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International business complexity and the internationalization of languages

  • Selmier, W. Travis
  • Oh, Chang Hoon

While the impacts of culture on international trade and foreign direct investment (FDI) have been much discussed, the influence of languages has been underappreciated in international business. We address this paucity by integrating literature from international economics, international business, Chinese business history, and linguistics to examine the transaction costs of languages. While we recognize that languages represent both a tool in international economic transactions and a vehicle to transmit cultural values, our results point out that this tool is employed differently in international trade and in FDI. Communication costs for both FDI and international trade show a hierarchy, with English the most inexpensive among major trade languages; however, we find that communication costs are much more important in FDI than in international trade. Herein, we offer practical suggestions corporations may implement regarding the matter.

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Article provided by Elsevier in its journal Business Horizons.

Volume (Year): 55 (2012)
Issue (Month): 2 ()
Pages: 189-200

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Handle: RePEc:eee:bushor:v:55:y:2012:i:2:p:189-200
Contact details of provider: Web page: http://www.elsevier.com/locate/bushor

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  1. Ginsburgh, Victor & Ortuño-Ortín, Ignacio & Weber, Shlomo, 2007. "Learning foreign languages: Theoretical and empirical implications of the Selten and Pool model," Journal of Economic Behavior & Organization, Elsevier, vol. 64(3-4), pages 337-347.
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  14. repec:cup:cbooks:9780521269315 is not listed on IDEAS
  15. Hutchinson, William K, 2002. "Does Ease of Communication Increase Trade? Commonality of Language and Bilateral Trade," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 544-56, December.
  16. William K. Hutchinson, 2002. "Does Ease of Communication Increase Trade? Commonality of Language and Bilateral Trade," Vanderbilt University Department of Economics Working Papers 0217, Vanderbilt University Department of Economics.
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