Internationalization and technological learning in Mexican Multinational Enterprises of auto parts sector

Type de publication:

Conference Paper

Source:

Gerpisa colloquium, Paris (2018)

Résumé:

 Internationalization and technological learning in Mexican Multinational Enterprises of auto parts sector

The research is based on two significant trends that characterized global economy. First, last three decades have seen the emergence of a growing number of Multinational Enterprises (MNEs) from developing countries. Although many of them do not have the more advanced and sophisticated technology and marketing capabilities, they have expanded around the world using different strategies, from alliances and joint ventures to acquisitions and the establishment of wholly-owned subsidiaries. They have learned to manage their resources across national borders and have adapted to different markets, institutional frameworks and cultures. This implied they have overcame challenges and undergone learning processes (e.g. Goldstain et al, 2006; Cuervo-Cazurra y Genc, 2008; Savant et al, 2010).

Second, in the 1990s and 2000s, the industries and activities encompassed by Global Production Chains (GPC) grew exponentially (Gereffi, 2013). In the case of automotive and auto parts industry, three shifts marked GPC hierarchy: 1) assemblers delegated to suppliers more responsibility for product design and inventory programs; 2) auto parts suppliers move from supplying individual parts and components to make sub-assemblies entire systems; 3) assemblers reduced the number of direct suppliers and began to offer longer contracts (Gereffi, 2001:22).

To meet the increasingly stringent demands by lead firm, some suppliers became this shifts in opportunities to technological capabilities building not only through quality improvements, just-in-time supply and product differentiation, but also through internationalization strategies and innovation capabilities.

There are few success stories, such as "Multinational Dragon", which in a very short period managed to overcome their shortcomings, moving to more advanced technological levels and becoming industry leaders through undertake certain internationalization strategies such as strategic alliances and joint ventures (Mathews, 2006). Moreover, until recently, it did not happen that developing-country MNEs undertake R&D activities outside their home countries, however, some companies from South Korea, Taiwan and more recently China and India, already have such characteristics (von Zedtwitz, 2005). Internationalization is a big challenge for any company. What are the main reasons to produce abroad? Is technological upgrading a main reason to expand internationally?

Although Chinese MNEs has dominated mergers and acquisitions in global auto parts sector (Roland Berger/Lazard, 2013), Mexico has a small group of companies that have made significant investments in assets abroad. All of them belong to the large business groups of Mexico, for example, Nemak is a subsidiary of Alfa Group, or Metalsa, subsidiary of Proeza Group.

MEXICAN MULTINATIONAL ENTERPRISES IN AUTO PARTS

SUBSIDIARY / HEADQUARTERED

PRODUCTS

INTERNATIONALIZATION STRATEGY

GLOBAL PRESENCE

Nemak / Alfa Group

Aluminum auto parts, mainly engine blocks, cylinder heads, and transmission components

Acquisitions

36 manufacturing plants in 16 countries

Metalsa / Proeza Group

Structural component solutions for light and heavy vehicles

Acquisitions

26 manufacturing plants in 12 countries

Rassini / Sanluis Corporación

Suspension components for light commercial vehicles

Acquisitions

8 manufacturing plants in 3 countries

Katcon

Catalytic converters, diesel after-treatment devices

Joint ventures

15 manufacturing plants in 12 countries

Tremec / Kuo Group

Transmission systems, components and subsystems

Acquisitions and joint Ventures

Manufacturing plants in 3 countries

Condumex Arneses / Condumex Group

Electrical harnesses for automotive and truck electrical systems, tooling, modules and electrical test stations for harnesses

Joint Ventures

13 manufacturing plants in 4 countries

Grupo Industrial Saltillo

Parts and components for engine, transmission and suspension

Acquisitions

10 manufacturing plants in 7 countries

Source: Own elaboration.

 

Considering both trends, the purpose of this research is to analyze technological capabilities building process during internationalization process for the case of Mexican Multinational Enterprises of auto parts sector. Specifically, it is interesting to know if internationalization strategies have caused technological upgrading in global value chains.

The research is based on three main components: 1) the theoretical framework that explain the relationship among phenomena involved: internationalization, technological learning and upgrading in global value chains; 2) an analytical and descriptive study of the auto parts sector characteristics, at international and national levels; and 3) the study of seven cases of Mexican Multinational Enterprises of auto parts sector, based on empirical evidence obtained through qualitative techniques: questionnaires and in-depth interviews with CEOs, general managers and engineers of the companies as well as officials from key institutions.

The results of collected data are organized in a matrix that shows two pictures of the state of technological and innovation capabilities in two moments, before and during the internationalization process. One can analyze technical change trajectory influenced by internationalization phenomenon.  Through the study of seven cases, representing the universe, we can identify different patterns of innovation dynamic and internationalization of MNE of auto parts sector.

 

References

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Gereffi, G. (2014). Global value chains in a post Washington Consensus world, Review of International Political Economy, Vol. 21, No. 1, 9–37. March.

Goldstain, A., Bonaglia, F., and Mathews, J. (2006). Accelerated internationalization by emerging multinationals: the case of white goods, Journal of International Business Studies, January.

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Roland Berguer / Lazard (2013), Global Automotive Supplier Study 2013. Driving on thin ice, Roland Berguer Strategy Consultants, September.

Savant, K., Maschk, W. A. y McAllisser, G. (2010) Foreign Direct Investment by Emerging Market Multinational Enterprises, the Impact of the Financial Crisis and Recession, and Challenges Ahead; en Savant, McAllister y Maschek (coords.), Foreign Direct Investment from Emerging Markets. The Challenges Ahead, Palgrave MacMillan, New York.

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Westphal, L., Kim, L. y Dahlman, C. (1985), Reflections on the Republic of Korea's Acquisition of Technological Capability, en Rosenberg y Frischtak (eds), International Technology Transfer; Praeger Publishers, New York.

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Concéption Tommaso Pardi
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