Correct Answer: B
An ethnocentric attitude in global business means that the parent company (headquarters) makes all key decisions and expects its foreign subsidiaries to follow directives without much autonomy. This approach often results in centralized control, standardized policies, and minimal local input.
(A) Standards used for evaluation and control are determined at local subsidiaries, not set by headquarters.
Incorrect. In an ethnocentric organization, standards and controls are determined by headquarters, not by local subsidiaries.
IIA Standard 2120 - Risk Management emphasizes that corporate governance should ensure consistent policies across all locations, which aligns with ethnocentric approaches.
(B) Orders, commands, and advice are sent to the subsidiaries from headquarters. # Correct. In ethnocentric organizations, decision-making authority is centralized at headquarters, and subsidiaries are expected to follow orders and policies without deviation.
IIA GTAG "Auditing Global Operations" discusses risks related to centralized control structures, where headquarters enforces policies globally.
(C) People of local nationality are developed for the best positions within their own country.
Incorrect. This describes a polycentric approach, where local talent is developed for leadership roles.
Ethnocentric organizations prefer to assign expatriates from headquarters to key positions in subsidiaries.
(D) There is a significant amount of collaboration between headquarters and subsidiaries.
Incorrect. Collaboration is more common in geocentric or regiocentric models, where decision-making is shared. Ethnocentric organizations have limited collaboration, as headquarters dictates policies.
IIA GTAG - "Auditing Global Operations"
IIA Standard 2120 - Risk Management
COSO Framework - Internal Control and Corporate Governance
Analysis of Answer Choices:IIA References:Thus, the correct answer is B, as ethnocentric organizations enforce top-down control, sending orders, commands, and advice to subsidiaries.
