Effect of Local Language Communication in Decision Making for MNC Dealing With Local Customers Proposal

Abstract

This study focuses on understanding the problem of local language communication in a multinational company management. The cultural context in which the subsidiary firms of multinational companies operate will help in understanding how local languages affect the business relations in MNCs. In this study, local language will be considered to be part of cultural aspects that affect subsidiary company management.

The local language effect will further be narrowed to the customer communication and general relations in management of subsidiaries. This study will be a qualitative study on foreign multinational companies operating in Saudi Arabia. Probability sampling will be the major sampling method with questionnaires being the major tools of collecting data. These research methods and tools have been picked upon because they reduce chances of biases in research.

Introduction

Multinationals Corporations have increased in number and are projected to increase as business organizations continue to take advantage of globalization in enhancing trade. One of the major problems facing the management of expatriate firms in Saudi Arabia is the influence of local language in communication by multinationals.

Therefore, the main objective of the study centers on assessing the influence and impact of local language in the administration of expatriate firms in Saudi Arabia. Arabic is the national language of Saudi Arabia, and research has proved that it takes a minimum of one year for a non-Arab speaker to learn and effectively communicate in Arabic language. The main question in this research is: How does local language affect the communicative relationship between staffs of subsidiary firms and the local population or customers of the company?

The language vacuum between the expatriates and the local population can be a hindrance in furthering trade goals by multinational companies. They have dwelt significantly on factors that directly relate to business establishment. Literature review will help open up into the real challenges of local language communication by multinationals. It will also help in gaining a deeper understanding and exploration of the following questions:

• What is the effect of local language in management of subsidiary companies of multinational corporations?
• How do Multinational corporations deal with the local language barriers?
• How does the local language in Saudi Arabia influence the management of multinationals that originate from outside the region?
• What role does local language communication play in promoting business in Saudi Arabia?
• What challenges do expatriate staffs face when communicating with the local customers?

Research Interest

The main reason why multinational companies expand into new destination is to expand their customer base. Foreign cultures often affect the management of expatriate staff and the subsidiary companies at large. Adaptation to foreign language poses great challenges in human resources management of subsidiary companies. It takes a lot of time for expatriate staffs to adopt the local language and use it well in communication.

Communication is a vital tool in business development, and language is the most essential component of communication. Other aspects of management such as marketing management are also negatively impacted by local language. Given the fact that Arabic is the local language of Saudi Arabia, the foreign staffs of foreign companies must learn how to communicate in the local language.

They must also learn other native languages that are used in the country. This will enable them to reach all potential customers. Language can hinder firms from developing close and sustainable relations with locals¹.

The rate of expatriate failure has been on the rise. One of the reasons for expatriate failure is difficulty of adapting to aspects of foreign culture. Modern management of business organizations has to be customer-focused because customers are the key determinants of the performance of a business firm.

Therefore, the mastery of language in business communication is very essential. Studies have revealed the importance of language in management at the international level. However, systematic research in the same area does not exist. Language in multinational companies will continue to be a major issue in the expatriate management of subsidiary firms. Therefore, further studies are needed in this area.

Relation to previous studies

In the last two decades, many researches in the field of international management have been centered on how multinational corporations manage their subsidiary firms². The studies have focused on diverse aspects of challenges of managing parent companies and the subsidiary companies³. Mother firms of multinational companies operate within a familiar business culture or environment.

They rarely face cross-cultural problems which are faced in the managing of subsidiary companies.⁴ However, it is evident that one problem in the management of subsidiaries has not been given the attention that it deserves. Multinational companies must understand that language is an important asset of business enhancement⁵.

Communication is very essential at any level of management. This poses a great challenge in international management. Percy Barnevik, the then chief executive office of ABB observed that communication and language barrier was the genesis of operational problems for the company⁶.

Many managers of multinational companies are coming to accept that language is indeed an operational problem for the subsidiary firms. While this seems to be a reality, the acceptance of the problem is a problem in itself⁷. Very minimal research has been focused on the effect of language diversity in international management⁸.

