Effects of Language Difference on Subsidiary Performance - Essay Example

International Business Strategy Effects of language difference on subsidiary performance Introduction Multinational enterprises investment firms struggle to diversify in their field of investment in foreign countries. This is because they focus on hiring and recruiting new employees of different language backgrounds in their respective nationalities. Language can be termed or described a chosen unique system of conceptual symbols that let individuals communicate effectively. Language generally is the greatest used mediator which facilitates understanding and relation between management, employees and customers of every given business (Duarte & Suarez, 2010). A multi linguistic human resource usually gives out benefits for example a larger and wider range of perspectives. This workforce also gives a greater competitive ability generally in the market place globally. Multinational enterprises that are venturing in new economies are faced with the new language and cultures which should be overcome to ensure organisational goals and objectives are achieved (Hinds, Neeley & Cramton, 2013). Multinational enterprises can be defines as financial firms and entities that are involved in the supply of services and goods in at least two or more economies (Dikova, 2009). These corporations are large in size and they are involved in different forms and fields of business activities in different countries. Increased competition, venturing in new business form and globalization has forced most business firms alongside with their employees to interact with different nationalities. This has been caused by variation in availability of resources. Surveys show that languages play an important part in communication in multinational enterprises. A workforce with different language background may encounter language barrier if working together. This leads to misunderstanding it also suggests that language barrier causes ineffective communication or it may cause miscommunication within a company (Dikova, 2009). According to past studies, they indicate that language does not only facilitate communication. Language barrier will not affect the human resource only, it also hinders effective communication. Customers will find it hard to communicate out their need or even fail to get important information about a particular or certain services or products being offered by Multinational Corporation (Feely & Harzing, 2008). Therefore it is very important for every multinational enterprise to know the degree of effect posed by language barrier in service delivery to customers and other clients. Transfer of employees across foreign nations to work in Subsidiary Corporation implies that language barrier will be common (Duarte & Suarez, 2010). These challenges are mostly experienced in office practices hence complicating verbal and writing communications. Impact of language barrier on foreign direct investments The foreign direct investment generally concentrates majorly on how companies and business entities from other foreign countries invest in a host country. These investments can be done by partnering with existing companies (joint ventures) or starting new companies in these host countries (subsidiary companies) for the production of goods or offering services. Language barrier can simple task to be done effectively and efficient in the corporation to be very hard and tricky. Creates misunderstanding within a given company When one or more workers in a given firm face language challenge and barrier can cause misunderstanding in their respective work place (Feely & Harzing, 2003). Misunderstanding can originate from the usage of technical jargon or slang which is not familiar to another employee. In most occasions, employees may fail to understand each other because of the accent or the different way of speaking (Konara & Wei, 2014). Misunderstanding in many occasions causes frustration and stress among each employee and it will generally take time to find a resolution. Many subsidiary multinational enterprises in many instances experience the interaction between management with different language backgrounds. Most managers in multinational corporations do not want to appear ill informed, stupid or considered slow learners. Misunderstanding caused by language challenge causes loss of face (Duarte & Suarez, 2010). This is commonly experienced in China and Japan. To avoid this embarrassment and humiliation most top managers in these corporations usually pretend to be understanding even if they do not understand what is being implied. Managers end up making mistakes by signing agreements and contracts on behalf of the corporation without full knowledge of actual content. Alternatively, they can also avoid being involved in attractive agreements and contracts (Feely & Harzing, 2003). This usually affects trust and credibility of parties being involved. This causes parties to be unreliable, fickle and deceitful. Maintains and creates group boundaries Language barrier is a major facilitator of creating organisational groups and divisions. Individuals understanding each other tend to merge together and understand each other better. The failure of being able to speak native language blocks employees from being able to express their personality fully and formation of relationship with fellow employees (Dikova, 2009). Workers generally in foreign countries fell isolated from the rest of other employees in case of a joint venture. Language challenge causes discrimination and isolation of different groups (Feely & Harzing, 2008) within a working environment (Duarte & Suarez, 2013). Employees in foreign countries may start forming up unions that share the same language and may start isolating themselves from the rest of the group. This will also hinder professional development as employees are unwilling to communicate and share out ideas hence affecting the corporation at large on its performance (Feely & Harzing, 2003). Affects the growth of employees A language barrier generally restricts the ability of foreign workers to learn from the new environment. This is caused by the absence of ability and comprehension to communicate within a corporation (Duarte & Suarez, 2013). Employees may fail to take instructions effectively from the supervisors due to language being used. This will reduce greatly the capability of employees to understand