Scandinavian Working Papers in Economics
Working Paper Series,
Research Institute of Industrial Economics
No 974: The Role of Language in Corporate Governance: The Case of Board Internationalization
Rebecca Piekkari (), Lars Oxelheim () and Trond Randøy ()
Additional contact information
Rebecca Piekkari: Aalto University, Postal: School of Business, Department of Management and International Business
Lars Oxelheim: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Trond Randøy: University of Agder, Postal: School of Management, Department of Economics and Business Administration
Abstract: Multinational corporations internationalize their corporate boardrooms in order to capitalize on their commercial and financial internationalization. Board internationalization provides access to specialized knowledge and skills, broadens social networks and ensures greater transparency of strategic decision-making. The entry of a foreign board member is often coupled with a change in the working language of the board. The purpose of the present study is to explore and explain how increased language diversity influences decision-making and work processes of corporate boards. We draw on previous research on board internationalization, diversity and language in multinational corporations. Based on a multiple case study of nine multinational corporations from four Nordic countries, we find evidence of impoverished and silenced discussions in board meetings in those case companies that were unprepared to switch to English as the new working language of the board. Some board members found it difficult to contribute to board meetings, articulate disagreement and felt socially excluded from the board. Such effects on decision-making and work processes were not found in the well-prepared companies. The study adds to the understanding of different modes to internationalize the board as a response to different forms of internationalization of the firm.
Keywords: Language diversity; Board internationalization; Commercial internationalization; Financial internationalization; Degree of internationalization; Social exclusion; Silencing effect
JEL-codes: A10
59 pages, September 10, 2013
Full text files
wp974.pdf
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