Building Competencies for Product Development in Brazilian Subsidiaries of MNCs of the Automotive Industry

Abstract

Product Development (PD) carried out in subsidiaries of multinational corporations (MNCs) located in countries with emerging markets provides advances in factors of production, creates high-quality jobs, increases specialisation of the workforce, and it is favourable to a strategic insertion of the host country in the international division of labour. Most importantly, it enhances the overall productivity and competitiveness of the MNC as a whole, because it shrinks the time-to-market, dropping development costs and releasing the pipeline pressure from traditional designing centres of the company. This paper analyses the overall conditions of Product Development competence building at subsidiaries of automotive companies located in Brazil, and puts forward an explanatory model of this competence building process. The study was held at two Brazilian subsidiaries that had effectively developed new products – General Motors do Brasil and Volkswagen do Brasil – with the use of Grounded Theory methodology. The model shows that competence building is caused by objective and subjective factors. Among the former are the specific conditions of the Brazilian market, competitive factors of the automotive industry in the country, and government tax policies; among the latter are specific training promoted by the parent company, standardisation of engineering procedures with the use of high tech development resources, and expatriation of executives. Implications for theory and management practices are discussed.