The Role of Language in Corporate Governance: The Case of Board Internationalization

60 Pages Posted: 11 Sep 2013 Last revised: 21 Jul 2014

See all articles by Rebecca Piekkari

Rebecca Piekkari

Helsinki School of Economics & Business Administration; Aalto University School of Business

Lars Oxelheim

Research Institute of Industrial Economics (IFN); University of Agder; Knut Wicksell Center for Financial Studies, Lund University

Trond Randøy

University of Agder - School of Management

Date Written: September 10, 2013

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 Classification: D22, F23, F66, G34, M16

Suggested Citation

Piekkari, Rebecca and Oxelheim, Lars and Randøy, Trond, The Role of Language in Corporate Governance: The Case of Board Internationalization (September 10, 2013). IFN Working Paper No. 974, 2013. Available at SSRN: https://ssrn.com/abstract=2323616 or http://dx.doi.org/10.2139/ssrn.2323616

Rebecca Piekkari (Contact Author)

Helsinki School of Economics & Business Administration ( email )

P.O. Box 21210
Helsinki 00100, 00101
Finland

Aalto University School of Business ( email )

Runeberginkatu 14-16
Helsinki, 00100
Finland

Lars Oxelheim

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
SE-10215 Stockholm
Sweden
+46 8 665 4527 (Phone)
+46 8 665 4599 (Fax)

University of Agder ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604
Norway

Knut Wicksell Center for Financial Studies, Lund University ( email )

P.O.Box 7080
S-220 07 Lund
Sweden
+46462228744 (Phone)

Trond Randøy

University of Agder - School of Management ( email )

Adger Research Foundation
Serviceboks 422 Bygg H
N-4604 Kristiansand
Norway
47 3814 1027 (Phone)

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