ELISE

European Language and International Strategy Development in SMEs 

European Overview Report

S. Hagen

Supported by EU leonardo da Vinci Programme
Overview of European Findings

The international business environment has been one of rapid change during the 90s.  Companies have had to ‘boldly go’ to regions where they have never traded before to compete for new business against local competition.

For most small and medium-sized companies this usually means a market where the local language and local customs and business practice differs noticeably from their own.  This has accelerated the process of internationalisation as companies have had increasingly to ‘think global and act local’. ‘Acting local’ means developing strategies to overcome the linguistic and cultural obstacles posed by foreign, often distant markets.  This involves integrating new tasks, such as localising products, hiring local staff, or handling foreign enquiries, and developing the capability to operate effectively in the local language and culture.

This study (ELISE) compares how well companies in different parts of Europe are managing the language and cultural dimension in their international trade.  It was therefore intended to produce indicative data and will, hopefully, trigger further more in-depth studies.

Sampling Methodology

The study was not intended (nor funded) to provide an exact cross-section of the industrial and commercial sectors of a given target country.  The sample was selected on the basis of their international trading profile and the study was designed to produce more qualitative than quantitative data.

Scope of the ELISE Study

The ELISE survey was carried out during 1999/2000 and the data in the study are based on findings from a sample of 452 small and medium - sized enterprises (SMEs) across five countries – Denmark, Ireland (North and South), the Netherlands, Scotland and Sweden. It follows on from the earlier ELUCIDATE study which surveyed SMEs in comparable regions of UK, France, Germany and Spain.  The aim of the project was to identify innovative practice in the SMEs, which participated in the ELISE survey and disseminate examples of effective language and communication strategies to other companies in Europe.

Table 1: Sample size 
Countries Surveyed	Sample Size	
Denmark	52	
Ireland	75	
Netherlands	92	
Northern Ireland	50	
Scotland	139	
Sweden	44	

The principal goals of the ELISE survey were to investigate:

	levels of existing language skills
	spread of competence across languages
	levels of cultural knowledge relevant to export markets
	barriers to trade due to missing skills 
	types of companies affected
	skill gaps/shortages
	impact of deficiencies on export business
	language training being undertaken
	strategies employed to overcome skill gaps and other linguistic deficiencies.

Companies included in the samples are comparable insofar as they are
	international trading companies (with up to 500 employees) 
	and involved in export (actual or potential ) – not standard definition

The findings in the study are intended to be particularly valuable to vocational education and training organisations, including chambers, as well as the managers of international SMEs.  The study is also intended to inform European policy-makers about how languages are used in exporting, where the skills gaps lie, and how European companies are coping with language and cultural barriers in different parts of the global environment. 

Earlier Studies: What language skills do Europeans possess?

Fortunately, the ELISE findings can be contextualised with those of other surveys of language skills in Europe over the last few years, which gives a broad picture of how different European countries compare in terms of linguistic competence.  The Eurobarometre 54 Special Report Les Europeeens et les Langages questioned 16,078 people in Europe about their knowledge of languages. 47% of Europeans only speak their mother tongue and no foreign language. However, knowledge of English as a second language is highest amongst the Swedes (81%), the Dutch (80%) and the Danes (78%). French is the first foreign language spoken by the Irish (25%) and the UK (22%). In terms of usage, English is the most frequently used foreign language (70% in Sweden; 66% in Denmark). After English, German is the most used language in the Netherlands (28%) and  Denmark (18%). In terms of usefulness, English is seen as the most useful for 75% of Europeans; then French (40%), German (23%) and Spanish (18%). In summary, the Nordic partners of ELISE possess substantially gretaer linguistic capability as a nation than the Irish and UK partners.

In December 1996 the Expolangues survey of 5000 Europeans aged 15 and over found that an average of 51% of Europeans were capable of speaking at least one foreign language. The French and Italians head the league with 61% and 56% respectively. Then come the Germans with 49%, followed by the British and the Spanish with 44% and 43% respectively. In terms of ‘fluency’ in another language the British are bottom of the league: only 14% of respondents claimed to speak another language to a very high standard, whereas the average for Europe was 26%.  Figures from 1990 put Ireland at the bottom of the linguistic league table. (EC Task Force for Human Resources).

In the Expolangues study there were three important noteworthy findings:

(i) Age distribution is a significant factor: amongst the under 35s the average number of Europeans claiming to speak another language fluently rises from 26% to 37%; 

(ii) Level of competence: The discrepancy between those claiming to be 'able to communicate' as opposed to being 'fluent' is marked. In the UK, for example, 26% consider themselves able to communicate in French, whereas only 12% think they are 'fluent'; 

(iii) English is the most widely spoken foreign language (excluding native speakers) but not the unquestioned lingua franca in practice where a range of second languages are known: English 52%; French 39%; German 35%; Italian 26%; Spanish 23%; Portuguese 3%; Dutch 1%; and Greek 1%. 

