Perlmutter’s international states of mindPerlmutter (1969) distinguished three states of mind or attitudes of international
executives: ethnocentric (or home-country oriented), polycentric (or
host-country oriented) and geocentric (or world-oriented). Table 2.5 summa-
rizes the implications of these three types of headquarters orientation. These
attitudes should be regarded as ideal types. Every firm will probably have some
degree of ethnocentrism, polycentrism and geocentrism, but usually one can
distinguish a dominant state of mind. The ethnocentric attitude implies that
management style, knowledge, evaluation criteria, and managers from the
home country are thought to be superior to those of the host country. A logi-
cal consequence is that only parent-country nationals are considered to be suit-
able for top management positions, both at headquarters and in the
subsidiaries. The polycentric attitude takes a completely different point of view.
It explicitly recognizes differences between countries and believes that local
nationals are in the best position to understand and deal with these country-
specific factors. A local manager, however, will never be offered a position at
headquarters, because parent-country nationals are considered to be more suit-
able for these positions. Geocentrism is world oriented. A geocentric company
draws from a worldwide pool of managers. Managers can be appointed at head-
quarters or subsidiaries regardless of their nationality.
The three different attitudes are easily linked to Bartlett and Ghoshal’s
organizational models as discussed in previous sections. Global (and to a lesser
extent international) companies will tend to be characterized by an ethno-
centric attitude, multidomestic companies by a polycentric attitude, while the
geocentric attitude will be most typical of transnational companies.
In later literature Perlmutter’s headquarters orientations became equated
with international HRM strategies, especially staffing policies, and it has
become common practice to talk about ethnocentric, polycentric and geocen-
tric staffing policies (see also Chapter 10). However, Perlmutter’s model should
not be seen as a prescriptive model as it certainly does not guide a HRM prac-
titioner in making specific choices about task design, training programmes,
compensation packages, etc. In the next chapter and in Part 3 of this book, we
will look at these various aspects of International HRM in more detail.
The transfer of HRM practices across bordersOne of the central questions in MNC literature is the extent to which sub-
sidiaries adapt their practices to local circumstances and behave as local firms
(local isomorphism) versus the extent to which their practices resemble those
of their parent company (internal consistency). Since the HR function deals
with human resources and hence is confronted with differences in culture and
local regulations to a larger extent than for instance the finance or production
Strategy and Structure of Multinational Companies 59