simple instructions. It will waste a lot of time for both parties to understand each other (Feely & Harzing, 2008). Distorted information A language barrier causes or blocks effective flowage of information in a corporation. Two groups of employees that communicate in different language may have a significant way of solving the same issue (Dikova, 2009). But because of difference in explanation they may differ in bringing out the idea. All the parties will have missed out on the new idea from each party. It is very hard for two employees who speak in different languages to share ideas and learn from each other (Welch, Welch & Piekkari, 200). Causes stress and frustration among new employees Language barriers can cause a lot of stress and frustration for both parties of employees in communication (Feely & Harzing, 2003). An employee will feel shameful, sad and inadequate if he is not able to understand and share out his ideas. Individuals who are unable to understand or speak a native language may develop stress and frustration when in case the miss out on important business opportunities, makes some embarrassing mistakes (Welch, Welch & Piekkari, 200), negative attitude and serious consequences on his fellow employees. An employee who communicates only in a native language may be disturbed at a fellow employee for not understanding his idea in as he is putting it in his language (Duarte & Suarez, 2010). All the stress, frustration and disturbance can constitute to hostility, resentment and avoidance among the work force. This will affect the multi corporation operation negatively. Areas affected with language barrier in multinational corporations Customer service Most multinational enterprises are faced with the challenge of effective customer service delivery when opening up subsidiary companies in foreign countries (Davis, Desai & Francis, 2000). Corporations invest in language training to improve skills in the native language to improve customer service. This is done by engaging itself in perfecting the preferred language in the region of investment (Feely & Harzing, 2003). Company language training will definitely aid firms deliver positive, effective and consistent experiences hence establishing profitable, loyal customer base. This will help a firm to improve its performance. Market expansion One of the biggest business disadvantages of a given human resource that cannot effectively communicate in more than one language (Harzing, Köster & Magner, 2011) is the inability to find new market both locally and internationally. Employing skilled and experienced talent is somehow difficult for many multinational enterprises; there addition of a foreign language as a requirement will increase the degree of difficulty in the recruitment process (Feely & Harzing, 2008). Therefore the corporation is left with the challenge of training its workforce with language skills in order to facilitate expansion of the business. Human resource development Language training in a multinational enterprise will greatly aid workers engagement and involvement performance (Duarte & Suarez, 2013) by offering them with a lot of opportunities for both professional and personal development. Furthermore it equips employees to acquire necessary language skills to compete successful in the global economy at large (Duarte & Suarez, 2010). Training of existing employees increases morale and loyalty to the corporation. Workplace safety Language barrier causes miscommunication and misunderstanding. This leads to unnecessary loss of revenues, opportunities and sometimes life. This is experienced in corporations involved in manufacturing, construction and oil or gas exploration (Konara & Wei, 2014). Therefore multinational firms’ faces a huge challenge when investing in new economies as some instances caused by language barrier causes closure of the company in the foreign economy. Productivity and collaboration Since Multinational enterprises are large firms, they employ thousands of employees with different language backgrounds (Harzing, Köster & Magner, 2011). To facilitate sharing of ideas, Innovations, insights and other practices within the corporation easily. It is a fundamental idea for all corporations to undertake training program for it to attain operational excellence. Language management in multinational corporations Multinational corporations (subsidiary companies) have a wider base of resources. This ensures large field operations (Hinds, Neeley & Cramton, 2013). Subsidiary companies have various techniques for managing international communication. The following are some of the ways in which subsidiary corporations try to manage the effects of language barrier: Language Training Most subsidiary companies organize language training programs for its foreign employees in respective host countries (Davis, Desai & Francis, 2000). In joint venture enterprises, the company has a choice to choose whether to train new employees or leave them to interact with existing employees. Through these programs the company is able to overcome the challenge posed by language difference. Creation of an intra-company language department Multinational Corporation may come up with a department within a company concerned with language service (Feely & Harzing, 2008). These although is a least mode adopted by these firms. This is majorly practised by Multinational Corporation that is taking more than five years in a foreign country (Duarte & Suarez, 2010). This method is inappropriate for corporation with short term foreign direct investment. Hiring of an external interpreter and translator Multinational corporations faced with language barriers in foreign nations may appoint an external translator or interpreter (Harzing, Köster & Magner, 2011). This is phenomenal when a company is engaged in more sales activities. It is more used in corporations with a short term investment plans in foreign countries (Luo & Shenkar, 2006). Employing language skilled workers Multinational corporations usually engage in selective recruitment. This involves giving opportunities and vacancies to employees with require linguistic and operational skills that are needed to meet the specific enterprise need (Konara & Wei, 2014). This policy is recommended for long term investments in host countries. It will cut down costs used in training the staff in foreign country. In and expatriation Multinational companies with subsidiaries