While the impact of culture on international trade and foreign direct investment (FDI) have been much discussed, the influence of languages ​​has been underestimated in international business. We address this deficiency by integrating literature International Economics, International Business, Business Chinese history and linguistics to examine the transaction costs of languages. While we recognize that both languages ​​are a tool in international economic transactions and a vehicle to t … Read more »

While the impact of culture on international trade and foreign direct investment (FDI) have been much discussed, the influence of languages ​​has been underestimated in international business. We address this deficiency by integrating literature International Economics, International Business, Business Chinese history and linguistics to examine the transaction costs of languages. While we recognize that both languages ​​are transferred into a tool of international economic transactions and a vehicle for cultural values, our results suggest that this tool is employed differently in international trade and FDI. Communication costs for both foreign direct investment and international trade show a hierarchy, with English as the cheapest among the major trade languages, but we find that the communication cost is much more important than in FDI in international trade. Here we offer practical suggestions regarding the company can implement affair.
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Chang Hoon Oh
W. Travis III Selmier
Source: Business Horizons
12 pages.
Release Date: 15, March 2012. Prod #: BH471-PDF-ENG
International Business Complexity and internationalization of languages ​​HBR case solution

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