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Contribution of language to the creation of corporate social capital

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Abstract

With increased globalization of trade and business in a knowledge-based economy, and increasing diversification of the workforce, there is increasing pressure on multinational companies to report, and even measure, their social capital. This article explores the role of language in the creation of corporate social capital. The language used in a corporation is an asset, which creates value and corporate social capital in the use and exchange of ideas. Linguists have long attempted to assess the value of language as a commodity, but with little success. This article offers an approach to overcome this difficulty and to measure the value of language as an element of corporate social capital. To do so, it draws an analogy between the functions of language and functions of currency. The article goes on to suggest that multinational corporations should hold a portfolio of language skills, much as it does a portfolio of currencies.
243243
Revista Internacional de Organizaciones, nº 23, diciembre 2019, 243–263
ISSN: 2013-570X; EISSN: 1886-4171. http://www.revista-rio.org
Contribution of language to the creation
of corporate social capital
Krishna S. Dhir
Széchenyi István University
krishnadhir@yahoo.com
Abstract: With increased globalization of trade and business in a knowledge-based
economy, and increasing diversification of the workforce, there is increasing pressure on
multinational companies to report, and even measure, their social capital. is article
explores the role of language in the creation of corporate social capital. e language used
in a corporation is an asset, which creates value and corporate social capital in the use
and exchange of ideas. Linguists have long attempted to assess the value of language
as a commodity, but with little success. is article offers an approach to overcome
this difficulty and to measure the value of language as an element of corporate social
capital. To do so, it draws an analogy between the functions of language and functions
of currency. e article goes on to suggest that multinational corporations should hold
a portfolio of language skills, much as it does a portfolio of currencies.
Keywords: Social capital, Language; Policy, Value of language, Language portfolio,
Utility of language
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1. Introduction
A number of factors contribute to the creation of corporate social capital.
Language is one of these factors. Its contribution, and indeed that of all other
contributing factors as well, is assessed subjectively, depending on the perceptions
the management has of the specific relationship between these factors and the
strategic environment within which the corporation exists and operates. e
management of a corporation would do well to begin by identifying each of
the contributing factors at the outset. is article focuses on the contribution
of language as one of the factors in the creation of corporate social capital. To
determine the contribution a language makes to corporate social capital it would
help to know the value that language holds for the corporation concerned. is
value depends on the strategic environment within which the corporation exists
and operates. Just as the value of any asset depends on the specific relationship the
owner of the asset has with that asset, so will different languages have different
values for different corporations, depending on the managerial perceptions of
the specific role the language plays in that corporation’s strategic environment
and context.
Corporations generally articulate their mission by describing the relationship
they seek to establish with the society within which they exist. With the increased
globalization of business and economy, organizations bring together people with
different cultural orientations, who do not all speak the same language, but
work toward a common organizational mission. From the languages available
to them, corporations choose the particular working language which offers the
most economically efficient way of creating and managing knowledge within the
context of the strategic environment in which they exist and operate. By using
their chosen language, the corporate community creates social capital. Putnam
(1996: pp. 66) describes social capital to be about people in a community acting
together to achieve shared objectives. He states that there are three prerequisites
that facilitate the creation of social capital: (i) community norms – the common
values and rules that people in the community share. ese encourage, or even
constrain, people to work for the common good, even foregoing what might be best
for them collectively or even individually in the short term; (ii) the networks – the
groupings and cross-groupings of people and organizations which facilitate people
working together; and (iii) trust, which enables the members of the community to
share information and responsibilities more readily as they work towards common
objectives (Putnam, 1996). Although Putnam does not explicitly mention the role
of language in the creation of social capital, it is obvious that networking would
require commonality in language use; that is, those in the network communicate
and interact through a language known to the parties involved.
