Innovation in Brazilian multinational companies

innovation phrase

One of the articles that I read and felt most interested by was The Brazilian Multinational’s Approaches to Innovation, written by professors Afonso and Maria Tereza Fleury and published in the very important Journal of International Management. The authors had analyzed the standard of innovation presented by Brazilian multinational companies and they have compared them to the standards of multinational companies from more industrialized countries. The article concludes that, in some cases, there are influences caused by markets and local institutions that exert impact in the abilities and strategies of multinational companies in Brazil.  In the present research, the authors had identified the types of innovation that provide competitiveness to the Brazilian multinational companies, the capacities that they had developed to begin their strategies of internationalization and the country-of-origin effects  in the formation of abilities and organizational capacities.

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The Fleury couple identified, for example, that companies based on natural resources (commodities) had looked onto developing management knowledge and good practices in process engineering in order to face global competition. Likewise, these organizations had needed to develop and to innovate in administrative aspects and financial engineering because the main companies in this sector are exposed to complex logistic networks and financial risks due to the fact of operating in global markets. In accordance with the model developed by Michael Porter (see post here), these Brazilian multinational companies are seeking for leadership in (low) cost.

mineração

On the other hand, Brazilian multinationals that do not deal with natural resources had developed in operations and technology, with the goal to produce and to commercialize products and services differently, which is an example of differentiation strategy.

procution plant

Table 1 presents the main conclusions of the authors

Cluster Abilities Innovative capacity in Types of innovation Stereotype
# 1 Administrative (organizational), operations and technology. Development of business-oriented models New ways of producing and commercializing products and services Top-notch Brazilian multinationals which are not related to natural resources
# 2 Product project, customer and operations relationships. Products and services customization for market niches New products for market niches Brazilian multinationals that explore market niches abroad
# 3 Technology and marketing (Relationship with customers) Development of products demanded by the global value chains New and appropriate products for firm purchasers within global value chains Brazilian multinationals involved in global value chains
#4 Administrative (especially finances) and technology (process engineering) Radical Innovations in process engineering in order to compete in commodity markets Production of commodities at the lowest prices in a more sustainable way Top-notch multinationals from areas which are based on natural resources.
Table 1 – Abilities, capacities and innovation in Brazilian multinationals. Fleury & Fleury (2013)

One of the limitations of the work, as stated by the authors, is the lack of knowledge of the cause-and-effect relationship between the process of internationalization and innovation: the development of innovative capacities may begin either before or after the internationalization process, or even not have a relationship with the process of internationalization of Brazilian multinationals

Source of production line picture here; mining picture here, Innovation picture here; globe picture here.

References:

FLEURY, A.C.C., FLEURY, M.T.L, BORINI, F.M. The Brazilian Multinational´s Approaches to Innovation. Journal of International Management. v.19 p260-275, 2013.

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