GTDW "Language Barriers in Multinationals and Knowledge Transfers"

On Monday 15th November October, Amit Khandelwal will present his paper "Language Barriers in Multinationals and Knowledge Transfers", joint with Louise Guillouët, Rocco Macchiavello and Matthieu Teachout.

Abstract: A distinct feature of MNCs is a three-tier organizational structure: foreign managers (FMs) supervise domestic managers (DMs) who supervise production workers. Language barriers between FMs and DMs could impede transfers of management knowledge. We develop a model in which DMs learn general management by communicating with FMs, but communication effort is non-contractible. These conditions generate sub-optimal communication within the MNC. If communication is complementary with language skills, the planner could raise welfare by subsidizing foreign language acquisition. We experimentally assess the validity of the general skills and the complementarity assumptions in Myanmar, a setting where FMs and DMs communicate in English. The first experiment examines the general skills assumption by asking prospective employers at domestic firms to rate hypothetical job candidates. They value candidates with both higher English proficiency and MNC experience, a premium driven, in part, by frequent interactions with FMs. The second experiment examines the complementarity assumption by providing English training to a random sample of DMs working at MNCs. At endline, treated DMs have higher English proficiency, communicate more frequently with their FMs, are more involved in firm management, and perform better in simulated management tasks. Organizational barriers within MNCs can thus hinder knowledge transfers and lead to an under-investment in English relative to the social optimum.

The GTDW is an established regular trade and development seminar series organized jointly by the Geneva School of Economics and Management of the University of Geneva (GSEM), the Graduate Institute in Geneva (IHEID), the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization (WTO). After twelve years of running as an on-site seminar, the online edition of GTDW is co-organized with the Centre for Economic Policy Research (CEPR). Visit GTDW's website for further information:

Each meeting will take place on a Monday at 10.00 AM (ET) / 3.00 PM (GMT) / 4.00 PM (CET) and last for 1 hour and 15 minutes.

The line-up of speakers is as follows:

- 20th Sept: Sebnem Kalemli-Özcan (University of Maryland and CEPR)
- 4th Oct: Esteban Rossi-Hansberg (University of Chicago and CEPR)
- 18th Oct: Pinelopi Goldberg (Yale University and CEPR)
- 15th Nov: Amit Khandelwal (Columbia Graduate School of Business and CEPR)
- 22nd Nov: Kala Krishna (Pennsylvania State University)
- 6th Dec: Andrés Rodríguez-Clare (University of California, Berkeley and CEPR)
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