communication 4

LANGUAGE POLICIES AND COMMUNICATION IN

MULTINATIONAL COMPANIES

Alignment With Strategic Orientation and Human Resource Management Practices

Floor van den BornVesa Peltokorpi

HEC School of Management, Paris, France

This article focuses on the degree of alignment among multinational company (MNC) strategic ori-entation, human resource management (HRM) practices, and language policies. On the one hand, the authors propose that the coherent, tight alignment among the HRM practices, language policies, and MNC strategic orientation, in terms of ethnocentricity, polycentricity, or geocentricity, is beneficial. On the other hand, they use international business research on language in MNCs to illustrate that what is good in theory is often more difficult in practice. For example, HRM practices and language policies in foreign subsidiaries may not be tightly aligned with the corporate-level activities, and some hybridization tends to occur, for example, because of contextual reasons in host countries.

Keywords: communication; human resource management; strategy; language policy; social identity theory

As companies expand internationally and their foreign operations become more dispersed, language differences begin to influence interunit and intraunit communication (Louhiala-Salminen, 1997; Rogerson-Revell, 2007, 2008). To reduce the negative effects of language diversity, multi-national companies (MNCs) have formulated language policies, that is,

Floor van den Born is a PhD candidate at HEC School of Management, Paris, France. Vesa Peltokorpi is an assistant professor of human resource management at HEC School of Management, Paris, France. His research interests include intercultural communication and cross-cultural adjustment.

An earlier version of this article was presented at the Academy of Management, August 7-11, 2009. Correspondence concerning this article should be addressed to Floor van den Born, Department of Management and Human Resources, HEC School of Management, 1, Rue de la Libération, Paris 78351, France; e-mail: [email protected].

Journal of Business Communication, Volume 47, Number 2, April 2010 97-118 DOI: 10.1177/0021943610364515© 2010 by the Association for Business Communication

98 JOURNAL OF BUSINESS COMMUNICATION

formal ways to decide which language is used in corporate communica-tion and documentation (Marschan-Piekkari, Welch, & Welch, 1999a). To maximize their effectiveness, language policies should be aligned with the MNC strategy (Luo & Shenkar, 2006; Marschan, Welch, & Welch, 1997). For example, to balance the benefits of local responsiveness and global integration (see Bartlett & Ghoshal, 1989), scholars have argued that MNCs should use a common corporate language for internal communica-tion and local language(s) in host country market(s) (Luo & Shenkar, 2006). This strategy, requiring a substantial portion of employees to be bilingual, is reflected in human resource management (HRM) practices.

In this article, we discuss the degree of alignment among MNC strate-gic orientations, HRM practices, and language policies. The focus here is on headquarters and wholly-owned foreign subsidiaries. We start by pro-posing that language policies in MNCs should be aligned with HRM practices and strategic orientations for control, coordination, and commu-nication purposes in terms of ethnocentricity (i.e., home country orienta-tion), polycentricity (i.e., host country orientation), or geocentricity (i.e., international orientation; Tayeb, 1998; Taylor, Beechler, & Napier, 1996). On the other hand, we draw from the research on language and HRM in MNCs to demonstrate that what is good in theory is often more difficult in practice. For example, HRM practices and language policies in foreign subsidiaries may not be tightly aligned with the MNC strategies, and some hybridization tends to occur because of contextual reasons in host coun-tries (e.g., lack of linguistically competent employees in the local labor markets and/or language-based social identification; Rosenzweig & Nohria, 1994; Tayeb, 1998).

This article contributes to the international HRM, international business, and international business communication literature in several ways. First, connecting HRM literature with international business research on lan-guage, we increase understanding in the consequences of language diversity for international business communication. Despite the existing arguments that language should be part of MNC strategy (Luo & Shenkar, 2006; Marschan et al., 1997), the importance of linking language policies with HRM practices has not yet been sufficiently emphasized. In contrast to the few existing studies considering the implications of international HRM on language diversity in MNCs (e.g., Marschan-Piekkari et al., 1999a), we tie language diversity to different MNC strategic orientations and critically discuss drawbacks of each. In addition, we not only propose ways in which language could become part of flexible HRM practices, but we also con-sider how an integrated and flexible approach contributes to lowering inter-group boundaries, which are detrimental for intergroup communication.

van den Born, Peltokorpi / LANGUAGE POLICIES AND COMMUNICATION 99

The rest of this article is structured as follows. The following section reviews the literature on language in international business and HRM practices. The second section discusses the implications of recruitment and selection practices for intergroup communication (i.e., members of differ-ent language groups communicating over language boundaries). The third section treats the influence of training and development for local employ-ees and expatriates. The way performance appraisals affect intergroup com-munication is discussed in the fourth section. The fifth section comprises the discussion, and the sixth section discusses implications, limitations, and provides suggestions for future research.

