The Role of Language in Knowledge Transfer to Geographically Dispersed Manufacturing Operations

Abstract

This study proposes a model of the effects of language on knowledge transfer to geographically dispersed operations. Rather than focusing on the distance between two language groups, we look at the commonalities between their languages, introducing the construct of linguistic relatedness as a way to measure the overlap in the structural features of the dominant languages at play between firms and their overseas manufacturing operations. We focus on the structural aspects of language (e.g., grammar, pronunciation, and word formation), rather than the functional aspects that deal with usage and interpretation. This allows us to separate the effects of language from those of culture and test whether linguistic distance may be more or at least differently relevant in communication-related tasks. We test our model of knowledge transfer and linguistic relatedness through a survey of international operations managers representing US-owned multinational enterprises with manufacturing plants in 22 countries. While linguistic relatedness shows the expected positive relationships with ease of knowledge communication and normative integration, it is negatively related to knowledge understanding — an echo of the psychic distance paradox and a reminder that distance can sometimes be beneficial, as it signals the need for attention to complex processes such as communication of knowledge.