Prejudice & Ethnocentrism in Organizations

Lesson Transcript
Instructor: Jennifer Lombardo

Jennifer Lombardo received both her undergraduate degree and MBA in marketing from Rowan University. She spent ten years in consumer marketing for companies such as Nielsen Marketing Research, The Dial Corporation and Mattel Toys. She is currently an adjunct professor of marketing at Rowan University and a social media marketing consultant.

Prejudice and ethnocentrism are two issues that organizations may face. Explore these two problems and learn about adjustments organizations can make to be more successful. Updated: 09/18/2021

Prejudice and Ethnocentrism

You are attending an international engineering conference where you meet a fellow engineer from Germany. He seems to be friendly and engaging, but soon he starts to attack everything about America. The German explains that only his country can design and produce high quality cars and that American products are all cheap. He then goes on to say that Americans are lazy, self-righteous, materialistic workers who take everything for granted. This is an example of the prejudice that ethnocentrism can create in individuals. Prejudice is also known as prejudgment and consists of thoughts and feelings regarding a specific group. The German engineer has already created a prejudgment about the American engineers without any real knowledge.

The word ethnocentrism comes from the Greek word 'ethnos,' or nation or people, and the English word 'center.' The definition of ethnocentrism is when a company or individual believes that their group is superior to another group. Let's take a look at the impact prejudice and ethnocentrism can have with an organization. SlowGo Automobile Company is based in Germany. They have recently expanded factories and subsidiaries into numerous international locations.

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  • 0:05 Prejudice and Ethnocentrism
  • 1:26 Ethnocentrism Problems
  • 4:07 Ethnocentric Adjustments
  • 5:20 Lesson Summary
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Ethnocentrism Problems

A company that is ethnocentric will have certain issues with organizational performance. The first issue a company can have is overall problems with decision-making. A company that has a mentality of 'if it works, don't fix it' will not have any flexibility with decision-making, rules, and policies with subsidiaries. For example, SlowGo Automobile ignored suggestions from their French subsidiary to improve engineering software. SlowGo used antiquated software and the German engineering VP feels that it's a waste to retrain the staff.

Another issue with ethnocentric companies is that they tend to be inflexible adapting to local standards or customer preferences. This kind of inflexibility can cost companies clients and customers. SlowGo has spent years designing, producing and manufacturing automobiles for German customer tastes. Each of the new subsidiaries have been supplying headquarters with local customer preferences to improve SlowGo's cars.

The engineers have ignored all suggestions. For example, the American subsidiary believes that it's important for their market to have additional cup holders. American customers are notorious for needing at least eight cup holders in their minivans. The German engineers feel that it would hurt the van's overall design and have refused to make the changes. This lack of responsiveness has hurt American sales of the German minivan.

A third costly issue of ethnocentric behavior in organizations is regarding the hiring of employees. Most ethnocentric companies do not hire locally. This results in higher costs to companies because they have to move and train headquarter staff. They believe that only their headquarter-trained employees can do a good job. This can also hurt product design and feedback, as the headquarter employees are not familiar with local customs and preferences.

Most of the English office is made up of German employees. This has led to a lack of understanding of the English auto market, since there are no local employees to help identify trends and tastes of English customers.

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