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The management of human resources in headquarters (HQ)�subsidiary relationships requires intensive communication, but effective communication often depends on having a shared language. Hence, language differences can be a serious threat to the successful management of human resources in multinational corporations. In this large-scale quantitative study, encompassing data from more than 800 subsidiaries in 13 countries, we investigated four related issues. First, in terms of the importance of language differences, we found that HQ�subsidiary relationships are clearly affected by language differences and that the latter form a distance category of their own, which should not be subsumed under the related, but separate concept of cultural differences. Second, regarding the consequences of language differences for communication outcomes, we found that a lack of a shared language is associated with misunderstanding, conflict and parallel information networks, which could harm HQ�subsidiary interactions. Third, with regard to the impact of language differences on communication methods, we found that a lack of a shared language is associated with a significantly lower level of oral (face-to-face and phone) communication, but not written communication. Fourth, and finally, in terms of a potential solution to communication problems caused by language differences, we found that expatriates can facilitate both communication and knowledge transfer between HQ and subsidiaries.