LANGUAGE POLICIES, STRATEGIES, AND HRM IN MNCs

Language, as the generally agreed-on, learned symbol system, used to represent the experiences within a geographic or cultural community (Samovar, Porter, & Jain, 1981), acts as a carrier of cultural values (Agar, 1994). Employees in MNCs consequently interact and make interpreta-tions within their cultural and linguistic context (Von Glinow, Shapiro, & Brett, 2004). Employees also differ in terms of their native languages and proficiency in the official corporate language, often English. For example, 60 percent of Citygroup’s employees worldwide do not speak English [as their native language], challenging the dissemination of headquarter direc-tives, the communication of local concerns, and value creation across subsidiary boundaries (Luo & Shenkar, 2006, p. 321). To reduce the nega-tive effects of language diversity and provide a common ground for corpo-rate communication, MNCs have formulated language policies (Marschan-Piekkari et al., 1999a). A common corporate language has been argued to facilitate coordination, interunit learning and value creation (Luo & Shenkar, 2006), formal reporting and access to documents, and reducing the need for translations and potential for miscommunication (Fredriksson, Barner-Rasmussen, & Piekkari, 2006; Marschan-Piekkari et al., 1999a).

According to Luo and Shenkar (2006), language policies at the subsid-iary level are based on three scenarios. First, the official language is the par-ent’s language, such as the Japan-based Panasonic’s subsidiary in the United States, which uses Japanese. Second, the official language is the local lan-guage, such as with the German-based Siemens’ subsidiary in the United States, which uses English. Third, the official language is a third language. For example, a Mexican subsidiary of Airbus, headquartered in France, uses English. At the corporate level, the official corporate language may or may not be the home country language. For example, several MNCs


from small non-English-speaking European countries, such as Electrolux, Nokia, and Phillips, use English as their corporate language. In addition, a study conducted at Siemens shows that MNCs may use two or more lan-guages in internal communication and leave the issue of formal corporate language ambiguous to avoid negative reactions from dominant language groups (Fredriksson et al., 2006). At Siemens, English and German are used for internal communication. Although the parent language is often chosen as the unifying language at the corporate and subsidiary levels, research shows that a low proficiency in the corporate language in subsidiaries hinders intraunit communication within corporate units and interunit com-munication among corporate units (see Piekkari, 2006). The usage of local languages in foreign subsidiaries can also be important, for example, for customer relations and to recruit functionally competent employees.

Language, as the generally agreed-on learned symbol system, used to repre-sent the experiences within a geo-graphic or cultural community, acts as a carrier of cultural values.

How can MNCs solve the language-related problems and facilitate inter-unit and intraunit communication? To manage the tension between global integration and local adaptation (Bartlett & Ghoshal, 1989), we start by proposing that official language policies should be aligned with HRM prac-tices and strategic orientations in terms of ethnocentricity, polycentricity, or geocentricity. First, emphasizing global integration through common HRM practices and corporate language, ethnocentric MNCs seek to extend best practices to foreign subsidiaries through home country expatriates (Perlmutter, 1969). Formal language policies are reinforced for control, coordination, and communication purposes. Ethnocentric policies tend to be found in cultures that are concerned with value homogeneity rather than foreign language proficiency (e.g., in Japan and France; Luo & Shenkar, 2006). This explains why Japanese MNCs often use Japanese as informal and formal language at the managerial level throughout globally dispersed subsidiaries despite the scarcity of locals fluent in the language. In con-trast, polycentric MNCs emphasize local adaptation and have differentiated practices that reflect the local subsidiary environment with limited control from the headquarters. Although the managerial-level employees need to


be competent in the corporate language for reporting and interunit com-munication, local languages are often used in subsidiaries. Finally, geocen-tric MNCs embrace both the local and the global context to transfuse local and parent HRM practices. Geocentric recruitment policies articulate the search for managers from a global pool of workers (Perlmutter, 1969). Such an approach amplifies the importance of an international business lingua franca and demands for language competences of managers.

