RMIT International University

Vietnam
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Subject Code:
Subject Name:
Location & Campus (SGS or HN)
where you study:
Title of Assignment:

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Student Number:

BUSM3311
International Business
RMIT Vietnam
Language diversity a major issue
that challenges companies when
internationalizing
Nguyen Bao Hung

S3393103

Teachers Name:

Mr. Felix Ng Chee Yew

Group Number:

Assignment due date:

July 18, 2014

Date of Submission:

July 18, 2014

Number of pages including this one:

Word Count:

522

International Business

Board internationalization brings chances for multinational corporations (MNCs) to

specialize their expertise as well as broadens social networks. Generally, the integration
process is challenged by the change in working language. In his 1998 research, Tayeb
points out the link between the companys ability to perform business and the success
of it in foreign market.
Henderson (2005) states that in a MNC, building relationships among members are
language dependent. However, her study also indicates that they tend to employ their
own native language strategies when speaking foreign language, which results in
misunderstanding. Another experiment of Takano and Noda (1993) demonstrate that
when making decisions by foreign language in a MNC, individuals act less fluently than
when doing in native language because they are placed under a heavier linguistic
processing load. Keysar et al. (2012) point out that people who do not exercise foreign
language efficiently suffer the temporary decline in their thinking ability. The research of
Keysar also clarifies that emotions play a key role in decision making related to risk
management and investment, and individuals who do business in foreign language
reacts less emotionally as well as smoothly than when they do in their native language.
In recent years, in order to have a common corporate language to support MNCs in
regards to building relationship among members and making decision, more companies
implement language policies that order to change their working language to English
(Bjrkman & Piekkari 2009). The reason for this change is stated in the 2010 study (p.
693) of Stahl et al. that members would have at least a minimum of a shared language
around which to align. Marschan-Piekkari et al. (1999) assert that using English as the
common working language could reduce language diversity. Moreover, Oxelheim et al.
(2013) argue that the use of English is being more committed by employees when it is
introduced from the top of the business and it also enhance communication among
internal.
Nokia is a typical illustration of a global corporation that adopts English as it daily
working language. Nokia switched the language using from Finnish to English in 1992
as a consequence of its early internationalization that demands the company to
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International Business

communicate with foreign stakeholders and regulators (Piekkari et al. 2013). During
1990s, Nokia extensively as well as strictly use English in its daily activities. Piekkari et
al. state that Nokia has a written policy of using English down to the level of tone of
voice. Nokias meetings, its writings and verbal speaking are all in English. Nokias
employees avoid using Finnish to prevent miscommunication happened to those who
do not speak Finnish (Piekkari et al. 2013). As a result, for the new generation of
Nokias managers, speaking English is very natural.
To sum up, language barrier is one of the major issues that challenges companies in
their internationalizing process because of some problems it could bring such as
misunderstanding between members and negative effect on thinking ability as well as
making decision. A possible solution to deal with this issue is using a common corporate
language such as English in order to reduce the language diversity within an
organization.

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International Business

REFERENCES
Bjrkman, A & Piekkari, R 2009, Language and foreign subsidiary control: an empirical
test', Journal of International Management, vol. 15, pp. 105117.
Henderson, K 2005, Language diversity in international management teams,
International Studies of Management and Organization, vol. 35, pp. 4354.
Keysar, B, Hayakawa, SL & An, SG 2012, The foreign-language effect: thinking in a
foreign tongue reduces decision biases, Psychological Science, vol. 23, pp. 661668.
Marschan-Piekkari, R, Welch, D & Welch, L 1999, Adopting a common corporate
language: IHRM implications, International Journal of Human Resource Management,
vol. 10, pp. 377390.
Oxelheim, L, Gregori, A, Randy, T & Thomsen, S 2013, On the internationalization of
corporate boards: the case of Nordic firms, Journal of International Business Studies,
vol. 44, pp. 173194.
Piekkari, R, Oxelheim, L & Randy, T 2013, The Role of Language in Corporate
Governance: The Case of Board Internationalization, IFN Working Paper, no. 974.
Stahl, GK, Maznevski, ML, Voigt, A & Jonsen, K 2010, Unraveling the effects of cultural
diversity in teams: a meta-analysis of research on multicultural work groups, Journal of
International Business Studies, vol. 41, pp. 690709.
Takano, Y & Noda, A 1993, A temporary decline of thinking ability during foreign
language processing, Journal of Cross-Cultural Psychology, vol. 24, pp. 445462.
Tayeb, MH 1998, Transfer of HRM Policies and Practices across Cultures: An American
Company in Scotland, International Journal of Human Resource Management, vol. 9,
no. 2, pp. 332358.

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