Subsidiary firms operate in foreign environments. Thriving in foreign markets needs the understanding of the customer trends and how markets are structured. Foreign markets are usually complicated for new subsidiaries. The management of subsidiaries should understand the behavior of their customers⁹.

Customer behavior is best understood when they are fully engaged by the firm. Unfortunately, subsidiary firms find themselves in regions where the language spoken differs with the parent country’s language. This has been the case with Danish multinationals that operate in France or western multinationals that are operating in the Arabic Region¹⁰.

Marketing is an important aspect of business thus business firms are adopting proactive marketing practices. The expatriate staffs are forced to learn the local language so that they can effectively communicate with the locals¹¹. The mastery of local language communication by the multinational will have positive effects on the survival of the firms. Multinationals use expatriates in management who are often non-native speakers depending on the countries in which they are situated¹².

Corporate communication is an important facet of business organizations. A number of multinational companies are choosing certain international languages as corporate languages. However, this cannot assume the reality in modern business where firms are centered on customers. Firms seek to win customers in whichever places they operate. Therefore, in as far as corporate languages are chosen by firms, local language communication for multinationals often overrides the corporate language.

Language is an important feature or organizational communication¹³. Multinational companies move into new functional areas with many expectations on of capturing a new market for their product and services. Therefore, they must learn how to communicate with the locals¹⁴.

The liberalization of trade has resulted to the rise of the number of multinational companies and the expansion of their activities in different regions. Different multinationals are seeking business opportunities in various nations around the globe¹⁵. They do not consider how local language will impact on their business operations in the foreign destinations.

Research shows that the adoption of corporate language by multinationals does not have a significant positive effect in eliminating communicative problems. Therefore, it is advisable for multinationals to shift their attention to foreign language when they are operating in foreign countries¹⁶.

Multinationals and mode of entry into new business destinations

Multinational organizations must choose best suited strategies that will help them exploit the new business environment. The culture of the new country and the local language in the new destinations must be given consideration. Failure to do this result in extended challenges that present themselves in stunted communication relations between the Multinational companies and the local customers¹⁷.

Language affects the practice of employees of multinational companies especially in cases where the MNC is operating in a multilingual environment¹⁸. In such cases, multinationals choose a common corporate language to be used. While scholars of international management look at this from a positive angle, they are also weighing on the possibility of failure¹⁹. The failure of firms often come about when they do not focus on adapting to local language usage and instead center on corporate language usage²⁰.

Many multinationals choose English as their corporate communication language^21/22. Therefore, when they enter the new regions, they will want to stick to this language. This works negatively for these organizations because some regions like the Arabic region heavily use the Arabic language²³.

Proposed research methods

Information for this research will be obtained from different sources. These sources are the review of literature concerning the topic under study. This will include primary sources or information from the field, and secondary sources. All these sources of information are vital and will help provide detailed knowledge and understanding of the problem under investigation.

Review of literature

Information related to the topic under investigation will be obtained from reliable sources. Online publications such as online journals will be the key sources of information. The information from online publications will be supplemented with information from other materials including textbooks, magazines, and reliable websites.

Primary sources of information

Information will also be sourced using empirical case studies of ten different foreign multinational companies that are operating in Saudi Arabia. Qualitative survey techniques will be used in the empirical study of the sampled multinationals. The sampled companies must come from outside the Arabic region.

A qualitative research method will be employed in this research since it is aimed at explaining how local language affects customer communication in multinationals. Language is a qualitative phenomenon, thus it will be better investigated using qualitative research tools. The aim of this research will be to analyze and not just explaining the outcomes.

Questionnaires will be used in obtaining information from the sample multinationals. The questionnaires to be used will have both closed-ended questions and open-ended questions²⁴. Questions used will be based on lingual aspects in managing customer relations. Marketing research questions are best suited in this case.

The data gained from the questionnaires will be analyzed using social science research analytical tools like the SPSS. The analysis will help in opening into and addressing some of the research questions. The question of how multinationals deal with local language communication barriers will be addressed in this analysis.

