Professor James Foreman-Peck’s analysis shows that poor language skills in businesses are holding back the UK’s trade performance.
The report suggests that because of poor language skills, trade by UK companies in 2006 was lower than it might otherwise have been in Brazil, Russia, India, China as well as with France, Germany and Japan.
His research concluded that language skills exert two critical impacts on exporting:
- being able to communicate in the same language as potential trade partners makes a firm more likely to be an exporter
- more aware of the barriers created by cultural factors .
Prof. Foreman-Peck also used data from a firm-level survey (UKTI’s PIMS Non-User survey) to investigate how language barriers impact on the performance of UK businesses.
The analysis finds strong evidence that language skill deficiencies and lack of awareness of the importance of these skills has a significant negative influence on export intensity.
Firms with greater understanding of language and culture are better able to identify and exploit sales opportunities in that market and can achieve higher export sales.
Prof Foreman-Peck concludes that firms who say they have not experienced cultural difficulties have at least a 46% lower export - turnover ratio.