The Impact of Language Competence of Local Workforce on Expatriation Strategies in Multinational Enterprises

This study examines how the language competence of the host country’s workforce affects expatriate deployment in multinational enterprises (MNEs). Analyzing 9,580 subsidiaries of Korean MNEs across 55 countries using multi-level modeling, this study reveals that MNEs tend to employ more expatriates in their foreign subsidiaries located in countries with lower English proficiency. Additionally, this study demonstrates the moderating role of the duration of the subsidiary’s local operations. As the duration of subsidiaries’ local operations increases, there is a significant reduction in reliance on expatriates within subsidiaries located in countries exhibiting lower English competence. These findings carry important implications for both research and practice in MNE management, particularly in countries with diverse levels of language competence among their workforces. They indicate that the impact of language barriers on subsidiary management is not constant but variable.