Arriving at samples in researches that are utilizing case studies is easier²⁵. In this research, a stratified sampling technique will be used to separate the Arab-based multinationals from the ones originating from outside the region. After this, simple random sampling will be used to pick on companies that originate from outside the region²⁶.

Simple random sampling techniques have been highly applauded in research since they reduce the possibility of biases. Many research techniques narrow down to simple random sampling technique when they want to arrive at the final sample²⁷.

Reflections

The effect of local language in multinationals is an area of management that has not been fully researched. However, this area is sensitive and has been affecting the operations of subsidiaries.

The potential impeding factors in the duration of this research are the limitation of time and the limitation to accessing all the detailed information from the sampled companies. Also, the sampled companies may have already used other means to adapt to local language communication. This is likely to influence the outcomes of this research. Language will also be an impeding factor in the research.

The research method used is suitable for this research. However, for every research method used, there are pros and cons. Therefore, the researcher must ensure that he or she maximize on the merits of the selected research method. Questionnaires form part of the best research tools because of the privacy aspect in them²⁸.

However, they can still be manipulated by the researcher when making entries in readiness for analysis. The interviewees will be given room to respond to the questions the way they understand them²⁹. The interpretation of questions is a notable problem. Therefore, the questions will be standardized by using a tone of language that is commonly used in marketing research³⁰.

Conclusion

This research is expected to employ qualitative research methods. Thus, a case study methodology shall be adopted to establish recommendations that will serve as a solution and a basis for future research. It will focus on the national language as a local language in countries where the subsidiary companies of multinationals are situated. A review of literature will be carried out in this research.

Probability sampling has been chosen because it will ease the selection of a proper sample in the study. I intend to undertake several pilot studies to test this proposal so as to master the challenges that will be faced and avoid them during research implementation. Since SPSS will be used in analyzing my data, I will acquire the software and learn how to use it. The research will be implemented within the set timeline so that the goals can be met.

Bibliography

Andersen, H. & E. S. Rasmussen, “The role of language skills in corporate communication”, Corporate Communications: An International Journal, vol. 9, no. 3, 2004, pp. 231 – 242.

Berger, M., “Going global: implications for communication and leadership training”, Industrial and Commercial Training, vol. 30, no. 4, 1998, pp.123-127.

Birkinshaw, J. & N. Hood, “Multinational subsidiary evolution: capability and charter change in foreign-owned subsidiary companies”, Academy of Management Review, vol. 3, no. 4, 1998, pp. 773-95.

Feely, A. J. & A. W. K. Harzing, “Language management in multinational companies”, Cross-Cultural Management: An International Journal, vol. 10, no. 2, 2003, pp. 37-52.

Firoz, N. M., A. S. Maghrabi, & K. H. Kim, “Think globally, manage culturally”, International Journal of Commerce & Management, vol. 12, no. 3/4, 2002, pp. 32-9.

Foss, N. J. & T. Pedersen, “Transferring knowledge in MNCs: the role of sources of subsidiary knowledge and organizational context”, Journal of International Management, vol. 8, 2002, pp. 49-67.

Fredriksson, R., W. Barner-Rasmussen, and R. Piekkari, “The multinational corporation as a multilingual organization: The notion of a common corporate language”, Corporate Communications: An International Journal, vol. 11, no. 4, 2006, pp. 406 – 423.

Gillham, B., Case Study Research Methods, Continuum, London, 2001.

Harzing, A. & A. Pinnington, International Human Resource Management, Sage Publications, London, 2009.

Harzing, A. & J. A. Feely, “The language barrier and its implications for HQ-subsidiary relationships”, Cross Cultural Management: An International Journal, vol. 15, no. 1, 2008, pp. 49 – 61.

Jackson, S. L., Research Methods and Statistics: A Critical Thinking Approach, Wadsworth Cengage Learning, Belmont, CA, 2012.

Mababaya, M., The Role of Multinational Companies in the Middle East: The Case of Saudia Arabia, Univ. of Westminster, London, 2002.

Maclean, D., “Beyond English: Transnational corporations and the strategic management of language in a complex multilingual business environment”, Management Decision, vol. 44, no. 10, 2006, pp. 1377 – 1390.

