IDEAS home Printed from https://ideas.repec.org/a/unc/tncjou/96.html
   My bibliography  Save this article

Does language affect the location choice of developing-economy MNEs? The case of Moroccan outward FDI

Author

Listed:
  • Jihad Ait Soussane
  • Mohamed Yassine Fakhouri
  • Ayoub Sabir Almaslouhi
  • Zahra Mansouri

Abstract

The present paper investigates the effect of linguistic distance on location decisions of Moroccan outward foreign direct investment (FDI) using panel data on 54 host countries from 2007 to 2021 and the robust weighted least squares estimation method. The results show that the higher the share of French- and Arabic-speaking populations, the more the host country attracts FDI from Morocco. Also, the results show that the higher the share of the English-speaking population, the less the host country attracts FDI because English-speaking countries tend to adopt institutional structures (the Anglo-Saxon way of governance) that differ from the French model inherited by Morocco during its colonization. For Spanish, there is no effect on the location decisions of Moroccan multinational enterprises because of the language’s marginalization at the formal level. The study highlights important policy considerations for home and host countries in terms of investment policy and investment promotion, language-in-education policies, and the role of international cultural and linguistic institutes in home and host countries.

Suggested Citation

  • Jihad Ait Soussane & Mohamed Yassine Fakhouri & Ayoub Sabir Almaslouhi & Zahra Mansouri, . "Does language affect the location choice of developing-economy MNEs? The case of Moroccan outward FDI," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    • Handle: RePEc:unc:tncjou:96
    as