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While social capital pertains to shared objectives, it benefits individuals, too, by
creating human capital which enables individuals to acquire skills, competencies and
qualifications, within a family, organization or community. Putnam is not alone in
offering a description for social capital. A number of scholars have offered a variety
of descriptions for social capital. Coleman (1994) has defined social capital as those
expectations for action within a collectivity that affect the economic goals and goal-
seeking behavior of its members, even if these expectations are not oriented toward
the economic sphere. e University of Michigan’s Institute for Social Research
describes social capital as follows: “Social capital … is more than simply having
social connections and networks. Social capital is exhibited in individuals who
have a well-developed sense of mutual trust and ‘give-and-take’ or ‘reciprocity’ in
their social networks. Moreover, it is exhibited in individuals who are actively
engaged in civic and political life. is trust, reciprocity, and civic and political
engagement then enrich the communities where these individuals reside”
(Institute for Social Research, 2018). In Basel, Switzerland, the Basel Institute
of Commons and Economics offers to measure social capital of organizations.
is is a challenging task. ey recognize that despite the distinction between
social capital and financial capital and human capital, there is still some confusion
about its meaning. ey recognize that social capital “cuts across with a couple
of societal, economical, and political issues” such as social networks, social
entrepreneurship, social development, public goods, civil society, social cohesion,
voluntarism, philanthropy, and solidarity (Dill, 2015).
Even though the concept of social capital has been actively discussed since the
1990s, defining the concept continues to be a challenge to this day. By 2004, a
variety of perspectives and definitions for the concept of social capital had already
been offered by various scholars (including Belliveau, O’Reilly and Wade, 1996;
Bourdieu, 1986; Bourdieu and Wacquant, 1992; Boxman, De Graal and Flap,
1991; Brehm and Rahn, 1997; Burt, 2001; Coleman, 1994; Fukuyama, 1997;
Knoke, 1999; Lin, 1999; Nahapiet and Ghoshal, 1998; Portes, 1998; Putnam,
1995; Smith and Kulynych, 2002; omas, 1996; and Woolcock, 1998). Claridge
discussed many of these definitions in his thesis (Claridge, 2004). e effort to get
a better grasp on the concept of social capital has continued throughout the past
decade (Adam, 2011; Curley, 2010; Foley and O’Connor, 2013; Fulkerson and
ompson, 2008; Hays, 2015; Westlund and Adam, 2010). Social capital may
well be difficult to define because scholars cannot account for the vast range of
elements contributing to it in a brief description. Clark (2006) states, Whereas
numerous commentators have addressed questions of aetiology, cultivation,
distribution, and effects of social capital, there is as yet no satisfactory explanation
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of what it is as such”. He defines social capital as follows: “Social capital is the
productive value of relationships between people. It consists in the networks of
relationship available to individuals and groups, such as families, friendships,
work, clubs, religion, neighbourhood, political affiliations, and ethnicity” (Clark,
2006). He goes on to state, “It also consists in the environmental and cultural
conditions in which those networks operate, such as the strength of identification
between a network and its members, the trust and/or sympathy that exist among
them, and the norms of reciprocity within a network that may be inferred from
the attitudes and behavior of its members” (Clark, 2006).
What is evident in the various definitions of social capital is that it is created
through relationships among individuals, either as members of the institutions
they represent or in their own capacity. e language of communication is an
essential asset in the exchange of ideas, sentiments, information, narratives, and
messages that create, maintain, and sustain relationships. Yet, surprisingly, most
definitions fail to identify language as a significant factor in promoting social
capital. Fortunately, recent scholars have begun to acknowledge it (Gallagher-
Brett, Doughty and McGuinesss, 2014; Joksimović et al, 2018; Khodadady and
Ashrafborji, 2016; Neely, Hinds and Cramton, 2012). Before Ciba-Geigy and
Sandoz merged in 1996 to create Novartis, there were three pharmaceutical
multinational corporations headquartered in Basle, Switzerland. ese were Ciba-
Geigy, Sandoz, and Hoffmann-La Roche. Each had different working languages:
English, French, and German, respectively. is difference in their respective
working languages suggested that these languages contributed differently to the
creation of social capital for these corporations. Indeed, the focus of this article
is on the importance of language in the creation of corporate social capital, not
on social capital itself. Different value may be accrued to different corporations
through the same language. Different languages may contribute differently to
the social capital created for the respective corporation. Dhir (2004, 2005) has
described elsewhere an approach to capture the subjective process for assessing
the value of language. is article emphasizes that by assessing the value of a
language the contribution of that language to the creation of corporate social
capital can be captured.