in foreign countries mostly get involved in a way of capacity building through policies of work placements. This happens in the home country for employees from foreign subsidiaries (Duarte & Suarez, 2013). This is more applicable in joint ventures. These sessions of inpatriation usually strengthens corporate cohesions as well as opening informal networking channels hence allowing a room for talent spotting (Feely & Harzing, 2003). On the other hand, expatriation is where a multinational enterprise locates workforce from the company regional offices in a subsidiary company. This is a popular practice as a mean of ensuring that firm’s values are originally embedded in a new development (Harzing, Köster & Magner, 2011). Inter language training for the internal human resource Multinational enterprises usually train their human resource regularly and often in inter language skills. This involves the company preparing some for a specific employee or section employees about a specific language (Davis, Desai & Francis, 2000). This is for the purpose that they are going to work in a specific country. For example a subsidiary firm may wish to invest in Japan; therefore it trains employees going to work in Japan the Japanese language. The main objective of such training is to create the extent to which multinational enterprise may use training in enhancing cohesion across linguistically wide global human resource (Konara & Wei, 2014). Use of internet based tools and machine translation Some multinational enterprises will offer material to their employees faced with language challenge to solve their problems (Feely & Harzing, 2003). This method is not widely used by firms. Since if the materials if not used properly may lead to different misinterpretation. Use of language ‘buddies’ A multinational joint venture enterprise may choose to use the native employees to help new foreign employees (Hinds, Neeley & Cramton, 2013) and those that are faced with the challenge with language understanding. Through interaction between employees are able to understand each other well (Konara & Wei, 2014). This also enhances teamwork and applies in situation where employees are working in a foreign country over a long period of time. Effect of language barrier between subsidiary companies and joint venture with local partner The current global competition being experienced is causing more and more multinational enterprises to venture outside their countries and become more international as they seek to obtain company’s objective (Davis, Desai & Francis, 2000). Many multinational corporations originating from developed economies seek to enlarge and broaden their business activities to the developing markets for example in countries like Brazil, Russia and Japan. It therefore requires that every multination enterprise that will survive are those with a workforce who communicate and collaborate effectively with suppliers, customers, partners and communication is a fundamental element in enabling of international trade, development and corporate efficiency (Harzing, Köster & Magner, 2011). Language is being an obstacle to development of business in internationally. This is evidenced in firms that are venturing in multinational business for the first time and in a native economy. The following are the effects faced by subsidiary firms and joint ventures when they approach partners and other stakeholders. Workplace language of communication barrier Language adopted by a multinational corporation is largely influenced by the unique world views of their indigenous language of specific countries venturing into (Davis, Desai & Francis, 2000). Therefore, this means that the language used by a certain corporation may contain phrases or words that got different meaning hence influencing the message being sent to stakeholders in the host country (Luo & Shenkar, 2006). In joint venture, employees may have the opportunity to interact with the native employers and adapt quickly on the language to be used appropriately (Gaur & Lu, 2007). In case of a fully owned subsidiary corporation, this may take a longer time for them to adapt to the usage of the appropriate language. International business language of communication barrier Few years ago, it was the responsibility of the management of a multi corporation to formulate their own style of communicating language with their suppliers, business partners and customers both locally and internationally (Feely & Harzing, 2008). This has changed over time; managers are required to study the type of business language being used in a particular region (Duarte & Suarez, 2013). In this case, the managers should study the business language being used in the host or foreign economy. Focusing on joint venture Corporation, it will be easy since the existing company that had merged had already been used to the host business language, hence it will (Welch, Welch & Piekkari, 2000) not require little research (Davis, Desai & Francis, 2000). This will cut down unnecessary costs and will reduce time used in the study of the language. In fully owned subsidiary company that will be established in a foreign economy will take time since it has to train employees, make necessary research and study about the language used in the host country. Therefore it will take a long time for the company to establish itself (Hinds, Neeley & Cramton, 2013). The costs will be also be high and even getting the required human resource will be difficult. Conclusion Language is a very important to multinational corporations because it used as a medium to transmit relevant information, thoughts and ideas (Konara & Wei, 2014). Knowledge and understanding of a native language can allow a clearer understanding of a situation and offers access to the host country. Knowledge of a new language or a native language of a host country by an employ will facilitate picking up nuances (Dikova, 2009), implied correct meaning and other relevant information that has not been stated outright. Language usually comprises of both spoken and unspoken way of communication. Human resource diversity in terms of linguistic difference will lead to complication to communication in the process internatiolization (Harzing, Köster & Magner, 2011). In summary language diversity and barrier comes up a major issue to tackle when choosing the type of foreign investment to undertake. 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