Focus on Research

March 23, 2012 2:50 pm

Something for the weekend

What is the recipe for business success? Research from North America indicates that it might have something to do with speaking English.

Academics have discovered that those countries that have English as at least one of their official languages, or whose language is linguistically close to English have higher rates of international investment.

Walid Hejazi, an associate professor of international business at the Rotman School at the University of Toronto says that a large amount of the world’s trade and investment involves English-speaking countries.

With co-author Juan Ma, a PhD student from Harvard Business School, Prof Hejazi analysed 30 countries within the Organisation for Economic Co-operation and Development. Using a mathematical model to control for variables such as exchange rates, GDP, population, colonial histories and cultural similarities they looked at international investment levels to see whether or not language had an impact.

They discovered that those countries who had English as one of their official languages accounted for more than half of the OECD’s foreign investment and English-speaking countries also had the highest rate of bilateral international investment.

Prof Hejazi says that while it is of course essential to have the domestic language of the country you are investing in, a proficiency to speak English is also important.

“If you are going to communicate in any other language than the official language... more likely than not it’s going to be in English,” he says.

The academics suggest that those companies considering investing internationally need to ensure that English is embedded in their workforce, whatever the local language.

The paper has been published in Multinational Business Review.

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