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2. Trends shaping the creation of social capital
Dhir (2004, 2005) has described three major trends that shape corporations
today. ese are the trends in the (i) knowledge economy, (ii) globalization of
business and economy, and (iii) diversity of the workforce. ese three trends
are also shaping the processes by which a corporation’s social capital is created.
Also see Grin et al. (2010), Esperança (2008), and Garcia Delgado et alii (2012).
2.1 e evolution of the knowledge economy
Dhir (2004) noted that traditional theory “views an organization as a system that
processes information and solves problems through decision-making. It seeks to
improve the efficiency with which information is processed within the context
of decision making in an uncertain environment”. e literature on the process
of creating and managing knowledge demonstrates that organizations create and
manage both information and knowledge (Amidon, 1997; Foss and Pedersen, 2004;
Kolodny et alii, 1996; Nonaka 1994; Scarbrough 1996). e role of knowledge
creation in a multinational corporations has continued to attract investigations
(Nonaka and von Krogh, 2009; Nonaka, von Krogh and Voelpel, 2006; Stacey,
2001). It is generally understood that knowledge is transferred through language
although not all languages are equally efficient at doing so. is knowledge is then
aligned with local or regional culture, thus establishing the conditions for creating
social capital.
Dhir has emphasized the role of language in knowledge creation. He contrasted
information-driven organizations with knowledge-driven organizations in the
following terms. Information-based organizations “focus on knowing facts acquired
through information that is often obtained by formal education. Information is
independent of the individual creator. Its transfer is quick and mass oriented” (Dhir,
2004). e cost structures in information-driven organizations are distinct from
those in knowledge-driven organizations. As stated by Dhir (2004), “Information-
driven organizations bundle information into standardised packages for a mass
of customers. e major costs of communication are developmental. e cost of
increasing volume is minimal.” In contrast, knowledge-driven organizations usually
not only make the knowledge available but enable others to use it. ey transfer
knowledge. e party acquiring the knowledge might undergo training, reflect on
the knowledge acquired, engage in repetitive exercises, make mistakes, and learn
through practice. e transfer of knowledge requires an efficient language and
generally takes time. It is usually accomplished on an individual, person-to-person
basis. e costs of delivering knowledge-based services are usually related to the
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transfer of knowledge and the capacity to use that knowledge. is may include the
cost of language translation. In contrast to the cost structures of information-based
organizations, the main cost for knowledge-based organizations is at the stage of
delivering the service. Sveiby explains that these costs increase with volume (Sveiby
1997: 24-50). Complex organizations have elements of both information-driven
organizations and knowledge-driven organizations. Demands for new corporate
competencies are motivated by five factors: new stakeholders, expectations,
technologies, time horizons, and competition (Dhir and Harris, 2001). New
stakeholders call for a focus on important corporate competencies, and expect
corporations to develop processes that add value. Dhir and Harris explain that
“this requires that corporations focus less on activities designed to convert events
into information (e.g., collecting, classifying and summarizing activities) and
focus more on activities designed to transform information into knowledge (e.g.,
analyzing, interpreting, and evaluating activities that drive the decision making
process)” (Dhir and Harris, 2001). New technologies are emerging at a rapid rate.
ey are disruptive in that they make dramatic improvements to methods and
efficiency through innovation, and they create values in society that were difficult
to foresee even just one decade ago. e rate at which business environments
change in our times has converted the long-term of the past into the short-term
of today. e pace of change has profound implications for continuing education,
professional development, and entrepreneurship. Corporations competing in
knowledge-based markets have to be agile and responsive at an ever increasing rate
of adaptation. All the factors and issues described here suggest new competitors
and new ways of competing. New stakeholders, new technologies, new time
horizons, and the rapidly changing profile of the market call for competitive
strategies that invite new players who are more agile and better able to compete,
in the market. All the five factors mentioned above have major implications for
communication, both within organizations, between organizations, and beyond
organizations, with social entities or external stakeholders. Language that
facilitates communication is important to each of the five factors described above.