The research on language in MNCs, however, suggests that various context-specific reasons challenge the applicability and feasibility of the MNC strategic orientation, HRM practice, and language policy alignment (Marschan-Piekkari et al., 1999a; Peltokorpi, 2007, 2008b). For example, a study on intercultural communication patterns and strategies in Japan indicates that small foreign subsidiaries face challenges to recruit linguis-tically competent Japanese employees (Peltokorpi, 2007). Recruiting managers were also not able or willing to take into account language policies when hiring Japanese employees because of the possible mis-alignment of language and functional skills. In addition, Japanese manag-ers are found to pay little attention to official language policies when hiring employees from the local labor market (Peltokorpi, 2008b). In some countries, the legalistic environment prohibits MNCs to disseminate information in the corporate language. For example, a U.S. Fortune 10 MNC was fined about US$ 800,000 for issuing English-language HR and benefits documents to subsidiary employees in France (Dowling, 2009). Because of various context-specific reasons, MNCs are found to hybridize their HRM activities (i.e., simultaneously to standardize and localize) to cope with the local and global pressures (Tayeb, 1998). For example, an MNC may apply an ethnocentric HRM approach to one subsidiary and a polycentric one to others. This may explain why a study in a Finnish MNC, Kone Elevators, shows that intraunit and interunit communication was hindered by varying native languages and a lack of competence in the corporate language, English (Marschan-Piekkari, Welch, & Welch, 1999b).

In addition to the difficulties in intraunit and interunit communication cre-ated by the lack of a common language, social identity theory (Tajfel & Turner, 1979) helps explain why language diversity may separate people into groups based on a shared language, giving rise to language boundaries. Social identities are derived from in-group membership. In-group bias may occur through the emphasis of positive self-images in reference to out-groups. Consequently, in-group members may enjoy high levels of trust, interaction, support, and rewards amongst each other, whereas out-group members are met with negative attitudes and negative emotions (Lauring, 2008). Although


visible (e.g., gender) and underlying diversity (e.g., values) can influence social categorization, there are social identity theory–based arguments in sociolinguistics that argue that language is a more important and powerful marker of an individual’s identity than age, gender, and race (e.g., Giles & Johnson, 1981). As a consequence of language and cultural diversity, local employees able to speak the company language may not be willing to speak with expatriates in foreign subsidiaries (Von Glinow et al., 2004).

Research shows that a low proficiency in the corporate language in subsidiar-ies hinders intraunit communication within corporate units and interunit communication among corporate units.

Integrating the above literature, we use the global standardization and local adaptation paradigm to illustrate that both alignment between HRM practices and language policies to maintain internal coherence and flexi-bility to cope with local communicative environments are needed. We propose that flexible language policies aligned with HRM practices can help in reducing some of the negative effects of language diversity. For example, on the one hand, ethnocentric language policies and HRM prac-tices enable MNCs to facilitate internal consistency and communication flows. On the other hand, for language policies and HRM practices to cor-respond to the host country context, those policies and practices need to be flexible and hybrid. Foreign subsidiaries may have to make compromises because of the high cost of recruiting linguistically competent people in the local labor markets or training linguistically incompetent local employees.

RECRUITMENT AND SELECTION

Recruitment and selection of employees is of strategic importance, because hiring a qualified work force is a key source of competitive advantage (Som, 2006). Recruitment policies are partially formulated at the head-quarters to maintain internal consistency, but local adaptation is needed to facilitate communication with the host environment and within foreign subsidiaries.


Ethnocentric Recruitment and Selection Policies

Ethnocentric recruitment and selection policies seek to ensure internal consistency in the global MNC network (Perlmutter, 1969). As ethnocen-tric policies also aim to strengthen coordination, control, and interunit communication (Ghoshal, Korine, & Szulanski, 1994), local employees are expatriated to occupy senior positions in foreign subsidiaries (Boyacigiller, 1990). When home country expatriates dominate subsidiary management, pressure builds toward using the company language also in intraunit communication. For example, Japanese subsidiaries in Western countries are frequently managed by Japanese personnel, particularly in the initial establishment phase (Martinez & Jarillo, 1989). Those expatriate managers are reported often to have low foreign language proficiency (Wright, Kumagai, & Bonney, 2001). The parent language increases global integration (Luo & Shenkar, 2006) and plays a significant role in the stimu-lation of a corporate culture within foreign subsidiaries (Nickerson, 1998).

However, an extensive reliance on home country expatriates and the reinforcement of the parent language in foreign subsidiaries may nega-tively affect intraunit relationships. Ethnocentric recruitment and language policies are expected to have a negative impact on the local employee-expatriate relations, particularly when language skills are unaligned. For example, only a few home country expatriates were found to be proficient in the host country language in Nordic subsidiaries in Japan, making it more challenging for the expatriates to communicate with local employees and to implement headquarters’ directives in subsidiaries (Peltokorpi, 2006, 2007). Inadequate host country language skills and possible catego-rization of expatriates as out-group members can make much information inaccessible to them and foster feelings of rejection and psychological distress, leaving them without a sense of control over their situation (Harzing & Feely, 2008). As for local employees, exclusion from commu-nication due to imposed language bound can cause a desire for interper-sonal dissociation (Hogg & Abrams, 1988) proving language as a power wielding instrument (Charles, 2007).

