In this paper we explore the impact of organisational mechanisms on inter-unit knowledge flows in multinational corporations (MNCs). A comprehensive model, based on agency theory and socialisation theory, is tested on a sample of 134 Finnish and Chinese MNC subsidiaries. Our findings indicate that MNCs can influence inter-unit knowledge transfer by specifying the objectives of the subsidiary and by utilising corporate socialisation mechanisms. However, we found no support for the hypothesised impact of management compensation systems and the use of expatriate managers on the extent of knowledge transfers from foreign subsidiaries to other parts of the MNC. Journal of International Business Studies (2004) 35, 443–455. doi:10.1057/palgrave.jibs.8400094

PurposeThis paper seeks to explore the use of common corporate language(s) in multinational corporations (MNCs). These organizations are usually multilingual and characterized by high language diversity. Parallel streams of literature in international management and international business communications are built upon to problematize the notion of a common corporate language.Design/methodology/approachInformation gathered from 36 personal interviews of the German‐based multinational Siemens is the primary source of data for this case study. The interviews were conducted in three different languages in three different organizational units of Siemens AG in Finland and Germany.FindingsIt was possible to identify powerful interplay between two languages – German and English – and to uncover discrepancies between company policy and employee practices with regard to language use. On the basis of these findings, the challenges of managing language in multinationals are discussed.Originality/valueArgues that a common corporate language may not be as widely shared within the firm as the term suggests, given the multilingual nature of most multinationals, variation in the language proficiency of their employees, and the level of analysis used in previous research.

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High levels of trust and shared vision contribute to collaborative behaviour among units belonging to the same corporation. We examined the relationship of language fluency and socialization mechanisms to inter-unit shared vision and trustworthiness, using a sample of 310 inter-unit relationships involving subsidiaries of multinational corporations located in China and Finland. Results show that language fluency related significantly to shared vision and perceived trustworthiness in both the Chinese and Finnish subsidiaries. We also found socialization mechanisms to have a positive relationship to shared vision in the Chinese but not the Finnish sample, and no significant relationship to perceived trustworthiness in either sample. The interaction effects of language fluency and socialization mechanisms produced different results in the Chinese and Finnish samples. The study confirmed the importance of language fluency for inter-unit relationships and offered several suggestions for future research.