2.2 Globalization of business
One noticeable response to the increasing demands for intellectual capacity
and the advent of technology-based entrepreneurship is that organizations,
multinational corporations in particular, are bringing together individuals who
have been nurtured in different cultural and political milieus, under different
degrees of industrial and economic development, and educated in different
socio-cultural conditions in different parts of the globe. ey often have different
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language competencies. Yet, together, they work towards a common organizational
mission. is trend moves the corporation toward the globalization not only
of the markets but of the workforce and personnel as well. e languages of
employees have a profound impact on the ability of corporations to compete in a
global marketplace. However, the strategic management literature does not offer
much discussion of the role of language in the positioning of the multinational
companies for effective competition. Also, the strategic role of language
from the perspective of corporate policy is generally ignored in the broader
communications literature (Dhir and Gòkè-Paríolá, 2002). Recently, scholars
have suggested that the language in which business transactions occur should
be addressed as a strategic issue, especially in multinational corporations that
operate in the trans-national, global markets. Language in the context of strategic
management has attracted considerable interest (Barner-Rasmussen et al, 2014;
Brannen and Doz, 2012; Brannen, Piekkari and Tietze, 2014; Dhir, 2005; Dhir
and Gòkè-Paríolá, 2002; Dhir and Savage, 2002; Harzing and Pudelko, 2013;
Marschan, Welch and Welch 1997; Peltokorpi and Vaara, 2012; Piekkari and
Tietze, 2011; Piekkari and Zander, 2005).
Corporations often adopt a single language as their official working
language. ey do this to promote efficiency of communication and operation.
Nevertheless, Ghoshal and Bartlett (1995) have observed that “multinational
corporations favor the development of a strong sense of common purpose,
managed through soft control processes that operate through informal
communication channels, rather than formal means” (Dhir, 2004). As stated by
Dhir,personal relationships within an organization define the feasibility and the
effectiveness of communication, collaborative learning, and knowledge creation,
with direct implications for the corporations competitive advantage in its
strategic environment… Yet, the strategic management literature rarely discusses
the impact of language on multinational operations … beyond acknowledging
its importance, even when otherwise focused on the importance of local
considerations in effective management of international business” (Dhir, 2004).
A common language deployed throughout a multinational corporation may well
minimize “uncertainty and loss of information”, and integrate “diverse members of
a multinational organization into a single, cohesive and effective corporate body”
(Dhir, 2005). However, Marschan-Piekkari, Welch and Welch (1999), and
Welch, Welch, and Marschan-Piekkari (2001), have suggested that a common
corporate language might very well hinder or even alter the flow of information,
and influence effective transfer of knowledge. Dhir and Gòkè-Paríolá (2002)
have argued that not allowing a diversity of languages in an organization through
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imposed standardization may in fact deprive the organization of critical resources.
Organizational members bring diverse perspectives from different cultures
that may offer unique values and opportunities to the company. A variety of
languages may bring a critical understanding of different cultures that can give a
multinational corporation a strategic and competitive advantage. Dhir and Gòkè-
Paríolá (2002) have suggested that multinational companies should develop
language policies that reflect the strategic environment within which they exist.
Dhir (2005) has noted that with “rare exceptions (Dhir and Gòkè-Paríolá, 2002;
Marschan, Welch and Welch, 1997) the need for corporate language policies has
not been adequately recognized in either the strategic management literature or
in the communications literature.
