Ethnocentric Approach: Meaning, Advantages and Disadvantages

Meaning of Ethnocentric Approach

Ethnocentric approach is one of the international recruitment method in which all positions for international business around the globe are filled from parent country. This approach focuses on hiring right candidates for right position within the business considering their skill set and willingness to mix with organization’s culture. All key positions of organization are filled up by relocating present employees from headquarter of company or hiring peoples from parent country who are willing to work in host country. MNC’s headquarter in parent country formulate and regulates all important decisions such as mission, vision and objectives for whole company. All subsidiaries need to completely abide by each of the rules and regulations directed by their head branch in parent country. It is believed on rationale that recruiting individuals from parent country would be best over other ones. Employees of parent country would perform better and will effectively represent interest of head branch. 

Advantages of Ethnocentric Approach

  1. Ethnocentric approach helps in attaining better coordination in between parent country and host country. 
  2. It enables in achieving effective control by company’s head branch over all its subsidiaries operating in distinct countries worldwide.
  3. Facilitates efficient transfer of technical know-how among various branches.
  4. The parent company can easily close watch over the activities of all subsidiaries.
  5. Avoids the need of having a well-developed local labor market at international level.
  6. It promotes effective communication in between the parent and host company.
  7. Enables easy transfer of parent country culture to the subsidiaries company. It assists in infusing beliefs and practices into foreign country.

Disadvantages of Ethnocentric Approach

  1. It becomes difficult to train or guide employees at far distant place away from the parent country.
  2. Staff from parent country may face difficulty in adjusting themselves in host country because of differences in culture.
  3. There may be cultural clashes among executives from parent country and employees of host country.
  4. Government in host countries may impose strict restrictions on subsidiaries that will adversely impact business of parent company.
  5. Opportunity of hiring best talented human resource from host country is missed.
  6. Expatriates of parent country are more expensive in comparison to employees in host country.
  7. Rate of failure is very high.