Geocentric Orientations
Dr. Howard V. Perlmutter is a world authority on globalisation and pioneer on the internationalisation of firms, cities and other institutions. Trained as a mechanical engineer and as a social psychologist, Perlmutter joined Wharton’s faculty in 1969. He specialised in the evolution of multinational corporations (MNCs) making predictions to how their viability and legitimacy would change.
Perlmutter is the first academic who identified distinctive managerial orientations of international companies. "The more one penetrates into the living reality of an international firm, the more one finds it necessary to give serious weight to the way executives think about doing business around the world". These organisational world views are shaped by a number or factors such as the circumstances during which the company was formed, the CEO’s leadership style, its administrative processes, the organisational myths and traditions. Perlmutter stated that these cultural orientations determine the way strategic decisions are made and how the relationship between headquarters and its subsidiaries is shaped. In 1969 he bundled his insights by publishing the EPG model.
Perlmutter’s EPG model states that senior management at an international organisation holds one of three primary orientations when building and expanding its multinational capabilities:
1. ETHOCENTRIC (home country orientation)
The general attitude of a firm’s senior management team is that nationals from the organisation’s home country are more capable to drive international activities forward than non-native employees working at its headquarters or subsidiaries. The practices and policies of headquarters and of the operating company in the home country become the default standard to which all subsidiaries need to comply. This mind set has as advantages that it overcomes a potential shortage of qualified managers in host nations by expatriating managers from the home country, creates a unified corporate
Perlmutter is the first academic who identified distinctive managerial orientations of international companies. "The more one penetrates into the living reality of an international firm, the more one finds it necessary to give serious weight to the way executives think about doing business around the world". These organisational world views are shaped by a number or factors such as the circumstances during which the company was formed, the CEO’s leadership style, its administrative processes, the organisational myths and traditions. Perlmutter stated that these cultural orientations determine the way strategic decisions are made and how the relationship between headquarters and its subsidiaries is shaped. In 1969 he bundled his insights by publishing the EPG model.
Perlmutter’s EPG model states that senior management at an international organisation holds one of three primary orientations when building and expanding its multinational capabilities:
1. ETHOCENTRIC (home country orientation)
The general attitude of a firm’s senior management team is that nationals from the organisation’s home country are more capable to drive international activities forward than non-native employees working at its headquarters or subsidiaries. The practices and policies of headquarters and of the operating company in the home country become the default standard to which all subsidiaries need to comply. This mind set has as advantages that it overcomes a potential shortage of qualified managers in host nations by expatriating managers from the home country, creates a unified corporate