Developing Multilingual Capacity: A Challenge for the Multinational Enterprise

In this article, we examine how the multinational enterprise (MNE) develops the ability to function as a multilingual entity in order to facilitate communication, knowledge transfer, and absorptive capacity. While we acknowledge the role played by the adoption of a common corporate language, we argue that this response alone is insufficient to cope with the diverse foreign language demands that accompany global expansion. MNEs need what we conceptualize as language operative capacity (LOC): language resources that have been assembled and deployed in a context-relevant and timely manner throughout the MNE’s global network. Language resources are mainly derived from human and social capital, and their interaction, to form what is termed language capital. Managerial motivation and a preparedness to act are necessary to ensure that language capital is converted into LOC. Our theoretical explanation of LOC derivation is multilevel, incorporating two interacting processes: individuals develop, maintain, and contribute their own foreign language resources, but the MNE also plays a key role. It can influence individual behavior and, at the organizational level, provide its own language resources through the provision of computerized translation software and the like. The interaction between these two processes is seen to be critical in the formation and use of LOC. This multilevel explanation contributes to the growing body of literature that considers how human capital resources in general can be converted for productive purposes.