2.3 Workforce diversity
Over the past three decades, the impact of workforce diversity on corporate
functioning has been studied with considerable interest (Alesina and Ferrara,
2005; Cox 1993; Garnero and Rycx, 2013; Harrison and Klein, 2007; Jackson
and Ruderman, 1995; Kurtulus, 2011; Parrota, Pozzoli and Pytlikova, 2012;
Roberge and van Dick, 2010; Saxena, 2013). Does cultural diversity enhance
work group functioning, or does it detract from their efficiency? Some literature
recommends that managers should increase workforce diversity to enhance
work group effectiveness, in both domestic and global organizations. Yet,
empirical research in support of these recommendations is limited. Saxena
(2013) reports that employing diversified workforce is a necessity for every
organization but to manage such diversified workforce is also a big challenge for
management.” In a study in Denmark, Parrotta, Pozzoli and Pytlikova (2012)
found that “labor diversity in education significantly enhances a firm’s value
added. Conversely, diversity in ethnicity and demographics induces negative
effects on firm productivity. erefore, the negative effects, which are derived
from the communication and integration costs associated with a more culturally
and demographically diverse workforce, seem to outweigh the positive effects of
creativity and knowledge spillovers.” Garnero and Rycx (2013) estimated “the
impact of workforce diversity on productivity, wages and productivity-wage gaps
(i.e. profits) using detailed Belgian linked employer-employee panel data. ey
found that educational (age) diversity is beneficial (harmful) for firm productivity
and wages. e consequences of gender diversity are found to depend on the
technological/knowledge environment of firms. While gender diversity generates
significant gains in high-tech/ knowledge intensive sectors, the opposite result
is obtained in more traditional industries. Overall, findings do not point to
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sizeable productivity-wage gaps except for age diversity.” Understanding how
workforce diversity impacts an organization remains a difficulty. For example,
studies on race and gender have demonstrated both positive and negative impacts
on work group functioning (Phillips and O’Reilly 1998). In another instance,
Pelled (1996) makes one set of predictions about how group work members are
affected by racial diversity, and another about how they are affected by functional
background diversity based on the visibility of race and job-relatedness …
Different researchers hypothesize different models for the impact of diversity on
work group effectiveness (Dhir, 2005). e factors that one researcher expects to
impact work group effectiveness negatively are thought to affect it positively by
another. For instance, Pelled (1996) expected that racial diversity would impact
work group effectiveness negatively. However, Cox, Lobel, and McLeod (1991)
expected racial diversity to have a positive outcome. It is noteworthy that while
workforce diversity studies account for the impact of demographic variables
including age, race, ethnicity, gender, social class, religion, nationality, sexual
orientation, and physical disability, they do not generally address language as
a personal characteristic. While most personal characteristics of employees are
more or less fixed and cannot be changed by corporate managers, language can
be learned.
As stated by Clark (2006), “if there is a substantial phenomenon called social
capital, then one of its manifest forms is language.” Language is at the heart of
knowledge creation, storage, distribution and transfer, and communication
within a workforce, or across globalized markets. Created through relationships,
social capital requires interactions. Clark (2006) said that “human relations
are incomprehensible without language”. He also stated that one obstacle
impeding the development of a social capital ontology has been the question
of measurement”. e value of a multinational corporation’s social capital is
determined by the contribution various elements of the capital make to it. Here
we describe how the value of language as an element of social capital can be
determined.
3. Assessing the value of language
e approach to the valuation of language described here is inspired by the
concept of the valuation of currency. In economic communities, currencies are
used to:
i) Account for value
ii) Store value
iii) Exchange value
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To account for value, currency is used to denominate financial instruments
and invoice trade. Currency is used as an investment asset that can be stored over
time, to be retrieved at a later date. It is also used as a medium of exchange for an
asset that is deemed to be of the same value. Different currencies may be used for
accounting, storing, and exchanging amounts of the same value. An analogy can be
drawn between currency and language. Different languages can be used to convey
the same message. Languages, too, performs the three functions of accounting,
storing, and exchanging, in the context of knowledge, information, and culture.
