MNC must adapt

The management of an MNC must adapt to different host environments with the help of international institutions yet it should develop a compatible, unified global approach that handles the interactions among the varied environments.

Three types of managerial attitudes that may be adopted by managers in adjusting to the global environments: ethnocentric, polycentric, and geocentric.

An ethnocentric attitude is oriented to the home environment. Managers who are inexperienced in international operations often have an ethnocentric viewpoint; that is, they are imbued with the beliefs and customs that have worked well at home and assume that they are suitable to all countries. This attitude ignores the impact of the diverse environments on managerial practices. Comments illustrating this attitude are “Americans have the best managerial approach. My job is to teach the American way to others and to bring foreigners around to our way of thinking. Japanese and Latin Americans are sure [peculiar – why don’t they do things the way we do? And I’m right and foreigners are wrong. A person may unconsciously take an ethnocentric view unless he or she is alerted to cultural factors of the relevant nations in which he or she participates.

The second attitude is polycentric, that is, an understanding that each country has unique cultural characteristics that require an international manager to attempt to do things the way they are done in the host country. In short, when in Rome, do as the Romans do. With extended first-hand experience outside the home country, a manager may evolve a polycentric viewpoint. The problem is that every move to a different country requires that the managers “learn the ropes” in a new environment. The manager might “go native” and lose contact with the home culture and its management fundamentals. A polycentric manager may react against earlier cultural experiences and cause increased difficulties with superiors at headquarters. Many problems between foreign subsidiaries and home country headquarters are conflicts between ethnocentric superiors and polycentric host country mangers. In such conflicts, headquarters may-treat foreign resident mangers as though they were in “Siberia”. In such cases, managers located outside the home country may be overlooked when their promotions are considered. Polycentric managers may have trouble fitting into the global thinking desirable in multinational companies.

The experienced top manager in trying to resolve the conflicts of the two attitudes attempts to develop a third viewpoint – a geocentric attitude. This global view recognizes the strengths in one’s home environment (ethnocentrism) and the strengths of other nations’ cultures (polycentrism). The managers at headquarters need to integrate these strengths in order to develop a unified, world perception. The geocentric or global view accepts the differences in cultures as conditions of reality. Cultures may not be superior to one another but they are just different. A geocentric view maximizes the advantages of these differences. The result may be that adaptations will strengthen a company’s managerial approach facilitating the transfer of ideas and practices tested in one environment and potentially useful in others.

The modern world has become increasingly interdependent. International institutions have emerged to facilitate the interchanged of goods, technology, and management. The ethnocentric, polycentric, and geocentric attitudes have basic impacts on this interchange.

Diverse environments create many problems for the international manager not faced by the domestic manger. A geocentric attitude helps keep the problems in perspective. We can list some of these problems.

Different languages create problems of translation and communications. Interpreters may be needed for oral communications; translators may be required for written communications. The best method for handling this problem is undoubtedly for managers to be multilingual or, at least, to learn the languages that enable them to communicate in the language of the home country and the languages of the host countries.