotiation, persuasion, and motivation cannot be used very fluently (Harzing and Feely, 2008). Communication failures caused by loss of rhetorical skills lead to uncertainty and anxiety. Moreover, because Language barrier heightens the level of suspicion, mistrust and conflict between a parent company and its international subsidiaries, it will lead the headquarters to be more formal and non-objective in its evaluation of subsidiary performance, and may also keep collaborative processes secret such as knowledge and technology transfer.