Culture, in turn, is based on knowledge and information. A language is used to:
a) Account for knowledge and information
b) Store knowledge and information
c) Exchange knowledge and information
It is clear that in different markets – or economic communities – around
the globe, different currencies are used to account for, store or exchange value.
ese currencies are also converted from one to another. Similarly, in different
social or corporate communities, different languages are used to account for,
store or exchange knowledge or information – or culture – and languages can
be translated from one to another. Dhir (2005) goes farther with the analogy
between currency and language. He observes that the “value of a currency to an
organization operating in an economic environment may be affected by such
considerations as the demographic range in which the currency is used, the
degree of investment made in that currency by the economic community, the
general demand for the currency, and so on. Similarly the value of a language to
an organization may be affected by the degree to which the language is used in
the demographic community defining the organization’s strategic environment,
the investment in the language relative to other available languages, the demand
for the language as a commodity within the organization’s strategic community,
and so on. Just as different prevailing economic trends have implications for
strategies devised for the management of currencies held by a company, different
social trends have implications for the management of a corporation’s language
assets” (Dhir, 2005). Dhir and Savage (2002) used these analogies to develop
an approach to the assessment of value of languages, within the context of an
organization’s strategic environment.
Well over two decades ago, Coulmas had already observed that language was
an element of the economic process in which organizations, and corporations,
functioned. However, at that time, Coulmas also noted that it was difficult
to assign value to language because of the difficulty in “weighing of the
factors” contributing to its value, due to a deficit in theoretical and empirical
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research…” (Coulmas, 1992: 88-89). Soon after, Grin (1996) called for a study
of the economics of language, in terms of such linguistic considerations in
which economic variables also play a part. As stated by Dhir (2005), “Linguistic
variables of language may include … percentage of a population that speak a
particular language, domains or situations of use, attitudes towards the use of a
language (e.g., whether the knowledge of a particular language gives the speaker
high or low social status), maintenance and spread of the language, formal and
informal patterns of use in the language, knowledge creativity in the language,
etc. Economic variables in relation to language include costs to the community of
learning a language, enhancement in the level of income derived using a language,
unemployment due to lack of language ability, etc.
Coulmas (1991) refers to the utility of a language, noting that the value of the
language may vary with its suitability for performing specific tasks. For instance,
some languages may be more effective than others for communication in different
places, to different audiences, and at different times. Coulmas also notes that in
international transactions and global markets, different languages offer different
values in exchange, determined by the demand for the language in the specific
context. “Both the utility value and the exchange value of language can vary from
context to context and markets to markets” (Dhir, 2005). Fortunately, advances
in applied psychology, model building, rapid computer-based data handling and
processing, graphic displays, et cetera, have now removed the deficits in theoretical
and empirical research lamented by Coulmas. It has now become possible to
assess the subjective processes underlying the valuation of languages, within the
strategic context in which corporations operate.
e economic considerations involved in the decision-making process can be
analyzed to address the issue of a multinational corporation choosing its working
language. Relying heavily on the clues provided by Coulmas (1992) in regard to
the utility value of language, Dhir and Savage (2001) developed an approach to
assess the value of a language, within the context of a firm’s strategic environment.
Of the various theories of decision making available in the decision analysis
literature, they settled on judgment analysis based on Social Judgment eory
(Cooksey, 1996). ey preferred this theoretical framework to others because it
does not prescribe how rational decisions should be made. eir objective was to
account for the subjective valuation process from the perspective of developing a
corporate policy for assigning relative value, not to define a prescriptive approach
to the valuation of a language. Neither did they wish to compare observed
decision behavior with a rational prescription. ey merely wanted to describe
the process of the assessment being deployed by individuals (Cooksey, 1996: pp.