Localization is one way to reduce language barriers in a low-competency linguistic environment. Whereas at the France-based L’Oréal the parent lan-guage (French) is used in expatriate-local employee communication in labo-ratories in China, in Japan localization led to the adoption of Japanese. Another way is to address language competences in recruitment policies for local emp loyees and expatriates. Peltokorpi (2007) observes that expatriate presidents incompetent in the local language in Nordic subsidiaries in Japan


emphasize English language skills in recruiting local employees. Alternatively, language proficiency can be addressed in expatriate recruitment and selec-tion. For example, a recent study of 136 MNCs located in Germany, the United States, Japan, and the United Kingdom shows that language compe-tences are considered an increasingly important issue in expatriate recruit-ment for international assignments (Tungli & Peiperl, 2009). The simultaneous increase of local employees’ proficiency in the corporate language and expa-triates’ proficiency in the host country language not only increases language fluency in two languages, but mutual appreciation for the effort in ameliorat-ing language skills is likely to reduce intergroup boundaries.

Proposition 1a: Ethnocentric MNCs should place high importance on pro-ficiency in the corporate language in foreign subsidiaries. However, foreign subsidiaries should increase localization and use a business lin-gua franca when language competences between expatriates and stake-holders in the local environment are unaligned.

Proposition 1b: To decrease unfavorable effects of ethnocentric recruitment policies on communication between local employees and expatriates, corporate language competences should be considered in recruitment of local employees, whereas host country language competence should be considered in recruitment of expatriates.

Polycentric Recruitment and Selection Policies

Polycentric MNCs emphasize the strategic importance of embedded-ness within host country environments (Andersson, Fosgren, & Holm, 2001). Recruitment of competent local employees is considered to be important partly because they are knowledgeable about local markets and government policies. In a polycentric approach, local employees are recruited to manage local operations, and only a minimal number of home country expatriates are present at foreign subsidiaries (Harvey, Speier, & Novecevic, 2001). When local control is considered important, the rele-vance of using local languages for communication in subsidiaries increases as it benefits local adaptation and legitimacy in the various local environ-ments in which it operates (Luo & Shenkar, 2006). This facilitates recruit-ment because focus can be more on functional rather than language competences. In addition to these internal reasons, the use of host country languages at the subsidiary is proposed to help an MNC establish legiti-macy in the various local environments in which it operates (Luo & Shenkar, 2006), for example, vis-à-vis customers (Feely, 2003).

Despite those benefits, the polycentric approach also has some drawbacks. First, the usage of local managers may cause interunit


communication barriers to increase. For example, a study shows that the overstaffing of local managers in foreign subsidiaries in Japan leads to isolation of those subsidiaries because those managers spoke little English (Boyacigiller, 1990). Deeply embedded subsidiary managers may further be overfocused on local operations and resist implementation of globally defined practices in subsidiaries (Ferner et al., 2004). Especially when headquarter and subsidiary interests divert, interunit communication becomes disrupted (Szulanski, 1996). Thus, polycentric recruitment prac-tices can create intergroup boundaries and language clusters at the inter-unit level (Marschan-Piekkari et al., 1999b; Zander, 2005). One of the main challenges with polycentric recruitment policies is, therefore, the management of interunit boundaries impeding communication flows throughout the MNC.

To cope with the interunit communication problems created by a lack of a common language, MNCs are shown to increase centralization of HRM practices (Björkman & Piekkari, 2009). The transfer of home coun-try expatriates to foreign subsidiaries is another way to facilitate interunit communication (Barner-Rasmussen & Björkman, 2005; Edström & Galbraith, 1977). For example, in attempts to reverse negative effects of localization in Japan, foreign MNCs are found to use expatriates to report to the headquarters (Boyacigiller, 1990). However, as discussed above, the usage of home country expatriates can generate problems of its own. An additional challenge for home country expatriate managers of polycentric MNCs is to span language boundaries in order to stimulate interunit com-munication. MNCs may insist using of a common corporate language (often English) for internal communication (Marschan-Piekkari et al., 1999a). English is often considered as a logical choice for business com-munication in international settings because of the dominance of the United States in the world economy and in international education (Charles & Marschan-Piekkari, 2002; Nickerson, 2005; Rogerson-Revell, 2007). Considering language competences in recruitment may enhance interunit communication flows.