Findings from ELISE

Similarly, when it comes to the industrial and commercial use of languages, it is clear that English remains the most widely used language in the European region’s companies where the ELISE study was conducted.  While English may be the predominant language used in international business (see Table 2), there is also significant use of French, German, Italian and Spanish as foreign languages.  Also, there is clear evidence of the importance of other Scandinavian languages in Denmark in particular, and small, but noticeable use of east Asian languages, such as Chinese and Japanese,  in Scotland.
Table 2: Use of Foreign Languages in the ELISE sample of European Companies
Denmark
(n=52)	Ireland
(n=75)	Nor. Ireland
(n=50)	Netherlands
(n=92)	Scotland
(n=139)	Sweden
(n=44)	
En   	92%	Fr  	43%	Fr	44%	En	82%	Fr	43%	En	86%	
Ge  	81%	Ge 	40%	Ge	26%	Ge	82%	Ge	42%	Ge	25%	
Fr  	33%	It 	20%	Sp	12%	Fr	53%	Sp	17%	Fr	14%	
Sw 	19%	Sp	16%	Dut	4%	Sp	15%	It	14%			
Sp  	17%	Jap	4%	Kor	4%	It	7%	Jap	10%			
Nor 	12%	Sw	3%					Ch	4%			
It  	6%	Nor	3%					Sw	4%			
Port  	4%	Dut	1%					Rus	4%			
Source: ELISE	(as % of sample)

Table 3 shows the number of foreign languages used by companies.  The results also highlight a glaring difference in the use of foreign languages between the English-speaking countries and regions (Ireland, Northern Ireland and Scotland) and the Northern European countries where over 85% of companies regularly use a foreign language for trade (English or German) compared with just over 50% of companies in the above English-speaking countries/regions.  In ELUCIDATE, the picture was similar, but with the UK much higher at 75% (North East, South East and West Midlands average) showing a lower level of foreign language use for UK regional areas and Ireland. This is consistent with findings from the Mid West region of Ireland, where 52% of companies deal with their international markets through English. After English the most common foreign languages used for exporting companies in the Mid West are French, German, Italian, Spanish and Japanese. (Kenny & Sheikh, 2000).

The difference is not so great when looking at the proportion using 4 or more languages regularly.  This indicates that there is a significantly lower proportion of companies in Ireland and the UK regions that are using foreign languages in their business.  This also highlights the fact that a high proportion of English mother tongue companies use only English for trading purposes.
Table 3: Number of Foreign Languages used in ELISE sample of European Companies
No. of Languages	Denmark	Ireland	N. Ireland	Netherlands	Scotland	Sweden	
1+	94%	57%	52%	88%	54%	89%	
2+	88%	37%	29%	80%	42%	39%	
3+	46%	21%	15%	54%	28%	9%	
4+	27%	11%	4%	19%	13%	2%	
5+	8%	3%		5%	4%		
	(as % of sample)

The significant discrepancy between use of foreign languages in the Nordic countries (and the Netherlands) is not unexpected.  However, the scale of it suggests underperformance in foreign language usage by companies in the English-speaking areas.  This confirms earlier findings in ELUCIDATE.

To what Extent are Language Skills Available in European Companies?

The percentage of companies that have employees with foreign language skills appears to be fairly similar for countries in the non-English speaking sample (73%+), whereas in UK and Ireland, particularly Northern Ireland, only 42% of companies have employees with any language skills (Fig. 1). As a minimum, however, this means that a company has at least one employee who knows one language.  In reality, the exact level of knowledge in UK companies tends to be no greater than a ‘rusty O-level’.  This is a significant deficiency in comparison with other major European companies since the availability of language skills within the UK (Scotland and N. Ireland) is also lower and cannot be made up easily from educational provision. For example, in the UK, the take-up of languages at post-16 is poor; i.e. less than 10% of students (Nuffield Inquiry report, 2000).  The key issue, however,  is what impact this has on trading performance. It clearly puts  UK  companies at a disadvantage since they are constrained to use English when this may not be the optimal commercial approach. This pattern seems to confirm earlier trends in ELUCIDATE (see Figure 1a).
Figure 1: % of Companies in ELISE sample with Employees with Foreign Language Skills

Figure 1a: ELUCIDATE Data 

To What Extent is Business Being Lost Due to Communication Deficiencies?

