Language Diversity & Knowledge Transfer
I. Report
Introduction
The ability to transfer knowledge across the organisation has become a key source of competitive advantage for firms striving to be leaders in the marketplace (Drucker, 1995). As companies expand internationally, sources and users of knowledge become increasingly dispersed. The transfer of knowledge is particularly challenging for multinational corporations (MNCs) where cultural and linguistic differences create barriers to communication and understanding (Yang, Mudambi, & Meyer, 2008). On the other hand, it has also been argued that language diversity broadens the access to diverse knowledge sources and serves as acknowledge transfer facilitator (Henderson, 2005).
However, Lee and Wu (2010) state that the access to knowledge sources per se does not necessarily correlate with a firm’s ability to use knowledge effectively and MNCs and their subsidiaries differ significantly in their ability to absorb and replicate external knowledge as well as in their capacity to transfer it in multiple directions and apply it in other (organisational and geographical) locations.
This process has been labelled ‘absorptive capacity’ and can be defined as a dynamic capability with four dimensions that progress chronologically: acquisition, assimilation transformation, and exploitation of knowledge (Zahra & George, 2002). Absorptive capacity has been identified as the most critical and influential determinant of knowledge transfer (besides others, i.e. technological infrastructure) and shall therefore be used as a main variable representing the complex process of knowledge transfer behaviour (as opposed to solely technical exchange of information, for instance) in this study.
In addition to that, one of the most obvious features of MNCs is that their employees will often speak different languages. However, the importance of language diversity has received little attention and is “generally treated as just one ingredient of culture” (Henderson,
Introduction
The ability to transfer knowledge across the organisation has become a key source of competitive advantage for firms striving to be leaders in the marketplace (Drucker, 1995). As companies expand internationally, sources and users of knowledge become increasingly dispersed. The transfer of knowledge is particularly challenging for multinational corporations (MNCs) where cultural and linguistic differences create barriers to communication and understanding (Yang, Mudambi, & Meyer, 2008). On the other hand, it has also been argued that language diversity broadens the access to diverse knowledge sources and serves as acknowledge transfer facilitator (Henderson, 2005).
However, Lee and Wu (2010) state that the access to knowledge sources per se does not necessarily correlate with a firm’s ability to use knowledge effectively and MNCs and their subsidiaries differ significantly in their ability to absorb and replicate external knowledge as well as in their capacity to transfer it in multiple directions and apply it in other (organisational and geographical) locations.
This process has been labelled ‘absorptive capacity’ and can be defined as a dynamic capability with four dimensions that progress chronologically: acquisition, assimilation transformation, and exploitation of knowledge (Zahra & George, 2002). Absorptive capacity has been identified as the most critical and influential determinant of knowledge transfer (besides others, i.e. technological infrastructure) and shall therefore be used as a main variable representing the complex process of knowledge transfer behaviour (as opposed to solely technical exchange of information, for instance) in this study.
In addition to that, one of the most obvious features of MNCs is that their employees will often speak different languages. However, the importance of language diversity has received little attention and is “generally treated as just one ingredient of culture” (Henderson,