international business

Managerial Paradigms and Culture When the topic of culture is discussed within the context of international business

management, the influence of three major cultural paradigms: ethnocentric, polycentric, and geocentric should be considered. Ethnocentrism is the belief that one’s own culture is superior to all others and the standard by which all other cultures should be measured. Ethnocentric cultures hold a general contempt for members of other cultures, and may manifest itself in attitudes of superiority or sometimes hostility. Violence, discrimination, proselytizing, and verbal

aggressiveness are other means whereby ethnocentrism expresses itself.2

Ethnocentric corporations are home-country oriented with key management positions located at the domestic headquarters. Ethnocentric managers believe that home-country nationals are more intelligent, reliable, and trustworthy than foreign nationals. Home-country nationals are recruited and trained for all international positions. Many international companies exhibit an ethnocentric philosophy as they find great difficulty communicating in different languages and accepting cultural differences. International strategic alternatives are limited to entry modes,

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such as exporting, licensing, and turnkey operations—because “it works at home it

must work overseas.”3

Polycentrism, as the opposite of ethnocentrism, promotes openness towards other cultures, opinions, and ways of life. Polycentric cultures relativize values and see

them in the whole context.4 Polycentric organizations are host-country-oriented corporations. The polycentric firm establishes multinational operations on condition that host-country managers “do it their way.”

Headquarters is staffed by home-country nationals, while local nationals occupy the key positions in their respective local subsidiaries. Host-country nationals have high or absolute sovereignty over the subsidiary’s operations. There is no direction from headquarters and the only controls are financially oriented. No foreign national can seriously aspire to a senior position at headquarters. Strategically, the MNC competes on a market-by-market basis because it believes that “local people

know what is best for them.”5

The geocentric organization’s primary objective is to develop an integrated system with a worldwide approach where subsidiaries operate in a highly interdependent manner. The entire organization focuses on both worldwide and local objectives. Every part of the organization makes a unique contribution using its unique

competencies. Geocentrism requires collaboration between headquarters and subsidiaries to establish universal standards with permissible local variations. Diverse regions are integrated through a global systems approach to decision making: good ideas come from and flow to any country, resources are allocated on a global basis, geographical lines are erased and functional, and product lines are globalized. The best people are sought to solve problems within legal and political limits; cross-cultural competency is priority not national origin. The reward system motivates managers to surrender national biases and work for worldwide objectives. 6

An awareness of the managerial-cultural paradigm present in each overseas situation is an essential insight for an astute global-business professional. However,

regardless of the paradigm in use, understanding the major dimensions of culture is paramount to the success of doing business overseas.