Proposition 2a: Polycentric MNCs are expected to emphasize the impor-tance of communication in local languages in foreign subsidiaries. However, foreign subsidiaries should centralize HRM practices while using a business lingua franca when communication problems arise between business units and interunit relationships weaken.

Proposition 2b: To decrease unfavorable effects of polycentric recruitment policies on interunit communication, corporate language competences should be considered in recruitment of local employees and expatriates.


Geocentric Recruitment and Selection Policies

Adopting elements of global integration and localization, geocentric MNCs seek to generate both global coherence and local responsiveness. In contrast to ethnocentric HRM policies that assigns home country nationals to management positions, a geocentric HRM policy staffs man-agement positions at headquarters and subsidiaries from a global pool of workers, regardless of the color of the passport (Perlmutter, 1969). A geo-centric approach includes the usage of third country nationals (i.e., man-agers from neither the parent nor the host country) in foreign subsidiaries because they may be more familiar with the local language and less expen-sive than home country expatriates (Tungli & Peiperl, 2009). In addition, inpatriation (i.e., host and third country employees who are transferred to the headquarters on a semipermanent to permanent basis) is used to facilitate information flows in the MNC network (Harvey & Buckley, 1997). An international lingua franca consequently fits best to the geocen-tric approach in a “truly” international firm. Because of the functional and language competence-based staffing, the geocentric approach is proposed to be the most efficient one to avoid intergroup communication problems in MNCs (Toh & DeNisi, 2003).

However, the extensive application of a lingua franca throughout the MNC may create concerns at both the intraunit and interunit level. Despite its widespread usage in international business communication, English is identified to be far from being “neutral” or “culture-less” (e.g., Charles, 2007; Henderson, 2005; Kankaanranta & Louhiala-Salminen, 2007; Rogerson-Revell, 2007, 2008). First, communication difficulties stemming from a lingua franca are caused by limited language skills (Charles & Marschan-Piekkari, 2002). For example, Mexican subsidiary personnel of Kone Elevators were found to face difficulties understanding corporate communication (Marschan-Piekkari et al., 1999b). The employees therefore communicated with those they could instead of should (Charles, 2006). Second, communi-cation problems are caused because of the difficulty of understanding differ-ent types of English used by nonnative speakers or poor translation of written material (Charles & Marschan-Piekkari, 2002). For example, a middle-level manager at Kone Elevators reports that it is sometimes difficult to know whether the Finnish staff really understands the local Singaporean English and whether the Singaporean employees understand the Finnish-English (Charles & Marschan-Piekkari, 2002). Unequal distribution of language skills across linguistic boundaries tends to increase language-based inter-group boundaries (Lauring, 2008; Marschan-Piekkari et al., 1999b).


To reduce some of these difficulties caused by an extensive use of a lingua franca, geocentric MNCs may choose to include different languages for formal communication. While one audible, visible “surface” language could be used to facilitate communicative exchanges, employees usually continue to use local languages (e.g., Henderson, 2005; Peltokorpi, 2007, in press). Enabling employees to use their local languages confirms their memberships within language communities but decreases the need to defend intergroup boundaries and decreases uncertainty. Acknowledging the presence of different languages allows those individuals who speak different languages to move between different communication zones (e.g., Babcock & Du-Babcock, 2001; Du-Babcock & Babcock 1996, 2007).

Proposition 3a: Geocentric MNCs are expected to emphasize the impor-tance to communicating in a lingua franca in foreign subsidiaries. However, foreign subsidiaries should localize and increase the use of local languages when communication in the lingua franca causes com-munication problems.

Proposition 3b: To decrease unfavorable effects of geocentric recruitment policies on communication at intra- and interunit levels, the use of dif-ferent languages should be considered besides the lingua franca.

TRAINING AND DEVELOPMENT

In addition to considering language skills in recruitment and selection, communication across linguistic boundaries can be enhanced by language training for both local employees and expatriates in MNCs (e.g., Barner-Rasmussen & Björkman, 2007; Charles & Marschan-Piekkari, 2002). Our discussion on the importance of language training for local employees and expatriates is founded on the observation that unequal language compe-tences lead to increased in-group and out-group categorization.

Language Training for Local Employees

For local employees, proficiency in the corporate language is often a pre-condition for promotion to managerial positions in foreign subsidiaries because of increased interactions with expatriates, headquarters, and other foreign sub-sidiaries (Fredriksson et al., 2006; Marschan-Piekkari et al., 1999a; Peltokorpi, 2008a). Promotion tends to include spending time at the corporate head-quarters, which makes parent language ability indispensable for those local employees envisioning career development, especially in ethnocentric firms.


