Product development in subsidiaries of multinational companies in Brazil

Abstract

Why do subsidiaries of foreign owned multinational companies (MNCs) carry out product development projects for clients located abroad? In order to answer this question, we carried out a web survey with more than 140 valid responses and used cluster analysis and non parametric hypothesis tests. This study identifi es fi ve signifi cantly distinct strategic roles, local adaptors, nascent innovators, local innovators, innovators for emerging markets and global innovators. Based on the profi les of these roles, we conclude that subsidiaries with local market scope tend to develop more new products when they have higher decision-making autonomy. Subsidiaries which develop new products for external markets, however, might see their decision-making autonomy reduced. Our results also suggest that subsidiaries are more likely to develop new products for external markets multinationals when multinationals stimulate competition among their subsidiaries.