It is clear from Fig. 2 below that a small, but nonetheless significant, proportion of European companies taking part in the ELISE study may have lost business due to language and/or cultural deficiencies.  Dutch companies appear to be worst off (14%), with all the other countries showing 6% or less of companies claiming loss of business. However, this unexpected finding can be explained in a number of ways:

1.	The Dutch are, traditionally, not only more linguistically aware than most other European countries, but trade extensively beyond their own borders.  They are therefore conscious of the ‘lost’ opportunities across global markets.  Furthermore, the Dutch prowess in speaking English and German does not extend to other languages, i.e. French. 

2.	Countries which are less linguistically aware are also less likely to perceive the impact of their deficiencies in foreign language skills, or indeed recognise the value of knowing the customer’s language in the first place.

Figure 2: Summary Of Barriers And Lost Business 

Figure 2a: ELUCIDATE Data 

To what Extent do European Companies Face Language Barriers?

Fig 2 and Fig 2a allow comparisons between ELUCIDATE and ELISE data.  Notably, the data on language barriers is similar in both studies.  A much greater proportion of companies, in both studies, face language barriers than face cultural barriers, or claim a resulting loss of business.  Scottish companies face most difficulty with 50% experiencing language barriers compared with the comparable UK result of 53% in ELUCIDATE.  The results for Ireland and Northern Ireland are similar (39%/38%), but, not unexpectedly, less than 30% of the Northern European countries face language barriers.  This correlates well with the proportion of companies in these areas using foreign languages on a regular basis and suggests that regular use of foreign languages by companies is inversely related to experience of language barriers.  This confirms earlier findings in ELUCIDATE.

Obviously, no one company can be expected to have competence in all the languages of its actual or potential customers in the global marketplace, but the most successful companies tend to develop language strategies at company level, evidenced by linguistic competence of the employees themselves.  

To What Extent Are Barriers Cultural, rather than Linguistic?

The experience of cultural barriers does not show clear cut distinctions between different regional samples.  Much depends on the range of cultures with which a company is trading.  37% of Danish companies claim to experience barriers against 16% for Sweden and 17% for Scotland (Fig. 2) (19% UK average, ELUCIDATE).  Thus, cultural barriers are not directly correlated with use of languages or language skills. As with perception of lost business due to linguistic/cultural barriers, culture is a more ‘nebulous’ commodity than language skills and include ‘soft’ as well as interpersonal skills.  Some nationalities appear more aware of their existence and impact than others.  This is true for the Danes in particular, and the ELISE data corroborate those from the earlier FLAIR study (Hagen, 1993).

Due to the small size of the sample experiencing cultural barriers, statistical analysis can only give a vague indication.  In fact, the more significant determinant is a company’s exports markets.  Nonetheless, it is still possible to identify patterns.  The area most likely to cause cultural barriers for Northern Irish, Scottish and Dutch companies is Asia and the Far East, with Japan and China most often specifically cited by companies.  Cultural barriers in the Middle East are also evident, particularly for Danish and Scottish companies, but cultural problems in France, Germany and Spain are also apparent for Irish and Dutch companies in particular. Not unexpectedly, the causes are many and varied, covering a wide range of societal, behavioural and interpersonal differences, which may or may not be culture-specific; e.g. awareness of a particular local business environment; or generic; i.e. caused by a general lack of cultural sensitivity and empathy.

Table 4: Cultures/Regions where Cultural Barriers are particularly evident
Denmark
(n=19)	Ireland
(n=23)	Nor. Ireland
(n=12)	Netherlands
(n=21)	Scotland
(n=24)	Sweden
(n=7)	
ME	26%	Fr  	26%	F.East	25%	Asia	52%	Japan	29%	Too few responses to analyse	
F East	26%	Ge 	26%	NL	17%	Fr	29%	ME	21%		
Japan	16%	It 	17%	US	17%	Ge	19%	Spain	17%		
China	11%	ME	9%					China	13%		
Fr  	11%	Sp	9%					Fr	13%		
(ME-Middle East)
Qualitative data, however, provide a much clearer pattern of difficulty. The quotations from the companies themselves show that business relationships can reveal far more complex difficulties arising over differences in values and in the philosophy of life than the more straightforward measurable linguistic misunderstandings.
Country	Comments Recorded from Sample on Nature of Cultural Barriers 		
China	Colour  - red on our promotion	
France	Conservative negotiating stance	
Japan	Almost impenetrable because of cultural approach	
United States Of America	a) Different psyche   b) USA business etiquette more formal than UK	
Saudi Arabia	Problems for female sales staff - we used males as this circumvented difficulties	
Spain	Relaxed attitude/lack of attention to detail	
France	Arrogance, lack of responsibility	
China	Takes a considerable effort to acquire understanding of etiquette.	
Middle East	Time keeping/observing meeting arrangements	
France	From a sales perspective needs direct on the ground support	
Middle East	Prefer to be dealt with by a male/lack of respect for women in junior roles	
Turkey	Prefer to be dealt with by a male/lack of respect for women in junior roles	
Turkey	Work weekends but not Thursdays	
Middle East	Work weekends but not Thursdays	
Africa	Polygamy, though illegal, is common. This plus other cultural differences impacted our

