Why and how does shared language affect subsidiary knowledge inflows? A social identity perspective

Abstract

Extending existing international business (IB) research, we conceptualize shared social identity as an outcome rather than only an antecedent of multinational enterprise knowledge flows to provide an alternative reason for why such knowledge flows occur. We further argue that shared language among subsidiary and headquarters (HQ) managers is an insufficient condition for subsidiary knowledge receipt. Accordingly, we develop a moderated mediation model at the subsidiary level to examine how shared language affects subsidiaries’ tacit knowledge inflows from HQ. Specifically, we study (1) whether this relationship is mediated by the extent to which subsidiary managers share HQ goals and vision, and the extent to which Human Resources decisions are centralized at HQ; and (2) whether subsidiary type (greenfields vs acquisitions) moderates these mediated relationships such that in both cases the mediation will be stronger in foreign acquisitions compared with foreign greenfields. Building on a sample of 817 subsidiaries in 9 countries/regions and a novel subjective measure of shared language, we find support for our model. Implications for research on HQ–subsidiary knowledge flows, social identity theory and the literature on sociolinguistics, and international Human Resource Management are discussed and managerial implications outlined.