Technology innovation management in MNCs business internationalization: the role of a Brazilian subsidiary from the automotive industry

Transcription

1 22nd International Conference on Management of Technology Renato Machado Costa Marcos Bruno Eduardo Vasconcellos Luiz Silveira Júnior April, 2013 Porto Alegre Brazil Technology innovation management in MNCs business internationalization: the role of a Brazilian subsidiary from the automotive industry

2 Presentation agenda Research Goal Methodology & Analysis Results & Discussion Technology innovation management in MNCs business internationalization: the role of a Brazilian subsidiary from the automotive industry 2

3 Research Goal Identify and analyze how some factors influence the role of subsidiaries, in relation to the management of technology innovation in a business internationalization process 3

4 Problem contextualization Subsidiary roles (1990 s) Competences development not only in headquarters, but also in foreign subsidiaries Increasing importance of MNCs subsidiaries in emerging countries (including Brazil) Inbound FDI in emerging countries (US$ billion) Expanded scope Marketing, products, processes, engineering, technology, R&D, management Evolution of foreign subsidiary roles Competitive advantage generation Development of products, technologies, applications Increased strategic relevance (UNCTAD) 4

5 Research question Particular case Brazilian subsidiary, which is leading technology innovation and business internationalization in a foreign MNC How some factors influence the role of a Brazilian subsidiary, in relation to the management of technology innovation in a business internationalization process? 5

6 Conceptual framework 6 Internationalization strategy of the company Target country Entry mode Competitive factors Subsidiary profile Role within organization Technical and managerial competences International strategic alliance skills Organizational learning ability Knowledge management and difusion Technology innovation capacity Subsidiary competitive advantage Parent company decision/support Brazilian subsidiary role in innovation management and internationalization 6

7 Reasons for selecting the company Brazilian subsidiary of an Italian MNC, which: leads the technology innovation process in its business unit has taken part in business internationalization processes of the MNC Personal contacts 7

8 Case Study: Magneti Marelli Cofap (MM Cofap) Magneti Marelli: world class global automotive supplier Founded 1919 in Italy, part of the Fiat Group Design and production of hi-tech systems and components Revenue in 2011: 5,9 B employees Investments in R&D: 5.3% (of sales) 83 production units / 18 countries 12 R&D centers / 26 application centers 8

9 Shock absorbers division - MM Cofap Cofap Brazilian company, founded : biggest auto parts supplier in LA, 18 companies Revenue US$ 770 M, exports to 100+ countries Shock absorbers operation acquired by MM in 1997 Division started in Brazil and expanded Revenue in 2011: 404 M (6,8% of MM group) employees Factories in 5 countries Brazil, USA, Poland, India and China R&D and application centers Brazil, Italy, Poland, USA and India 9

10 CASE HIGHLIGHTS Shock absorber s center of excellence MM Cofap Brazil Cofap already mastered the CORE COMPETENCES to design and manufacture shock absorbers. Global competence center for shock absorbers still kept in Brazil, LEADING technological innovation and R&D. Competence and experience with INTERNATIONAL TECHNOLOGY STRATEGIC ALLIANCES. Experience in several internationalization processes (USA, Poland, Russia, India, China) 10

11 JOINT VENTURE IN INDIA Shock Absorber Role of subsidiary MM Cofap Brazil Target country: INDIA - local market, plus export to Europe; Built Area corporate decision. Land Area Entry mode: corporate guideline - JOINT VENTURE Employees with local partner: ENDURANCE. LOW COST based competition in local market. Main customer FIAT in India Brazilian subsidiary PARTICIPATED or LED: SOP 2009 Selection and negotiation with partner Business plan Selection of products, processes, technologies, suppliers Project management Technology and knowledge transfer m² m² 254 Endurance Magneti Marelli PUNE, INDIA Shop Floor Overview contd.. 11

12 Timeline Endurance Magneti Marelli Partner selection JV contract Tryout Training Production launch Expansion Export to Europe 12