From a social identity perspective, local employees with relevant lan-guage skills play an important role in bridging intergroup boundaries. They often function as brokers between their in-group and expatriates, who are dependent on those intermediaries to reach out to local employees (Du-Babcock & Babcock, 1996, 2007). The possession of relevant language skills can be an important source of informal power for local employees (Peltokorpi, 2007; San Antonio, 1987). In some cases, such power can be delivered to employees whose formal status would not allow them to have access to confidential or strategic company information (Du-Babcock & Babcock, 1996). Those few linguistically competent employees may receive visibility and increase their opportunities for promotion (San Antonio, 1987). Conversely, local employees who lack language skills can become excluded from formal communication and feel isolated within the subsid-iary. Within ethnocentric MNCs, decreased chances to develop international careers for local employees may limit a sense of urgency in increasing lan-guage skills. We suspect that this may lower local employees’ motivation to engage in or finish language courses and increase language skills, which negatively affects intergroup communication.

Recognizing the importance of corporate language proficiency in engen-dering network integration and central control, ethnocentric MNCs often provide language courses for local employees in the corporate language. When using a business lingua franca is considered to lower intergroup boundaries, language courses should become available. However, lan-guage training provided either at the headquarters or at the subsidiary may not be equally accessible for all employees. Despite the fact that particularly lower level employees may be influenced by communication in a second language (Marschan-Piekkari et al., 1999b), language training is often available from managerial level upwards.

Proposition 4: When ethnocentric MNCs emphasize MNC integration, language training for local employees should be of high strategic impor-tance. However, limited access to language training and reduced possi-bilities of local employees to develop international careers could delimit the perceived importance of attending and finalizing language courses.

The possession of relevant language skills can be an important source of informal power for local employees.


To polycentric MNCs who emphasize assimilation of their foreign sub-sidiaries in local environments, language training is likely to be of less importance than to ethnocentric MNCs. According to this localization approach, training needs of different workforces vary depending on local conditions and thus should be localized (Rosenzweig & Nohria, 1994). Extensive localization, however, may cause subsidiaries to become iso-lated from the MNC network (Boyacigiller, 1990). The social identity theory further suggests that language-based intergroup boundaries will be situated at the interunit level (Harzing & Feely, 2006), decreasing organi-zational identity, knowledge transfer, control, coordination, and communi-cation in MNCs.

Language training can be an important factor in lowering interunit lan-guage boundaries if it is made available in different languages to local employees in all units. HRM policies should thus encourage participation in language courses, organized at subsidiaries or in professional training centers. In addition, local employees’ participation in training programs organized at the headquarters intensifies interunit communication as staff gets the opportunity to meet face-to-face (Barner-Rasmussen & Björkman, 2005). When functional training programs organized at the parent company are important to local employees, language training should be encouraged to make those programs accessible to local employees.

Proposition 5: When polycentric MNCs emphasize assimilation in the host local environment, language training is expected to be of less strategic importance to local employees. However, local employee language training should be emphasized in HRM policies and practices to increase access to corporate-wide training programs and lower interunit commu-nication barriers.

For geocentric MNCs embracing employee diversity, language training programs for local employees should be both important and widely provided. A wider flow of employees between regions and parent country increases the demands for multiple language competence as communication can take place in the host, parent, or third country language. In contrast to ethnocentric and polycentric MNCs, local employees may regard training in diverse languages as necessary as the linguistic diversity can be considerable, both at the foreign subsidiaries as well as the headquarters. Motivation to complete language courses lies partly in international career development opportunities.

Proposition 6: When geocentric MNCs emphasize the international character of the firm, language training is expected to be of high strategic importance to local employees, and should be available in parent, corporate, and host country languages.


Language Training for Expatriates

Ethnocentric MNCs emphasize inter-unit over intra-unit communica-tion because it enables home country nationals to be expatriated to coun-tries where they do not speak the local language. Because of the importance of corporate language skills in formal policies, local employ-ees are frequently expected to possess sufficient language competences to interact with expatriates. However, studies show that such language com-petences may not exist, especially in countries with low general second language proficiency (e.g., Marschan-Piekkari, 1999b; Peltokorpi, 2007). Expatriates who use intermediaries to communicate in foreign subsidiar-ies may experience isolation and exclusion from local employees (e.g., Du-Babcock & Babcock, 2007; Harzing & Feely, 2008). Lower-quality relationships and decreased understanding of organizational occurrences may be experienced as frustrating. The use of intermediaries for transla-tion may lead to feelings of dependence and lack of information.

