English as Lingua Franca in

International Business
International Business
Final Individual Paper

Written by
Tarra Laurentia
(17/411433/EK/21404)

Faculty of Economics and Business

Universitas Gadjah Mada
Yogyakarta
Introduction

International business, by the textbook definition of International Business: The Challenge of

Global Competition by Ball, Geringer, McNett, and Minor, is “any kinds of business whose
activities are carried out across national boders.” (Ball et al., 2012). The types of businesses
covered by this definition were not only restricted to international trade and manufacturing, but
also international service industry, such as in transportation, tourism, advertising, and mass
communications. Naturally, a business that spans across multi-nationalities, in terms of
geographical location, business operations, and human resources, will have to deal with people
originating from variants of nation. One very profound problem that usually arises in a situation
involving different kinds of people from different nationalities is language problems. People
from different origins and each having their own mother tongue respective to their nationalities
will cause communication problems to arise. To overcome the problem of communication due to
language differences, a commonly agreed language is established as a bridging mean of
communication between people speaking different languages. This language, agreed by all
members of the populations (or in a given forum) is termed as Lingua Franca. In a global scale,
English language has been recognized as the global Lingua Franca. The everlasting popularity
and growth of English usage is evident in the way multinational corporations are establishing
English as their corporate languages, meaning that English will have to be spoken by every
employee, even those who worked the headquarters populated by mainly locals or non-English
speakers. Examples that have taken this path are Boston Consulting Group, Honda, and Rakuten.
In context of this trend, this paper will discuss the question “What is the importance of English
as Lingua Franca in Multinational Companies?”

Background
Historically, the term ‘Lingua Franca’ first emerged during the Middle Age to describe French
and Italian based jargon or pidgin developed by Crusaders and trades in Eastern Mediterranean
as a mean of communication between the two groups speaking their respective native language.
Pidgin, as the origin of the term Lingua Franca, is the term for grammatically simplified
communication means that were developed to bridge between two or more groups that have no
common language (Mufwene, 2010). Pidgin was most commonly used in trade, such as the
situation above where Lingua Franca developed and historically trade posts also developed their
own pidgin (Bickerton, 1976). Pidgin language is characterized by invariant forms of nouns,
verbs, and adjectives, which are drawn from the languages spoken by the groups creating the
pidgin. (Mufwene, 2010). During the 15th – 18th centuries, Portuguese served as the common
diplomatic and trade language, or the Lingua Franca, in coastal Africa and in Asian coastal areas
from Indian Ocean to Japan. In Southeast Asia, Malay served as an important Lingua Franca, and
it has also been adopted by Arab and Chinese traders (Mufwene, 2010). Today, officially the
United Nations established six official languages: English, Chinese, French, Arabic, Russian, and
Spanish. Although some groups of countries may have their own established Lingua Franca,
such as inter-ethnic groups between Asian countries, globally English is emerging as the main
Lingua Franca. With three out of every four English user in the world being non-native English
speaker (Crystal 2003), the English language use spreads rapidly beyond the community of
native English speakers or those with English as mother tongue. The magnitude of English
usage, perhaps, is what has been a deciding factor for multinational corporations that chose
English as their single corporate language. With English as the corporate language, local
employees will be required proficient use of English with their also local colleagues in an office
filled mainly with the locals, such as the case of Rakuten. However, with the resulting problems
from the language adoption, such as cost of transitions, difficulties for non-English speaking
employees, and stricter employment requirements, does the benefits of English as Lingua Franca
in these companies still bypasses the incurred costs? Why are multinational company dead-set on
establishing English as one single corporate language? What is the significance of such decision?
The main question of the paper, “What is the importance of English as Lingua Franca in
Multinational Companies” will addresses the whole discussion on English as Lingua Franca, its
benefits and costs, and its significance to the company.

Findings

English language earned its placed as the fastest-spreading language in human history, being
spoken at proficient level by approximately 1.75 people worldwide. In countries with English as
its mother tongue such as U.S. and Australia, there are approximately 385 million native
speakers. In formerly colonized nations such as India and Nigeria, there are about a billion fluent
speakers of English. Around the world, millions of people studied English as second language.
On the internet, approximately 565 million people use the language to communicate (Neeley,
2012). English ‘supremacy’ does not stop at being the most-spoken language, but in academic
and business to English is the dominant language. International periodical publications in the
1990s had more than 75% of social science published in English, while for natural science it was
90% (Martins, 2017). In business world, 85% of business organization is using English as their
official language. In Asia and Pacific, approximately 90% of business proceedings were
conducted in English. At international level, the default language of e-commerce is English
(Martins, 2017). With such dominance, it is clear that English supreme as the most commonly
shared language between different nationalities and its place is not likely to be replaced by other
language anytime soon, despite the controversy and criticism on the reigning English supremacy
(Martins, 2017).
According to Martins (2017), English as the language of business internationally has 3 major
distinctive features, which are: neutrality, practicability, and cultural diversity:
1. Neutrality feature of English as language of business means that English is an impartially
shared communication between non-native speakers and act as a neutral ground. As
English is a common communication tool in international business, English as the
language of business focuses on communication strategies rather than on nativity of the
language. Since English is widely shared too, native English speakers are not constantly
used as the measurement of English competency and fluency of non-native speakers.
Rather, the weight is placed more on the accuracy of the content and professionality in
the use of business terminologies.
 2. Practicality feature of English as language of business means that English as highly
practical language tend to focus more on the efficient, relevant, and economic use of
English rather than the formality or traditions surrounding a language. English as a
language of business will focuses more on the understanding of the content rather than
errors or nativity.
3. Cultural diversity feature of English as language of business means that English language
covers a highly diverse culture and is not predisposed to one culture due to majority of
participants being non-natives from different cultural backgrounds.

Companies that are engaging in large scale international business are starting to adopt English as their
corporate language. These companies, despite the fact they are based in one country and, in some cases,
have workforces that consisted mainly of locals of the home-base country, are insistent on establishing a
strictly English-only workplace. Some of the examples of companies that are adopting English as
corporate language are: Daimler-Chrysler (Germany & United States), ITT Motion Technologies (Italy),
Nissan (Japan), Rakuten (Japan), Renault (France), Samsung (South Korea), Siemens (Germany), and
Sodexo (France).
Consider the case of Rakuten, a multibillion-dollar company of Japan’s online marketplace based in
Japan. The CEO of Rakuten, Hiroshi Mikitani, mandated in March 2010 that the corporation’s official
language will be English. In achieving the company’s goal of becoming the number one internet sevices
company in the world and Mikitani’s responsibility to contribute to expanding the worldview of his
country, the CEO believed that the English language policy will be vital to the company. In the wake of
the mandate, which were announced in English, various changes were made around the work
environment: cafeteria menus and elevator directories were changed into English, and employees are
expected to demonstrate English competence within 2 years or face demotion or dismissal. Although
there were many criticisms surrounding the decision, the policy produced positive results. Rakuten
transformed into a remarkably diverse and powerful organization. Today, 3 out of 6 of the senior
executives in Rakuten’s engineering organization are not Japanese and does not speak Japanese. The
policy also allowed the company to be more aggressive in seeking the best talent with a wider scope-as in
around the globe. 25% of Rakuten’s Japanese employees communicate in English with partners from
foreign subsidiaries regularly, which increases company’s flexibility and clear flow of information.