Management knowledge and product and innovation ideas can be ‘lost in translation’

Efficient and effective communication channels provide multinationals with valuable information.

One of the pleasures of travel is listening to the sound of exotic languages in foreign places. But for a multinational corporation (MNC) setting up shop overseas, linguistic differences can bring a host of problems that have the potential to seriously impact performance.

Vesa Matti Peltokorpi, associate professor at the Japan Advanced Institute of Science and Technology, addresses challenges like this – and ways to overcome them – in his paper Language and Reverse Knowledge Transfer in Multinational Corporations.

MNC subsidiaries are increasingly providing headquarters with valuable management knowledge and product and innovation ideas, says Dr. Peltokorpi, but without efficient and effective communication channels, this valuable information will be lost.

While English is the official corporate language for most MNCs in the West, many of the workers in countries where MNCs establish a subsidiary often have only a basic grasp of written and spoken English.

This has two worrisome effects: messages from head office are not fully understood, and subsidiary intelligence about marketing and operational issues and insights are not communicated to MNC headquarters, something known as “reverse knowledge transfer,” says Dr. Peltokorpi.

“I have lived in Japan for 10 years and even though the workers there might have brilliant ideas, unfortunately many of them working for MNCs don’t speak enough English to effectively voice their opinions. They hesitate to reveal their lack of language proficiency,” says Dr. Peltokorpi, who based his findings on hundreds of surveys with Japanese workers at MNC subsidiaries (in Japan, MNCs employ one million nationals).

The solution? Finding ways to nurture the information flow between headquarters and subsidiairies, says Dr. Peltokorpi. One option – although an expensive one – is translation, he explains, citing a factory in China that translated written and spoken communications from headquarters to subsidiary workers. However, the expense made the practice unsustainable.

To make reverse knowledge transfer more efficient, Dr. Peltokorpi suggests “rich media” strategies that include face-to-face meetings or meetings via Skype and video conferencing, making participation easier for those who are less comfortable with English. He sees “lean media,” such as emails, memos and reports, as least effective. 

Further steps to enrich communication strategies are needed, says Dr. Peltokorpi, and subsidiary workers have to be encouraged to share their ideas by making them feel that they are an important part of the corporation’s global operating structure. “If you have a great idea you would like to communicate to the decision makers, you need sufficient corporate language abilities and you need to be motivated to transfer the idea,” he says.

With increasing globalization, it seems that classic “top-down” communication structures must be altered to plumb the wells of innovation and problem-solving potential within subsidiaries.


Language and Reverse Knowledge Transfer in Multinational Corporations: Interactive Effects of Communication Media Richness and Headquarters Commitment by Vesa Matti Peltokorpi, associate professor at the Japan Advanced Institute of Science and Technology.


Best Global Trade Finance Bank, GTR Leaders in Trade 2014

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