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26-54). e approach they used is a process of individual judgment, from which
judgment and decision aids can be developed.
3.1 A Case Study
For illustrative purposes, consider the following case. A consultant is hired by
an aspiring multinational firm, presently operating in Romania. e company
has decided to expand into Europe, including markets in England, Germany and
France. While German and French are recognized minority languages in Romania,
English is not. e managers of this growing firm feel they need to choose
additional language, or languages, to (i) serve as a medium of communication, so
that the firm may engage in effective inter-subsidiary communication; (ii) acquire
a local identity in markets where Romanian is not a familiar language; and (iii)
to create human and intellectual capital in the local markets. e consultant is
asked to assist the policy makers of the multinational company in developing a
language policy that would inform what language or languages should be adopted
by the company.
e consultant sets out on the task, asking at the outset what the purpose of
the policy is, and is told that the goal is to maximize the potential for creating
corporate social capital. e consultant decides to assess the value of the language
in terms of its potential to create corporate social capital, within the context of the
company’s strategic environment. e consultant then inquires what linguistic
factors enhance the process of creating corporate social capital. e following
factors are identified as contributing to the value of language, within the context
of the company’s strategic environment:
a) Demographic Range – the degree to which the language is used in the
demographic community relative to other languages available within
the multinational company’s strategic environment (both external and
internal).
b) Total Investment – the degree to which the demographic community
collectively invests in (that is, learns or prefers) the language relative to
other languages available in the organization’s internal environment.
c) Demand – the degree to which the language is demanded as a commodity
within the demographic community relative to other languages available
within the multinational company’s strategic environment (both external
and internal).
d) Knowledge Creativity – the degree to which the demographic community
creates knowledge in the language relative to other languages available
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within the multinational company’s strategic environment (both external
and internal).
e) Functional Potential – the degree to which the language can be developed
as the multinational business organization’s economic means of
production within the time frame of its strategic plan relative to other
languages available.
To determine the relative importance of these factors, the consultant
presents the corporate policy makers a set of, say, twenty hypothetical profiles of
languages. In these profiles, each of the five factors, a) through e), are presented
with random values on a scale from 1 to 10, where 1 represents a factor to be
present at an extremely low level, and 10 represents the factor to be present at an
extremely high level. e consultant ensures that the twenty profiles are designed
with orthogonal values assigned to the five factors (that is, they are not inter-
correlated).
e consultant now asks the corporate policy makers to rate each of the twenty
profiles for their respective usefulness, or utility, to the company on a scale from
1 to 10, where a rating of 1 indicates that the language represented by the profile
has an extremely low utility for the company, and a rating of 10 indicates that
the language has an extremely high utility for the company. When all the profiles
have been rated, and the raters are satisfied with the ratings they have assigned to
the respective profiles, the consultant performs nonlinear regression analyses for
each policy maker. e consultant uses a second order model for the regression
to capture the weights each policy maker assigns to the factors and the non-
linearity resulting from the level at which each of the five factors are present in
the various profiles. e regression analyses also yield the cognitive consistencies
of each of the policy makers in exercise of their respective judgments, in terms
of the multiple correlation coefficient. For mathematical details regarding these
analyses, see Cooksey (1996: 178-180). In this way, the policy of each policy
maker can be obtained in terms of the relative weight assigned to each factor
considered and the functional relationship between the factor and the overall
rating of utility derived from various language profiles. ese profiles can then
be applied to the other languages being considered and the ones that best suit
the policy makers can be chosen. For further elaboration, detailed description,
and discussion of the method for determining the value of languages described
above, see Dhir and Savage (2002) and Dhir (2005). An example of the process
of determining the value of a language within a firm’s strategic environment
and formulating a corporate policy from this valuation is presented in Dhir and
Savage (2002).