13 Results & discussion Case findings and Final considerations 13

14 CASE FINDINGS Intervenient factors for the Brazilian subsidiary role in innovation management and internationalization Factor Subsidiary role within organization (global innovator, center of excellence, strategic global role) Technical and managerial competences (excellence related to shock absorbers technologies) International strategic alliance skills (extensive history of strategic partnerships) Organizational learning ability (high level of managerial capability) Knowledge management and difusion (distinctive abilities) Technology innovation capacity (mastery of core competences and R&D before acquisiton) Influence important motivator and facilitator crucial motivator for leadership important motivator and facilitator facilitator facilitator predominant motivator 14

15 CASE FINDINGS Main management practices learned and/or improved by the MNC with the process of internationalization Factor Influence Organizational Structure Brazilian subsidiary responds for global results and manages overall operations of the shock absorbers division Matrix structure, with Brazilian managers coordinating correlated areas in other subsidiaries Board of engineering in Brazil coordinates innovation activities in all centers, and has strong participation in the internationalization processes Management Mechanisms and Tools Strategic decisions are centralized in corporate headquarters Significant autonomy granted to MM Cofap Brazil Results are consolidated within a corporate structure in Italy, for all business units (with some Brazilian employees) 15

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17 FINAL CONSIDERATIONS Rich field of research, phenomenon still little explored in the literature A subsidiary of an MNC from a developed country (Italy), located in an emerging country (Brazil), leading innovation and technology development, and the internationalization of the company s business to other emerging (India, China and Poland) or developed (USA, Italy) countries. 17

18 FINAL CONSIDERATIONS Conclusions of the research POSITIVE ASPECT: participation of the Brazilian subsidiary in the internationalization process allowed the conquest of new markets and the expansion of MNC s global presence LIMITATION: the absence of a specific structure to operate in the internationalization processes RECOMMENDATION: the use of a more robust structure, with dedicated resources for the internationalization (considering the tradeoff between the benefits of this structure and its additional costs) 18

19 Partners Universities Distributors PARENT COMPANY Partners 2. Subsidiary-to-parent Distributors 1. Parent-to-subsidiary FOCAL SUBSIDIARY Suppliers Suppliers Universities 3. Subsidiary-to-subsidiary OTHER SUBSIDIARIES Distributors Partners Suppliers Universities Figure 2 Flows of innovation in an MNC: a network perspective (Source: Baglieri et al., 2014) 19

20 THANK YOU! Contacts: Renato Machado Costa: Luiz Antonio Bloem da Silveira Junior: 20

21 RESEARCH DESIGN Selecting company for the case study Case study protocol and interview scripts Research question and goals Conceptual Framework Collect data: interviews and document research Literature review Semi-structured interviews with key executives at the company Analysis of case study data Case study justification: complexity of the issue large number of factors involved Discussion of results and final considerations 21

22 Primary data collecting Semi-structured interviews with key executives of the selected company (parent and subsidiary), directly involved on technology innovation management and internationalization (almost 8 hours, plus a visit to the R&D center) Managers in Brazil Industrial engineering Innovation engineering New businessess Managers in Italy Product development Product application 22

23 Methodology limitations Results cannot be generalized Subjectivity Vision is limited to the studied case Tradeoffs: Allows for a more in-depth analysis Generated ideas can be tested in future research 23

24 Research methodology & analysis Case study in a Brazilian subsidiary of an Italian MNC 24

25 Opportunities for further research Investigating the same phenomenon in other companies Validate results and deepen understanding Looking for similarities with internationalization of Brazilian MNCs Investigation of the reverse situation: foreign subsidiaries of Brazilian MNC s New perspective for the study of MNCs operating in Brazil (foreign or Brazilian) 25

26 Research findings The behavior of the MM group, in the case of its shock absorbers division, is in line with the conceptual model for the Center of Excellence formation External Factors Strength of local diamond Links to sources of competence Inter-unit Relationships Links to sources of competence Subsidiary autonomy Center of Excellence Strong capabilities Formal recognition Greater than unit level contribution Performance Profitability and competitiveness Innovation Learning and knowledge transfer Parent Firm Investment Conceptual model of center of excellence formation in multinational firms (Source: FROST; BIRKINSHAW; ENSIGN, 2002, p. 1001) 26