 and products	
	Proposals and products	
France	Lack of language skills plus cultural knowledge of the selling process	
United States Of America	Time and employment matters	
Netherlands	Efficient but very cautious	
Ireland	More laid-back approach. Not punctual	
Netherlands	Very precise. Want perfection	
Korea	Difficult to understand who to speak to - they have a hierarchy which is very important	
Iran	Difficult to convince in daily work	
Germany	Etiquette and way of addressing people	
India	Often business done at home thus need understanding of Indian business life. Puts you at	
	ease - falsely.	
Spain	Negotiating often with 4-8 people who make surprise attacks. The tactic is to confuse the enemy.	

The Importance of Language Strategies in Successful Trade Performance 

Language strategy means having in place planned mechanisms for dealing with language and cultural problems in given markets. Most companies wrongly interpret 'language strategy' as undertaking last minute language training, rather than, for example, developing an integrated language strategy combining several approaches within a medium to long-term plan. A holistic strategic approach tends to involve an international human resource development strategy, alongside, for example, recruitment and multilingual document management strategies. For some companies, language training, which they often consider first, may not always be the best solution: it may, for example, be too expensive or progress too slow for companies seeking immediate results.  For others training can be exactly the right solution. One company, for example, used to employ local interpreters on its exhibition stands abroad until it realised their lack of product knowledge coupled with their poor understanding of the company's culture posed a serious drawback.  A year later, following a programme of language training for its own carefully selected employees, the company managed not only to improve sales abroad but saved 6000Euro on the costs of staffing the stand locally.

Thinking through planning and implementing the most appropriate communication strategy for a given company can require a far-sighted and sophisticated approach to overcoming potential barriers before they happen, yet relatively few companies do so.  Indeed, in samples of companies where there are the greatest language problems, there is also less evidence of language strategies. 

One of the most significant findings in the ELUCIDATE study was an interrelationship between companies’ development of language strategies and a lower incidence of language barriers (see Fig. 3a).  This finding is also confirmed in the ELISE study (Fig 3) - companies which have thought through the language and cultural issues and developed solutions appear not to encounter barriers.
Figure 3: Inter-Relationship Between Language Strategies and Barriers (ELISE study)

Figure 3a: Interelationship between Language Strategies and Language Barriers (ELUCIDATE Study)

Overview of Language Activity in ELISE sample

In Table 5 it is apparent from evidence of commitment to language training and to, for example, the hiring of native speakers that there is growing awareness of the importance of language skills.

Certain samples show greater proactivity in these aspects than others.  For example the Danish, Dutch, Scottish and Irish samples are generally more likely to train and hire native speakers than the Swedish and Northern Irish companies.  This finding would require further analysis in a more in-depth study.
Table 5: Overview of Language Activity in Sample Companies (ELISE)

Company Responses
	Denmark	Ireland	Northern
Ireland	The
Nether.	Scotland	Sweden
	
Language Strategy

Employees with language skills

Undertaken Language Training in past 3 yrs

Will need Language Training in future

Hired Native Speaker for Language Skills	42%

88%

56%

62%

25%
	16%

71%

29%

29%

40%	12%

42%

8%

12%

14%	32%

82%

38%

32%

47%	5%

58%

22%

38%

24%	11%

73%

16%

41%

9%

Amongst all samples there are nonetheless exceptional models of good practice, where innovative language strategies have been developed and impacted significantly on trade.  These are included as case studies and are available on the website and in the form of a booklet. 

Critical to this process of strategy development is developing greater awareness of culture, or linguistic competence by training.

Training - A Key Strategy

In recent years language learning and training have become an enormous global industry. In 1989, for example, English Language training alone was valued at £6 billion across 36 countries and there was an estimated 68 million students of English worldwide. By comparison, in the same year there were just one million students of Japanese as a foreign language throughout the world. 

