Gravity, the English language and international business

Gravity, the English language and international business Purpose – The purpose of this paper is to test the merits of the view that the English language has emerged as the dominant language in international business. If there is merit to this view, then the ability to speak English and its role as a lingua franca in the global economy would imply that countries which have English as an official language should have a benefit over non‐English‐speaking countries vis‐à‐vis their abilities to undertake international business. Design/methodology/approach – Within an augmented gravity model framework, the importance of the English language in explaining bilateral foreign direct investment (FDI) data within the OECD is tested. In addition to English, all other common official languages within the OECD are also tested. Furthermore, the linguistic distance to English is used to test whether closeness of languages to English enhance international business activity. Findings – The results indicate that English‐speaking countries within the OECD do have a benefit that comes with the English language. Furthermore, countries whose official languages are linguistically close to English benefit from the special role played by the English language. These results therefore highlight the importance of the English language in deploying multinational strategies, even in countries whose official language is not English. Research limitations/implications – These results therefore indicate the importance of the English language in international business. As such, having a proficiency with English within any corporation should enhance that corporation's ability to engage in international business. Originality/value – Sharing a common language with FDI partners enhances the ability to communicate, and hence enhances FDI between the countries. This paper extends this evidence to show that when the common language is English, the common language effect is strongest. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Multinational Business Review Emerald Publishing

Gravity, the English language and international business

Multinational Business Review, Volume 19 (2): 16 – Jun 17, 2011

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1525-383X
D.O.I.
10.1108/15253831111149780
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to test the merits of the view that the English language has emerged as the dominant language in international business. If there is merit to this view, then the ability to speak English and its role as a lingua franca in the global economy would imply that countries which have English as an official language should have a benefit over non‐English‐speaking countries vis‐à‐vis their abilities to undertake international business. Design/methodology/approach – Within an augmented gravity model framework, the importance of the English language in explaining bilateral foreign direct investment (FDI) data within the OECD is tested. In addition to English, all other common official languages within the OECD are also tested. Furthermore, the linguistic distance to English is used to test whether closeness of languages to English enhance international business activity. Findings – The results indicate that English‐speaking countries within the OECD do have a benefit that comes with the English language. Furthermore, countries whose official languages are linguistically close to English benefit from the special role played by the English language. These results therefore highlight the importance of the English language in deploying multinational strategies, even in countries whose official language is not English. Research limitations/implications – These results therefore indicate the importance of the English language in international business. As such, having a proficiency with English within any corporation should enhance that corporation's ability to engage in international business. Originality/value – Sharing a common language with FDI partners enhances the ability to communicate, and hence enhances FDI between the countries. This paper extends this evidence to show that when the common language is English, the common language effect is strongest.

Journal

Multinational Business ReviewEmerald Publishing

Published: Jun 17, 2011

Keywords: FDI; Gravity model; Language; International business

References

  • Using the gravity equation to differentiate among alternative theories of trade
    Feenstra, R.C.; Markusen, J.R.; Rose, A.K.
  • Does ease of communication increase trade? Commonality of language and bilateral trade
    Hutchinson, W.K.

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