To reverse this tendency, MNCs are shown to make language training increasingly available to expatriates (Tungli & Peiperl, 2009). This is important because host country language skills positively influence cross-cultural adjustment of expatriates (Peltokorpi, 2008a; Selmer, 2006), dec-rease isolation of expatriates in foreign subsidiaries (Park, Hwang, & Harrison, 1996), and increase the quality of interpersonal relationships and communication. Expatriates who acquire the local subsidiary language will improve understanding of local occurrences. Those expatriates are able to direct information flows with a minimum loss of information because they have contextual knowledge of local practices and routines (Von Glinow et al., 2004). Ultimately, MNC integration is enhanced because expatriates themselves can collect local knowledge available at the intraunit level and strengthen ties within subsidiaries, lowering intergroup boundaries.

Proposition 7: When ethnocentric MNCs emphasize integration, host county language training is expected to be of less strategic importance to expatriates than corporate language training to local employees. However, host country language training for expatriates should be emphasized to decrease intraunit communication boundaries.

When expatriation is considered in polycentric MNCs, knowledge of the local environment and language is important and can be considered as part of predeparture training. Prior knowledge and predeparture training are important in facilitating expatriation (Selmer, Torbiörn, & de Leon, 1998).


Expatriates with limited host country language skills are dependent on the use of a business lingua franca for interactions with customers and local stakeholders. Direct communication with outsiders is only possible if expatriates possess sufficient language skills of the common second language of the country in question and when local stakeholders’ language skills are sufficiently elevated to maintain quality of communication content (Du-Babcock & Babcock, 2007). Increasing knowledge about the host country culture and language facilitates adaptation and expatriate performance and is thus expected to be of key importance.

Proposition 8: When polycentric MNCs emphasize assimilation in the host country environment, host country language training for expatriates is expected to be of high strategic importance. Integrating host country language training in predeparture training will contribute to expatriate assimilation in the host environment.

Geocentric MNCs assign expatriates at multiple levels of the organization and use expatriates not only from headquarters but also from third countries (Toh & DeNisi, 2003). The presence of different linguistic backgrounds is expected to make language competences crucial in expatriate performance.

Proposition 9: The orientation toward an international identity of geocen-tric MNCs is expected to cause language training programs in different languages to be widely provided for expatriates.

PERFORMANCE APPRAISAL

Performance appraisal is a tool to assess the job performance and dev-elopment of employees through scales, questionnaires, and progress reviews filled out by the employee’s direct supervisor and/or peers. The feedback obtained is used in estimating salary increase, bonuses, or training needs. The prospect of remuneration for accomplishing language tests can increase the rate of successful examination because language courses tend to work only for those who are already motivated (Huhta, 1997, as cited in Charles & Marschan-Piekkari, 2002). Even in face of limited interna-tional career opportunities in ethnocentric MNCs, compensation for suc-cessfully accomplishing language tests may increase motivation for taking tests. However, sometimes extrinsic rewards limit intrinsic motivation (Deci, 1975). Therefore, focusing on compensation in return for success-ful examination might replace feelings of play potentially rel ated to the


learning process for feelings of competition. Initial intrinsic motivation may, over time, become replaced by goals of extrinsic rewards. Some emp-loyees are not acquainted with the process of formal examination and might look up to examinations, causing increasing stress levels during training and examination.

Proposition 10: When MNCs integrate successful examination of language tests into performance appraisal schemes, the rate of accomplishment should increase. However, perceived pressure to perform could lower intrinsic motivation with those employees not used to the potential for-mal structures of those tests.

DISCUSSION

In this article, we proposed that a coherent alignment between HRM practices, language policies, and MNC strategic orientation can be benefi-cial. We did not only acknowledge that language policy should be a part of MNC strategy because it “permeates virtually every aspect of their business activities” (Marschan et al., 1997, p. 591), but we also suggested that they should be aligned with HRM practices. On the other hand, we drew from empirical research on language diversity in MNCs to illustrate that what is good in theory is often more difficult in practice. Various particularities in the host country environment, such as the average level and distribution of language skills, are likely to increase the demand for adaptation and reconsideration of formal policies. When policies do not fit the local context, in addition to practical problems, intergroup boundaries may arise, causing expatriates and local employees to be divided in in-groups and out-groups. HRM practices can increase people’s tendency for social categorization if those practices are not fitted on the local host country context. Drawing on social identity theory (Tajfel & Turner, 1979), we proposed that language differences act as markers for social identities.