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Krishna S. Dhir
3.2 A portfolio of languages
Assessing the value of languages within the strategic context in which a
multinational corporation operates opens up interesting language possibilities
for the management of multinational corporations. Valuations of currencies
help multinational corporations to determine the optimal portfolio. Similarly,
valuations of languages, within the context of the corporation’s strategic
environment, help the corporation to determine the portfolio of languages. is
suggests the need for plurality of language skills among the corporate managers.
e implication is that multinational corporations need to recruit managers
who are multilingual and carefully place these language skills at key positions
for maximum impact and efficiency in the creation of corporate social capital.
e distribution of language competencies in the various hierarchical levels of
a corporation would be determined by the specific organizational design, which
in turn may be determined by the specific goals and the overall mission of the
corporation.
4. Concluding remarks
is article has discussed the importance of languages in creating corporate
social capital in multinational corporations. Relationships that are essential
for creating corporate social capital depend on the languages deployed within
the corporation. e role of language is becoming increasingly important in
the emergence of the knowledge-based economy, the globalization of business,
and the increasing diversification of the workforce. With these trends leading
to complex internal and external competitive environments, multinational
corporations are experiencing increasing pressure to understand and design the
processes that create their respective social capital. ey urgently need to assess
the value of their social capital but this valuation itself is challenging.
e languages used in a corporation are assets that create value and corporate
social capital through their use and the exchange of ideas. As mentioned above, a
number of factors contribute to the creation of corporate social capital. Language
is one of them. Linguists have long attempted to assess the value of language
as a commodity, but with limited success. is article suggests that the existing
studies on the assessment of the value of language be extended to the contribution
language makes to the creation of corporate social capital.
It is important to recognize languages as elements of corporate social capital,
within the strategic environment in which corporations operate. e three
major trends shaping modern corporations all focus on the increasing role and
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importance of language in the creation of corporate social capital. e emerging
trends in the knowledge economy go beyond information processing, the
globalization of business and economy, and the diversification of the workforce,
and emphasize the importance of taking language into account as a strategic
factor creation of social capital.
To bring home the concept of value of language to a corporation, this article
draws an analogy between currency and language. Currency and language have
similar functions in that they account for, store, and exchange value. Money gets
transacted through currencies. Messages get transmitted through languages. And
they are often managed in similar ways as well. One currency can be converted
into another. Languages get translated. Ecuador, El Salvador, and Zimbabwe,
adopted the US Dollar though currency substitution. India has adopted English
as its working language.
Just as multinational corporations often maintain a portfolio of currencies,
they could also develop and maintain a portfolio of languages for maximizing
the creation of their corporate social capital. Exactly how specific language
competencies are distributed throughout the corporate hierarchy would depend
on the corporate design and how these competencies can be most effectively used
to execute its goals and fulfill the corporate mission.
is article has emphasized language as a factor in the creation of corporate
social capital. As stated, language is one of various factors that contribute to the
creation of social capital. It is important that the corporation begin by identifying
all of the contributing factors at the outset and determining how they are related
to the strategic environment within which the corporation exists and operates.
e approach applied to language could conceivably be applied to other factors
as well.
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This study aimed to 1) explore the social capitals of students who had registered in the three branches of Khorasan Language Institute (KLI) to learn English, 2) establish their factorial validity and 3) explore their relationship with English language achievement. To this end the 40-item Social Capital Scale (SCS) developed by Khodadady and Alaee (2012) and validated with grade three senior high school students in Mashhad was modified and administered to 493 female English language learners (ELLs) in the KLI. The application of Principal Axis Factoring and Varimax with Kaiser Normalization to the collected data showed that the SCS consisted of seven factors, i.e., Social Attachment, Parental Supervision, Parental Expectation, Helpful Others, Social Contact, Religious Activities, and Parent Availability. When the SCS was correlated with the ELLs’ scores on oral and written examinations, no significant relationship could be found between social capitals and English language achievement. Out of seven factors, only Helpful Others correlated significantly but negatively with ELLs' English achievement. The results are discussed from both empirical and theoretical perspectives and suggestions are made for future research.
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