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Early in research on internationalization of
corporations, Wiedersheim-Paul (1972) cited
the importance of psychic or cultural distance
between the locations in determining how
a multinational company’s operations get
organized. Language has consistently been
recognized as an important factor contributing
to cultural distance (Johanson and Vahlne,
1977; Fixman, 1990; Petersen and Pedersen,
1997). More recently, it has been argued that
the issue of language should be addressed in
terms of the strategic management of multinational
corporations (Marschan et al., 1997;
Dhir and Savage, 2001; Dhir and Goke-Pariola,
2002; Dhir and Savage, 2002). In a global
organization that operates in diverse locations
and cultures, the challenge of deriving synergy
from a set of activities performed by individuals
who speak different languages can be
daunting. Hood and Truijens (1993) studied a
Japanese manufacturing company in Europe
and found that language was one of the dominant
factors considered in their decision to
locate in an English-speaking environment.
However, such strategies can be limiting, and
work only in the short term. As suggested by
Marschan-Piekkari et al., (1999), ‘a Canadian
firm moving into the United States, then
Australia, New Zealand and the United
Kingdom, can postpone language complications
of international growth for some time’.
Generally, corporations as well as other
organized communities such as nations or
groups of people, seek improved efficiency
of communication and operation through a
standardized language adopted as its official
language (Marschan-Piekkari et al., 1999;
Dhir and Savage, 2002). Nevertheless, multinational
corporations favour the development
of a strong sense of common purpose,
managed through soft control processes, that
operate through informal communication
channels, rather than formal means (Ghoshal
and Bartlett, 1995). Personal relationships
within an organization define the feasibility
and the effectiveness of communication,
collaborative learning, and knowledge creation,
with direct implications for the corporation’s
competitive advantage in its strategic
environment. Some works draw attention to
the relationship between language and power
(Foucault, 1978; Bourdieu, 1991; Janks,
2000). Yet, the strategic management literature
rarely discusses the impact of language
on multinational operations (Gupta and
Govindarajan, 1991; Egelhoff, 1993; Ghoshal
et al., 1994; Park et al., 1996) beyond
acknowledging its importance (Johanson and
Vahlne, 1977), even when otherwise focused
on the importance of local considerations in
effective management of international business
(Andersen, 1993; Clegg et al., 1999). The
broader communications literature, too, generally
ignores the role of language in the
development of informal channels of information
flow (Nohria and Eccles, 1992;
Krackhardt and Hanson, 1993; Macdonald,
1996).
Welch et al., (2001) warn that attempts to
impose a common corporate language might
hinder or alter information flow, knowledge
transfer and communication. Dhir and Goke-
Pariola (2002) make a case for language policies
in multinational corporations. They, too,
argue that the process that constrains a company
to a standard language may actually
deny it access to critical resources unique to
the members’ own diverse training and
experiences. Diversity of cultures represented
and languages spoken by the personnel may
offer opportunities to a global organization
not available to its competitors. In addition, a
number of ongoing changes in the pattern of
relationships between nations and societies
make it imperative for multinational corporations
to take a serious look at developing
© 2004 Sandra Oliver for editorial matter and selection;
individual chapters, the contributors