The chart in Fig. 4 shows clearly that the demand for language training varies considerably from country to country. Scotland and Sweden, who had relatively low levels of training in the past, anticipate a major increase in demand in the next three years with many more companies expecting to undertake training than had done so in the past. Whereas the demand remains fairly steady for Danish, Irish and Dutch companies.  The only possible reason for this has been the greater insularity of the former in the past Europe compared with the latter three.  However, the favourable increases forecast by Scottish and Swedish companies is a sign of the growing internationalisation of the two countries.
Figure 4: Demand for Language Training (ELISE)

Figure 4a: ELUCIDATE data

Table 6: Past Training – Languages*
Languages	Denmark
(n=29)	Ireland
(n=22)	N. Ireland
(n=4)	Netherlands
(n=35)	Scotland
(n=31)	Sweden
(n=7)	
English	62%	-	-	37%	-	29%	
German 	48%	41%	25%	34%	48%	-	
French	31%	55%	50%	34%	48%	-	
Spanish	21%	9%	25%	14%	16%	-	
Italian	7%	32%	25%	6%	16%	-	
Russian					13%		
Japanese	3%	18%			3%		
(*As % of companies who have undergone training)
The main European languages are those most likely to be covered on training programmes. As an average across the whole European sample, 40% of companies who have undergone training have taken German, 39% French and 31% English. (But this is a direct average and does not account for the higher responses from certain regions). The figures for each country are given above.

Table 7 : Future Training – Languages*
Languages	Denmark
(n=32)	Ireland
(n=22)	N. Ireland
(n=6)	Netherlands
(n=29)	Scotland
(n=53)	Sweden
(n=18)	
English	72%	-	-	34%	-	50%	
German 	69%	45%	33%	34%	38%	-	
French	34%	55%	50%	34%	40%	6%	
Spanish	16%	14%	33%	31%	19%	-	
Italian	6%	18%		10%	6%	-	
Russian					8%		
Japanese		9%			2%		
(*As % of companies who have undergone training)

Future demand follows a similar trend with the main European languages dominating. Interestingly, Dutch, Scottish and Irish companies anticipate a considerable increase in demand for Spanish training.

Summary of Key Findings in the ELISE European Sample

1.	English remains the most widely used language in this sample of language use across the five European regions. There is also significant use of French, German, Italian and Spanish as foreign languages and clear evidence of the importance of the use of  Scandinavian languages in Denmark, and small, but noticeable use of east Asian languages, such as Chinese and Japanese in Scotland. 

2.	There is a glaring difference in the use of foreign languages between the English-speaking countries in the sample regions (Ireland, Northern Ireland and Scotland) and in the non-English speaking Northern European countries. In the latter, over 85% of companies regularly use a foreign language for trade (English or German) compared with just over 50% of companies in the above English-speaking countries/regions. 

3.	Companies in Ireland and the UK regions tend to use the local customer’s language less than in the non-English speaking regions. This also highlights the fact that a high proportion of English mother tongue companies use only English for trading purposes. 

4.	A small, but significant proportion of European companies may have lost business due to language and/or cultural deficiencies.  Dutch companies appear to be worst off (14%), with all the other regions showing 6% or less of companies claiming loss of business. However, this high figure for the Dutch sample may be due to a greater linguistic awareness. 

5.	A much greater proportion of companies, in both studies, face language barriers than face cultural barriers, or claim a resulting loss of business; Scotland, N. Ireland and Ireland appear to face the greatest barriers. 
Cultural barriers are not directly correlated with use of languages or language skills; culture is a more ‘nebulous’ commodity than language and include ‘soft’ as well as interpersonal skills.  Some nationalities appear more aware of their existence and impact than others. The area most likely to cause cultural barriers for Northern Irish, Scottish and Dutch companies is Asia and the Far East with Japan and China most often specifically cited by companies.  Cultural barriers in the Middle East are also evident, particularly for Danish and Scottish companies, but cultural problems in France, Germany and Spain are also apparent for Irish and Dutch companies in particular.

6.	Companies which have thought through the language and cultural issues and developed a strategy in advance tend not to encounter barriers. 

7.	Danish, Dutch,  Scottish and Irish samples are generally more likely to train and hire native speakers than the Swedish and Northern Irish companies. Scotland, Sweden and Northern Ireland, who had relatively low levels of training in the past, anticipate a major increase in demand in the next three years with many more companies expecting to undertake training than had done so in the past. Whereas the demand remains fairly steady for Danish, Irish and Dutch companies. 

8.	40% of companies who have undergone training have taken German, 39% French and 31% English. (But this is a direct average and does not account for the higher responses from certain regions).

Bibliography

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This report is a product of the ELISE project which was made possible with the financial assistance of the European Commission under the Leonardo da Vinci programme. The content is the sole responsibility of its authors and in no way  represents the opinions of the Commission or its departments.