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Language friction and partner selection in cross-border R&D alliance formation

Author

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  • Amol M Joshi

    (College of Business, Oregon State University, Corvallis, USA)

  • Nandini Lahiri

    (Fox School of Business, Temple University, Philadelphia, USA)

Abstract

How does language friction affect alliance formation? Language friction is a form of cultural friction arising from structural differences in the respective languages used by potential partners to reason and solve problems together. A little language friction may prompt partners to rethink solutions, thereby enhancing collaboration, but excessive friction may impede collaboration. We develop a Language Friction Index (LFI) to quantify relative differences in linguistic structure for any language pair. Utilizing a unique data set of semiconductor design activities (1988–2001), our empirical analysis finds an inverted U-shaped relationship between partners’ LFI and the likelihood of cross-border research and development (R&D) alliance formation. This relationship is further moderated by prior ties and technological distance. Our findings have several important implications, including: (1) language differences are a measurable and discernible source of cultural friction; (2) the effects of language friction are economically significant and strategically consequential; (3) certain aspects of language friction occur independent of language proficiency and persist despite the use of lingua franca to reduce language barriers; (4) linguistic diversity is an indirect marker of cognitive diversity, which is useful in boosting creativity, especially in first-time collaborations; (5) beyond R&D alliances, language friction may also influence other types of strategic interactions and organizational processes.

Suggested Citation

  • Amol M Joshi & Nandini Lahiri, 2015. "Language friction and partner selection in cross-border R&D alliance formation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(2), pages 123-152, February.
    • Handle: RePEc:pal:jintbs:v:46:y:2015:i:2:p:123-152
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    Cited by:

    1. Jian Du & Shan Zhu & Wen Helena Li, 2023. "Innovation through internationalization: A systematic review and research agenda," Asia Pacific Journal of Management, Springer, vol. 40(3), pages 1217-1251, September.
    2. Vesa Peltokorpi & Markus Pudelko, 2021. "When more is not better: A curvilinear relationship between foreign language proficiency and social categorization," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(1), pages 78-104, February.
    3. Lee, Jeoung Yul & Yang, Young Soo & Ghauri, Pervez N. & Park, Byung Il, 2022. "The Impact of Social Media and Digital Platforms Experience on SME International Orientation: The Moderating Role of COVID-19 Pandemic," Journal of International Management, Elsevier, vol. 28(4).
    4. Robson, Matthew J. & Katsikeas, Constantine S. & Schlegelmilch, Bodo B. & Pramböck, Barbara, 2019. "Alliance capabilities, interpartner attributes, and performance outcomes in international strategic alliances," Journal of World Business, Elsevier, vol. 54(2), pages 137-153.
    5. Eunbi Kim, 2023. "Top management staffing and subsidiary performance under home-country uncertainty," Asian Business & Management, Palgrave Macmillan, vol. 22(4), pages 1513-1543, September.
    6. Alfredo Jiménez & David Fuente, 2016. "Learning from Others: the Impact of Vicarious Experience on the Psychic Distance and FDI Relationship," Management International Review, Springer, vol. 56(5), pages 633-664, October.
    7. Lian, Zeng & Sun, Wenli & Xie, Dan & Zheng, Jie, 2021. "Cultural difference and China’s cross-border M&As: Language matters," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 1205-1218.
    8. Golesorkhi, Sougand & Mersland, Roy & Piekkari, Rebecca & Pishchulov, Grigory & Randøy, Trond, 2019. "The effect of language use on the financial performance of microfinance banks: Evidence from cross-border activities in 74 countries," Journal of World Business, Elsevier, vol. 54(3), pages 213-229.
    9. Pascual Berrone & Patricio Duran & Luis Gómez-Mejía & Pursey P M A R Heugens & Tatiana Kostova & Marc Essen, 2022. "Impact of informal institutions on the prevalence, strategy, and performance of family firms: A meta-analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1153-1177, August.
    10. Nguyen, Ha Thi Thu & Larimo, Jorma & Ghauri, Pervez, 2022. "Understanding foreign divestment: The impacts of economic and political friction," Journal of Business Research, Elsevier, vol. 139(C), pages 675-691.
    11. Michael Nippa & Jeffrey J Reuer, 2019. "On the future of international joint venture research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 555-597, June.
    12. Stoian, Maria-Cristina & Tardios, Janja Annabel & Samdanis, Marios, 2024. "The knowledge-based view in international business: A systematic review of the literature and future research directions," International Business Review, Elsevier, vol. 33(2).
    13. Ilgaz Arikan & Oded Shenkar, 2022. "Neglected elements: What we should cover more of in international business research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(7), pages 1484-1507, September.
    14. Li, Wanli & Zhang, Xinyue, 2023. "Green innovation and cross-border strategic alliance announcements: Evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    15. Peng Wang & Yongyuan Ma & Zhongquan Hu, 2018. "Unraveling the effect of alliance experience on alliance formation and alliance governance structure: A meta-analytic approach," Australian Journal of Management, Australian School of Business, vol. 43(4), pages 653-671, November.
    16. Wang, Jie & Long, Zhineng & Chen, Liang & Li, Wanli, 2024. "How does linguistic diversity matter? The case of trade credit," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 333-350.
    17. Charpin, Remi & London, Jackie & Vincent, Nicolas, 2024. "The effect of geopolitical tensions on international research collaborations and its implications for global operations management," International Journal of Production Economics, Elsevier, vol. 268(C).

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