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Firm-Level Evidence for the Language Investment Effect on SME Exporters

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  • James Foreman-Peck
  • Peng Zhou

Abstract

type="main" xml:id="sjpe12072-abs-0001"> Both analysis of international trade and the knowledge resource theory of the firm imply that language skills should play a vital role in exporting. This may be apparent to large multinationals with sites in many different linguistic locations, but we show it is less obvious to smaller companies. With data on the language used by each of a large sample of European small- and medium-sized enterprises in their export markets, we test and estimate the effects of language assets on language performance in export markets and on export sales. Controlling for the possibility that language skills may be acquired by exporting, we find a very substantial export return to linguistic expertise, indicative of unexploited gains from investment in languages. There is also evidence of greater under-investment in language skills in English-speaking Europe.

Suggested Citation

  • James Foreman-Peck & Peng Zhou, 2015. "Firm-Level Evidence for the Language Investment Effect on SME Exporters," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(4), pages 351-377, September.
    • Handle: RePEc:bla:scotjp:v:62:y:2015:i:4:p:351-377
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    File URL: http://hdl.handle.net/10.1111/sjpe.2015.62.issue-4
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    2. Hadia Fakhreldin, 2018. "Examining the Effect of Cultural Intelligence on the Internationalization of Swiss Small and Medium Enterprises," International Business Research, Canadian Center of Science and Education, vol. 11(6), pages 89-101, June.

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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