Marschan, R., D. Welch, and L. Welch, “Language: the forgotten factor in multinational management”, European Management Journal, vol. 15, no. 5, 1997, pp. 591-8.

Marshall, C. & G. B. Rossman, Designing Qualitative Research, 4th ed. Sage, Thousand Oaks, CA. 2006.

Paterson, S. L. & D. M. Brock, “The development of subsidiary-management research: review and theoretical analysis”, International Business Review, vol. 11, no. 2, 2002, pp. 139-63.

Peltokorpi, V., “Intercultural communication in foreign subsidiaries: The influence of expatriates’ language and cultural competencies”, Scandinavian Journal of Management, vol. 26, 2010, pp. 176-188.

Piscitello, L. & L. Rabbiosi, The impact of MNCs’ foreign activities on the innovative performance of the parent companies. 2004.

Segalla, M., L. Fischer and K. Sandner, “Making cross-cultural research relevant to European corporate integration: old problem – new approach”, European Management Journal, vol. 18, no.1, 2000, pp. 38-51.

Shay, J. P. & S. A. Baack, “Expatriate assignment, adjustment and effectiveness: An Empirical examination of the big picture”, Journal of International Business Studies, vol. 35, no. 3, 2004, pp. 216-232.

Taggart, J. H., “An evaluation of the integration-responsiveness framework: MNC manufacturing subsidiaries in the UK”, Management International Review, vol. 37, no. 4, 1997, pp. 295-318.

Thomas, D. C., ‘The expatriate experience: A critical review and synthesis’ in JL Cheng & RB Peterson (eds.), Advances in international comparative management, JAI Press, Greenwich, CT, 1998, pp. 237-273.

Thomas, J. R., K. N. Jack, and J. S. Stephen, Research Methods in Physical Activity. Human Kinetics, Champaign, IL, 2011.

Welch, C. & R. Piekkari, “Crossing language boundaries: qualitative interviewing in international business”, Management International Review, vol. 46, no. 4, 2006, pp. 417-37.

Welch, D. E., L. Welch, and R. Piekkari, “Speaking in tongues: language and international management”, International Studies of Management and Organization, vol. 35, no. 1, 2005, pp. 10-27.

Welch, D. E., L. Welch, and R. Piekkari, “The persistent impact of language on global operations”, Prometheus, vol. 19, no. 3, 2001, pp. 193-209.

Woodside, A. G., Case Study Research: Theory, Methods and Practice, Emerald, Bingley, 2010.

Yin, R., Case Study Research: Design and Methods, Sage, Thousand Oaks, CA, 2003.

Yin, R. K., Case Study Research: Design and Methods, Sage Publications, Los Angeles, Calif, 2009.

Zekiri, J. & B. Angelova, “Factors that Influence Entry Mode Choice in Foreign Markets”. European Journal of Social Sciences, vol. 22, no. 4, 2011, pp. 572-584.

