International Business Complexity
Copyright 2011 by Kelley School of Business, Indiana University. For reprints, call HBS Publishing at (800) 545-7685.
BH 471
Business Horizons (2012) 55, 189—200
Available online at www.sciencedirect.com
www.elsevier.com/locate/bushor
International business complexity and the internationalization of languages
W. Travis Selmier IIa,1,*, Chang Hoon Oh b,1 a School of Political Science, Indiana University, 210 Woodburn Hall, 1100 E. Seventh Street, Bloomington, IN 47405-7110, U.S.A. b School of Business, Brock University, 500 Glenridge Avenue St. Catherines, Ontario L2S 3A1, Canada
KEYWORDS
International business; Transaction costs; Languages; Language distance; FDI and international trade; Confucian Institutes
No tC
Abstract While the impacts of culture on international trade and foreign direct investment (FDI) have been much discussed, the influence of languages has been underappreciated in international business. We address this paucity by integrating literature from international economics, international business, Chinese business history, and linguistics to examine the transaction costs of languages. While we recognize that languages represent both a tool in international economic transactions and a vehicle to transmit cultural values, our results point out that this tool is employed differently in international trade and in FDI. Communication costs for both FDI and international trade show a hierarchy, with English the most inexpensive among major trade languages; however, we find that communication costs are much more important in FDI than in international trade. Herein, we offer practical suggestions corporations may implement regarding the matter. # 2011 Kelley School of Business, Indiana University. All rights reserved.
1. Why does complexity of international business increase languages’ power?
International business is becoming increasingly complex. But you do not need a pair of academics to tell you that; you see this
BH 471
Business Horizons (2012) 55, 189—200
Available online at www.sciencedirect.com
www.elsevier.com/locate/bushor
International business complexity and the internationalization of languages
W. Travis Selmier IIa,1,*, Chang Hoon Oh b,1 a School of Political Science, Indiana University, 210 Woodburn Hall, 1100 E. Seventh Street, Bloomington, IN 47405-7110, U.S.A. b School of Business, Brock University, 500 Glenridge Avenue St. Catherines, Ontario L2S 3A1, Canada
KEYWORDS
International business; Transaction costs; Languages; Language distance; FDI and international trade; Confucian Institutes
No tC
Abstract While the impacts of culture on international trade and foreign direct investment (FDI) have been much discussed, the influence of languages has been underappreciated in international business. We address this paucity by integrating literature from international economics, international business, Chinese business history, and linguistics to examine the transaction costs of languages. While we recognize that languages represent both a tool in international economic transactions and a vehicle to transmit cultural values, our results point out that this tool is employed differently in international trade and in FDI. Communication costs for both FDI and international trade show a hierarchy, with English the most inexpensive among major trade languages; however, we find that communication costs are much more important in FDI than in international trade. Herein, we offer practical suggestions corporations may implement regarding the matter. # 2011 Kelley School of Business, Indiana University. All rights reserved.
1. Why does complexity of international business increase languages’ power?
International business is becoming increasingly complex. But you do not need a pair of academics to tell you that; you see this