    Download full text from publisher

    File URL: https://unctad.org/system/files/official-document/diaeia2022d4a4_en.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Douglas Dow & Ilya R P Cuypers & Gokhan Ertug, 2016. "The effects of within-country linguistic and religious diversity on foreign acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(3), pages 319-346, April.
    2. Rebecca Piekkari & Lena Zander, 2005. "Preface : Language and Communication in International Management," International Studies of Management & Organization, Taylor & Francis Journals, vol. 35(1), pages 3-9, January.
    3. Aradhna Aggarwal, 2008. "Regional Economic Integration and FDI in South Asia - Prospects and Problems," Macroeconomics Working Papers 22141, East Asian Bureau of Economic Research.
    4. Yadong Luo & Oded Shenkar, 2006. "The multinational corporation as a multilingual community: Language and organization in a global context," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(3), pages 321-339, May.
    5. Wilhelm Barner-Rasmussen & Mats Ehrnrooth & Alexei Koveshnikov & Kristiina Mä;kelä, 2014. "Cultural and language skills as resources for boundary spanning within the MNC," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 45(7), pages 886-905, September.
    6. James R. Markusen & Anthony J. Venables, 2021. "Multinational firms and the new trade theory," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 3, pages 47-67, World Scientific Publishing Co. Pte. Ltd..
    7. Marschan, Rebecca & Welch, Denice & Welch, Lawrence, 1997. "Language: The forgotten factor in multinational management," European Management Journal, Elsevier, vol. 15(5), pages 591-598, October.
    8. Johanson, Jan & Mattsson, Lars-Gunnar, 1987. "Interorganizational relations in industrial systems : a network approach compared with the transaction cost approach," Working Papers 1987:7, Uppsala University, Department of Business Studies.
    9. Rana, Mohammad B. & Elo, Maria, 2017. "Transnational Diaspora and Civil Society Actors Driving MNE Internationalisation: The Case of Grameenphone in Bangladesh," Journal of International Management, Elsevier, vol. 23(1), pages 87-106.
    10. Harzing, Anne-Wil & Pudelko, Markus, 2013. "Language competencies, policies and practices in multinational corporations: A comprehensive review and comparison of Anglophone, Asian, Continental European and Nordic MNCs," Journal of World Business, Elsevier, vol. 48(1), pages 87-97.
    11. Denice Welch & Lawrence Welch & Rebecca Piekkari, 2005. "Speaking in Tongues : The Importance of Language in International Management Processes," International Studies of Management & Organization, Taylor & Francis Journals, vol. 35(1), pages 10-27, January.
    12. Gao, Ting, 2003. "Ethnic Chinese networks and international investment: evidence from inward FDI in China," Journal of Asian Economics, Elsevier, vol. 14(4), pages 611-629, August.
    13. Heather Berry & Mauro F Guillén & Nan Zhou, 2010. "An institutional approach to cross-national distance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1460-1480, December.
    14. Peter J. Buckley & Martin J. Carter & Jeremy Clegg & Hui Tan, 2005. "Language and Social Knowledge in Foreign-Knowledge Transfer to China," International Studies of Management & Organization, Taylor & Francis Journals, vol. 35(1), pages 47-65, January.
    15. John H. Dunning & Sarianna M. Lundan, 2008. "Multinational Enterprises and the Global Economy, Second Edition," Books, Edward Elgar Publishing, number 3215.
    16. Goldberg, Michael A. & Heinkel, Robert L. & Levi, Maurice D., 2005. "Foreign direct investment: The human dimension," Journal of International Money and Finance, Elsevier, vol. 24(6), pages 913-934, October.
    17. Toumi, Sofiane, 2009. "Facteurs d’attractivité des investissements directs étrangers en Tunisie," L'Actualité Economique, Société Canadienne de Science Economique, vol. 85(2), pages 209-237, juin.
    18. Mäkelä, Kristiina & Andersson, Ulf & Seppälä, Tomi, 2012. "Interpersonal similarity and knowledge sharing within multinational organizations," International Business Review, Elsevier, vol. 21(3), pages 439-451.
    19. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 1-31, March.
    20. Xiaoyun Feng & Faqin Lin & Nicholas C S Sim, 2019. "The effect of language on foreign direct investment," Oxford Economic Papers, Oxford University Press, vol. 71(1), pages 269-291.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Helene Tenzer & Siri Terjesen & Anne-Wil Harzing, 2017. "Language in International Business: A Review and Agenda for Future Research," Management International Review, Springer, vol. 57(6), pages 815-854, December.
    2. Konara, Palitha & Wei, Yingqi, 2019. "The complementarity of human capital and language capital in foreign direct investment," International Business Review, Elsevier, vol. 28(2), pages 391-404.
    3. Golesorkhi, Sougand & Mersland, Roy & Piekkari, Rebecca & Pishchulov, Grigory & Randøy, Trond, 2019. "The effect of language use on the financial performance of microfinance banks: Evidence from cross-border activities in 74 countries," Journal of World Business, Elsevier, vol. 54(3), pages 213-229.
    4. Latukha, Marina & Doleeva, Anna & Järlström, Maria & Jokinen, Tiina & Piekkari, Rebecca, 2016. "Does corporate language influence career mobility? Evidence from MNCs in Russia," European Management Journal, Elsevier, vol. 34(4), pages 363-373.
    5. Aichhorn, Nathalie & Puck, Jonas, 2017. "Bridging the language gap in multinational companies: Language strategies and the notion of company-speak," Journal of World Business, Elsevier, vol. 52(3), pages 386-403.
    6. Ting Liu, 2018. "The Review of Language Studies in International Business: Suggestions and Future Directions for Japan," Discussion Papers in Economics and Business 18-30, Osaka University, Graduate School of Economics.
    7. Tenzer, Helene & Pudelko, Markus, 2017. "The influence of language differences on power dynamics in multinational teams," Journal of World Business, Elsevier, vol. 52(1), pages 45-61.
    8. Vesa Peltokorpi, 2023. "The “language” of career success: The effects of English language competence on local employees’ career outcomes in foreign subsidiaries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(2), pages 258-284, March.
    9. Vesa Peltokorpi & Markus Pudelko, 2021. "When more is not better: A curvilinear relationship between foreign language proficiency and social categorization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(1), pages 78-104, February.
    10. Amy Church-Morel & A. Bartel-Radic, 2014. ""Not all multilingual teams are created equal " : Conceptualizing language diversity management," Post-Print halshs-01185822, HAL.
    11. Björkman, Anette & Piekkari, Rebecca, 2009. "Language and foreign subsidiary control: An empirical test," Journal of International Management, Elsevier, vol. 15(1), pages 105-117, March.
    12. Nurmi, Niina & Koroma, Johanna, 2020. "The emotional benefits and performance costs of building a psychologically safe language climate in MNCs," Journal of World Business, Elsevier, vol. 55(4).
    13. Antioco, Michael & Coussement, Kristof & Fletcher-Chen, Chavi Chi-Yun & Prange, Christiane, 2023. "What's in a word? Adopting a linguistic-style analysis of western MNCs’ global press releases," Journal of World Business, Elsevier, vol. 58(2).
    14. Shima’a Hanafy, 2014. "Determinants of FDI Location in Egypt: Empirical Analysis Using Governorate Panel Data," Working Papers 875, Economic Research Forum, revised Nov 2014.
    15. Gilbert Kofi Adarkwah & Tine Petersen Malonæs, 2022. "Firm-specific advantages: a comprehensive review with a focus on emerging markets," Asia Pacific Journal of Management, Springer, vol. 39(2), pages 539-585, June.
    16. Michalski, Marina P. & Śliwa, Martyna, 2021. "‘If you use the right Arabic…’: Responses to special language standardization within the BBC Arabic Service’s linguascape," Journal of World Business, Elsevier, vol. 56(5).
    17. Navío-Marco, Julio & Solórzano-García, Marta & Matilla-García, Mariano & Urueña, Alberto, 2016. "Language as a key factor of long-term value creation in mergers and acquisitions in the telecommunications sector," Telecommunications Policy, Elsevier, vol. 40(10), pages 1052-1063.
    18. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    19. Barbieri, Paolo & Boffelli, Albachiara & Elia, Stefano & Fratocchi, Luciano & Kalchschmidt, Matteo, 2022. "How does Industry 4.0 affect international exposure? The interplay between firm innovation and home-country policies in post-offshoring relocation decisions," International Business Review, Elsevier, vol. 31(4).
    20. Amy Church-Morel & Anne Bartel-Radic, 2016. "Skills, Identity, and Power: The Multifaceted Concept of Language Diversity [Competencias, identidad y poder: las múltiples facetas del concepto de diversidad lingüística]," Post-Print halshs-01996048, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unc:tncjou:96. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kumi Endo (email available below). General contact details of provider: https://edirc.repec.org/data/unctach.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.