Ethnocentrism in Business

Subject: Business
Type: Expository Essay
Pages: 5
Word count: 1259
Topics: Management, Investment, Teamwork


The concept of ethnocentrism has evolved from a sociological concept to a psychological construct stating the universal tendency of individuals to associate reality with their own culture or “in groups” and concurrently dismiss out- groups. In the contemporary world as we know it, most people’s understanding of their own culture is one where they believe that their perspective of the world is the basis of reality and therefore dismiss and judge other cultures view as not only different but wrong. According to Foster (2013), ethnocentrism is like a tunnel whose viewpoint is narrow as a result of too much concentration on similar ideas, opinions and exclusion of people who do not believe in the same. Ethnocentrism is an undesirable effect in business that causes division, discrimination and victimization of what one would refer as an “out group”. Once such cultural narrowness exists in a business it undermines the intercultural and intergroup understanding which is detrimental for business performance. The expanded global economy of today has created a world where cross cultural interactions are inevitable for business leaders and the inability to tolerate the beliefs and values of other cultures limits growth and opportunity for business. When ethnocentrism occurs at the management level, it can cause managers to only focus on one nationality and develop insensitivity for the out groups. Ethnographic managers will act and make decisions on the presumption that their judgment stands for universal truth of what can be termed as normal and attractive, therefore requiring out groups to adjust to these beliefs.

How business concentrates on one nationality at the exclusion of others 

One of the typical forms in which ethnocentrism demonstrates itself in business is through unequal career development opportunities out group nationalities are exposed to. People within the same nationality as that of the management have greater chance of developing careers and getting favors from the management as opposed to people from different nationalities (Pocovnicu & Vasilache, 2012). Initially, the assumption was that management employs one management or leadership style to play their roles in an organization. It turned out however, that much of the control and decision making responsibilities were highly affected by ethnocentrism, creating a culture where certain groups were left out of decisions made. Insensitive to workplace differences, leaders may end up focusing on in group nationalities and exclude others from various growth opportunities within the business. With the inevitable global economy and existence of diverse workforce, leaders limit the ability of the out groups to contribute optimally to the performance of the company since they feel like minorities. Ethnocentrism creates a perceptual lens which the leaders make subjective evaluations of the out group members, terming them as incompetent for certain positions since they don’t think as they should (Weinstein,2013). The leaders hardly accept any innovations or ideas presented by members of the other nationality since the cultural bias leads them to believe it is just not right. 

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Team work is an imperative function in business operations since the larger collaboration and synergy in number, creates better outcomes for business. However, existence of stereotypes and discrimination among different nationalities creates a situation of group think. Group think is a situation where members within a group or team will tend to agree with the ideas of the rest simply because they are made to believe that their ideas don’t matter. The idea of being the minority facilitates development of group think within work teams. Existence of in group stereotypes within work teams means that the out group nationalities are excluded in decision making processes (Olufson, 2008). In group stereotypes don’t allow their assumptions to be challenged by the minority nationalities, thereby reducing the level of work team effectiveness.

Lack of consciousness of cultural differences creates a business environment that is segmented. Ethnocentrism leads to a situation deters a leader from respecting the values and beliefs of a member from another nationality, making their relationships incompatible. The fact that leaders react heterogeneously to different nationalities creates an environment where there are in groups and out groups (Öğretir& Özçelık, 2008). Incompatibility between the leader and members from a different nationality leads the out group subordinates to remain segmented. Such segmentation often gives rise to discrimination when it comes to opportunities for career growth. For some leaders, it becomes a normal tendency to exclude those with different nationalities from his own such that the communication language used in meetings and forums is that which the in group nationality can understand. When the chain of communication is broken down between the leader and the different nationalities, it means the out group individuals do not understand what they are supposed to do proficiently and cannot thus be productive even when they want to. On the other hand, use of different language to communicate during meetings means that the out group nationalities are left out of the decision making process since they are unaware of what is being discussed.

Ethnocentrism leads business to engage in marketing operations and business to business interactions associated with ethnocentrism. A business high in ethnocentrism may only focus on making their perspectives heard during business negotiations with other business people from different nationalities.  Such a business will have very unsuccessful international expansion initiatives since they will not want to accommodate the differences in others. A business with ethnocentrism will only focus on producing goods that suit the tastes and preferences of consumers within the same nationality. Even when they attempt to expand to other countries, such a business may still emphasize to focus on the same nature of product as opposed to customizing it to suit local tastes and preferences. Ethnocentrism in business expansion is particularly seen when business established in another country is reluctant in providing employment opportunities for people in that country even when they will bring value to the company (Weinstein,2013). Management of the business remains centralized and major duties remain within the grasp of the dominant nationality since they believe management from different nationalities may challenge their way of thinking and attempt to bring in their wrong perspectives of the world. 


There is a common presumption that what we perceive as reality is indeed the universal truth, making any other perspective wrong.  The element of ethnocentrism is both a sociological and psychological concept that creates incompatibility in business. Existence of ethnocentrism among leaders and employees means that an organization is segmented in terms of the in group and out group members. The in group members receive the most favor in terms of career development, incentives and timely communication while the out group individuals from different nationalities are not subject to such privileges. Focusing on one nationality as a business limits organizational growth and productivity of those treated as the minority. The elements of ethnocentrism even go further to affect the quality of cross cultural communication when it comes to business to business activities since the ethnocentric business will not accept cultural challenges or compromises.

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  1. Foster, C. T. (2013). Leaders’ cultural antipathy: A description of ethnocentric investments in the global workplace.
  3. Olufson, L. C. (2008). An investigation of ethnocentrism, its elements, factors affecting its intensity, and implications for cross-cultural activities (Doctoral dissertation).
  4. Pocovnicu, A., & Vasilache, S. (2012). An interview-based assessment of the influence of ethnocentrism in business. Revista De Management Comparat International, 13(3), 478-492.
  5. Weinstein, D. (2013). Exploring Ethnocentrism in Business Courses and Businesses. Business and Management Research2(3), 120.
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