Emphasizing the role of language as a dividing factor, Andersen and Rasmussen (2004) concluded that no matter what language is chosen as an official corporate language, communication problems will always pre-vail. While agreeing with these scholars, we also argued that increasing flexibility in HRM strategy and practices and integrating language poli-cies into HRM strategies while considering an MNC’s language system as an open system helps reduce communication difficulties. For example, inter-group differences tend to become emphasized when ethnocentric staffing


policies are executed, delivering important positions to home country nationals while understaffing local employees at managerial positions. Intergroup differences are, as such, replicated within the formal subsidiary structure and can increase in-group and out-group categorization between expatriates and local employees. When intergroup communication occurs in the parent language in subsidiaries, expatriates are likely to dominate communication whereas local employees can be kept aloof from inter-group interactions. Intergroup boundaries are caused not only by HRM policies and practices but reaffirmed in intergroup communication through language choice. Allowing for some hybridization of staffing policies and a mixing of different languages is likely to decrease intergroup boundaries.

Considering language skills in recruitment and selection of local employ-ees and expatriates is further expected to increase the quality and fre-quency of communication in different languages as linguistic competences increase within both groups. For example, social identity theory–based discussions hold that language becomes a question of self-representation once individuals attach value to their language group (e.g., Giles & Johnson, 1981). As a source for social identification, language differences may cause individuals to defend their in-group boundaries, with exclusion of out-group members as a consequence. HRM practices that stimulate local employees and expatriates to invest in their respective language com-petences through participation in language training can equilibrate some informal power inequalities resulting from language differences. Thus, depending on the importance of the subsidiary-headquarter relationship, headquarters could include the subsidiary language within the headquarters’ language policies, increasing flexibility of language policies and practices of headquarters. Those subsidiaries that choose English as corporate lan-guage in countries where the educative systems promotes, for example, Arab, Spanish, Hindu/Urdu, or Mandarin as second language are likely to encounter communication difficulties when English is the lingua franca and language policies are functional and standardized. Training of staff in the second languages might increase the centrality of the subsidiary in the MNC network and secure information flows to the headquarters.

Allowing for some hybridization of staffing policies and a mixing of differ-ent languages is likely to decrease intergroup boundaries.


IMPLICATIONS, LIMITATIONS, AND SUGGESTIONS FOR FURTHER RESEARCH

We argue that to consider HRM practices as flexible and language sys-tems as open demands flexibility from MNC staff: both at the headquar-ters and at foreign subsidiaries. We consequently argue for increasing the use of multiple languages throughout the MNC network, which implies that MNC staff should possess multiple language skills or a willingness to attend language training when language skills are considered underdevel-oped. This has important managerial implications: As a consequence of the recognition of language as a unique skill, time must be made available to individuals to develop language competences. As for expatriates, insist-ing on the importance of host country language skills, the length of expa-triate assignments must make time invested in language training worthwhile. Reconsidering the rhythm of expatriate rotation implies that instead of developing broad skills as a result of lateral career development, expatri-ates develop specific, unique skill sets fit on the host country environment.

This article has some limitations that should be taken into account in future research. First, while associating HRM practices with language, we somewhat neglected the discussion on the interrelationships of language and culture (see, e.g., Babcock & Du-Babcock, 2001; Janssens, Lambert, & Steyaert, 2004; Musson & Tietze, 2004; Von Glinow et al., 2004; Peltokorpi, in press). However, language competence alone does not suf-fice in enhancing communication; cultural competences are indispensable (Babcock & Du-Babcock, 2001; Peltokorpi, 2008a). Second, while shift-ing between the functional role of language in MNCs as a strategic macro-level tool to the role of languages as markers of social identities in a subsidiary context, the social identity theory perspective may be seen as too deterministic and static (Lauring, 2008). The focus on intergroup boundaries delimits complexities at play at the individual level and reduces groups to homogenous entities. However, intergroup dynamics are more complex and cannot always be reduced to generalizations at the group level. Third, our argument is built on secondary literature although pri-mary data linking HRM practices and language policies are lacking.

Future research should thus empirically inquire about the relationships between HRM practices and language policies, and investigate how they are executed in foreign subsidiaries, to more precisely identify where poli-cies differ from practices and why. Furthermore, future research could look into the combined influence of language and culture on communication between linguistically and culturally diverse groups. Individuals confirm


and reaffirm localized identities, which they exert in a multilingual and culturally plural context by resorting to communication in their native language. In times of ongoing internationalization of firms, the importance of individual employees’ attachment to local languages and cultures to assume group identities may not be overlooked.

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