Do Chinese-speaking managers prefer mergers and acquisitions more than English-speaking managers? The time cognition behind language and corporate strategy
When enterprises continue to underperform, they tend to seek breakthroughs through mergers and acquisitions. Managers who speak languages with "weak future-time reference" such as Chinese, German and Japanese often act decisively; while managers who speak languages with "strong future-time reference" such as English and French have significantly weaker mobility. The temporal structure in language is shaping the organizational temporal perception in an imperceptible way, thus influencing the strategic choices of enterprise managers when facing difficulties.
A classic proposition in the behavioral theory of the firm states that enterprises will compare their own performance with the average level of their peers. Once they fall behind, managers will feel pressured and start looking for ways to reverse the situation. However, the meaning of "falling behind" is completely different when it occurs occasionally versus continuously. Poor performance in a certain year can be attributed to market fluctuations, policy changes, or even bad luck. But if the performance has been below the industry average for three to five consecutive years, this signal will become increasingly difficult to ignore. It is like an alarm with rising volume, forcing managers to admit that the problem lies within themselves.
Under such pressure, mergers and acquisitions become a natural option. It can help enterprises acquire new capabilities, enter new markets, expand scale, and restructure businesses. Although mergers and acquisitions are not always successful, they represent the possibility of "doing something big to change the status quo" for enterprises that are continuously underperforming. Research data also confirms this: a 13-year tracking of more than 12,000 enterprises in 12 countries shows that the longer an enterprise's performance is below the industry average, the more M&A activities it actually conducts.
However, even with the same sluggish performance, there are still significant differences between enterprises. Some enterprises act decisively and try to reverse the situation through external expansion; while others hold back, as if the problem is not so urgent. What causes this difference? Resource endowment, industry characteristics, management style — these are all common explanations. But a recent study published in Management and Organization Review offers a surprising answer: the language spoken by managers.
Different Languages, Different Response Speeds
Researchers found that in the face of continuous poor performance, enterprises using different languages have completely different response speeds. Specifically, enterprises that use "weak future-time reference" languages such as Chinese, German, Japanese and Swedish are more inclined to make decisive M&A moves in the face of continuous losses; while enterprises that use "strong future-time reference" languages such as English, French, Korean and Thai have significantly weaker mobility under the same conditions.
The logic behind this is not complicated. Linguists have long discovered that languages such as English require speakers to grammatically separate the future from the present strictly, which makes users psychologically feel that the future is more distant and less real. In contrast, languages such as Chinese allow speakers to talk about the present and the future in the same grammatical form, so users are more likely to regard the future as a natural extension of the present. This sense of psychological distance affects corporate decision-making through two paths.
The first path is the urgency of the problem. When language makes people habitually push the future away, managers, although seeing the data of continuous losses, are less likely to feel the burning urgency. Therefore, facing the same problem, managers who speak different languages will make different judgments.
The second path is the return of M&A. The money for M&A has to be spent today, but the return can only be realized in the future. If managers psychologically push the future further away, the future returns will be discounted more heavily in their mental accounts. The same M&A deal may seem worth a try to managers in a weak future-time reference language environment, but less cost-effective to managers in a strong future-time reference language environment.
This is not a matter of personal preference. Corporate decision-making is a collective process — meetings, discussions, report writing, and presentations are all completed in the same language. The temporal perception shaped by language will be continuously reinforced within the organization, and eventually become a collective cognitive pattern.
The More Abundant Resources, the More Procrastination; the More Stable the Political Situation, the Bolder the Actions
To further verify the above two paths, the researchers collected data on manufacturing enterprises in 12 countries from 2007 to 2019. Among them, Australia, France, the United Kingdom, South Korea, Poland, Thailand, and the United States belong to countries with strong future-time reference languages; China, Germany, Japan, Malaysia, and Sweden belong to countries with weak future-time reference languages. The sample covers a total of 12,309 enterprises and 100,288 observation data, including corporate financial and M&A data. The combined gross domestic product (GDP) of these 12 countries during the study period accounted for about 60% of the global total, covering Eastern and Western cultures, developed and developing economies, making the research conclusions unlikely to be just the product of a certain culture or level of economic development.
Researchers found that when enterprises have abundant resources on hand, the procrastination effect brought by strong future-time reference languages will be further amplified. The reasoning is straightforward: with money in the account, managers already feel that they can hold on; plus the language makes them push the future away, the feeling of "no rush" becomes even stronger. Abundant resources should have been a favorable condition for enterprises to carry out M&As, but in a strong future-time reference language environment, it has instead become a hotbed for procrastination.
At the same time, when the country where the enterprise is located is politically stable, the discount effect of strong future-time reference languages will be weakened. Because political stability means that the future is more predictable, and the returns of M&As are more guaranteed. Even if the language makes managers tend to underestimate the future, a stable external environment will help them recalibrate their judgments.
These two findings confirm each other, and present the hidden mechanism of "language affecting corporate decision-making" in a detailed and thorough manner.
Management Insights: Language Shapes Attitudes Towards the Future and Stealthily Influences Corporate Decisions
The implication of this study for entrepreneurs and managers is not to "change to another language for meetings", but to realize a hidden cognitive bias. If your enterprise is experiencing continuous poor performance, and the management team always seems to feel that "it is not yet time to act", or that "the cost of M&A is too high and the return is too far away", you may wish to think: How much of this judgment is based on rational analysis, and how much is subtly influenced by the time perception shaped by language?
For multinational enterprises, this point is particularly worthy of attention. Executives from different language backgrounds may form completely different judgments on the urgency of the problem and the value of M&A when facing the same financial report. This kind of divergence has nothing to do with right or wrong, but only reflects systematic differences in time perception between the two sides. At the negotiation table of cross-border M&As, this difference may directly affect both parties' expectations of the transaction rhythm and valuation.
Enterprises with abundant resources need to be especially alert. Having money on hand and the language making you feel that the future is far away — the superposition of the two can easily make the management team fall into a state of "comfortable insensitivity". In a market environment with political stability and predictable systems, enterprises will have more confidence in the value of long-term investments, and will not be overly constrained by the psychological discount brought by language.
In the final analysis, language is not just a tool to help us describe the future, it also subtly influences our attitude towards the future. For entrepreneurs who are considering major strategic decisions, recognizing this point is itself a competitive advantage.
This article is adapted from the full text: Future-Time Reference (FTR) and Firm Acquisitions: The Role of Time Perception of Languages in Firm Response to Performance Feedback [J]. Management and Organization Review, 2026, 22: 427-455.
This article is from the WeChat Official Account "Fudan Business Knowledge" (ID: BKfudan), the author is Management Horizon, and it is released with authorization from 36Kr.