Footnotes

1. M. Mababaya, The Role of Multinational Companies in the Middle East: The Case of Saudia Arabia, Univ. of Westminster, London, 2002, p. 272.
2. J. Birkinshaw & N. Hood, “Multinational subsidiary evolution: capability and charter change in foreign-owned subsidiary companies”, Academy of Management Review, vol. 3, no. 4, 1998, p. 778.
3. S. L. Paterson & D. M. Brock, “The development of subsidiary-management research: review and theoretical analysis”, International Business Review, vol. 11, no. 2, 2002, p. 145.
4. N. J. Foss & T. Pedersen, “Transferring knowledge in MNCs: the role of sources of subsidiary knowledge and organizational context”, Journal of International Management, vol. 8, 2002, p 53.
5. M. Berger, “Going global: implications for communication and leadership training”, Industrial and Commercial Training, vol. 30, no. 4, 1998, p. 125-6.
6. A. Harzing & J. A. Feely, “The language barrier and its implications for HQ-subsidiary relationships”, Cross Cultural Management: An International Journal, vol. 15, no. 1, 2008, p. 50.
7. D. E. Welch, L. Welch, and R. Piekkari, “Speaking in tongues: language and international management”, International Studies of Management and Organization, vol. 35, no. 1, 2005, p. 12.
8. A. J. Feely & A. W. K Harzing, “Language management in multinational companies”, Cross-Cultural Management: An International Journal, vol. 10, no. 2, 2003, p. 50.
9. R. Marschan, D. Welch, and L. Welch, “Language: the forgotten factor in multinational management”, European Management Journal, vol. 15, no. 5, 1997, p. 593.
10. D. E. Welch, L. Welch, and R. Piekkari, “The persistent impact of language on global operations”, Prometheus, vol. 19, no. 3, 2001, p. 197.
11. N. M. Firoz, A. S. Maghrabi, and K. H. Kim, “Think globally, manage culturally”, International Journal of Commerce & Management, vol. 12, no. 3/4, 2002, p 35.
12. L. Piscitello & L. Rabbiosi, The impact of MNCs’ foreign activities on the innovative performance of the parent companies. 2004.
13. M. Segalla, L. Fischer, and K. Sandner, “Making cross-cultural research relevant to European corporate integration: old problem – new approach”, European Management Journal, vol. 18, no.1, 2000, p. 47.
14. J. H. Taggart, “An evaluation of the integration-responsiveness framework: MNC manufacturing subsidiaries in the UK”, Management International Review, vol. 37, no. 4, 1997, p. 298.
15. V. Peltokorpi, “Intercultural communication in foreign subsidiaries: The influence of expatriates’ language and cultural competencies”, Scandinavian Journal of Management, vol. 26, 2010, p. 182.
16. H. Andersen & E. S. Rasmussen, “The role of language skills in corporate communication”, Corporate Communications: An International Journal, vol. 9, no. 3, 2004, p. 232
17. A. Harzing & A. Pinnington, International Human Resource Management, Sage Publications, London, 2009, p. 6.
18. C. Welch & R. Piekkari, “Crossing language boundaries: qualitative interviewing in international business”, Management International Review, vol. 46, no. 4, 2006, p. 432.
19. J. P. Shay & S. A. Baack, “Expatriate assignment, adjustment and effectiveness: An Empirical examination of the big picture”, Journal of International Business Studies, vol. 35, no. 3, 2004, p. 223.
20. D. C. Thomas, ‘The expatriate experience: A critical review and synthesis’ in JL Cheng & RB Peterson (eds.), Advances in international comparative management, JAI Press, Greenwich, CT, 1998, p. 237.
21. R. Fredriksson, W. Barner-Rasmussen, and R. Piekkari, “The multinational corporation as a multilingual organization: The notion of a common corporate language”, Corporate Communications: An International Journal, vol. 11, no. 4, 2006, p. 416.
22. D. Maclean, “Beyond English: Transnational corporations and the strategic management of language in a complex multilingual business environment”, Management Decision, vol. 44, no. 10, 2006, p. 1378.
23. J. Zekiri & B. Angelova, “Factors that Influence Entry Mode Choice in Foreign Markets”, European Journal of Social Sciences, vol. 22, no. 4, 2011, p. 577.
24. B. Gillham, Case Study Research Methods, Continuum, London, 2001, p. 2.
25. R. K. Yin, Case Study Research: Design and Methods, Sage Publications, Los Angeles, Calif, 2009, p. 7.
26. C. Marshall & G. B. Rossman, Designing Qualitative Research, 4th ed. Sage, Thousand Oaks, CA. 2006, p 5-9.
27. S. L. Jackson, Research Methods and Statistics: A Critical Thinking Approach, Wadsworth Cengage Learning, Belmont, CA, 2012, p. 87.
28. A. G. Woodside, Case Study Research: Theory, Methods and Practice, Emerald, Bingley, 2010, p. 225.
29. R. Yin, Case Study Research: Design and Methods, Sage, Thousand Oaks, CA, 2003, p. 3.
30. J. R. Thomas, K. N. Jack, and J. S. Stephen, Research Methods in Physical Activity. Human Kinetics, Champaign, IL, 2011, p. 300.