Re-organization of the R&D management of General Motors Corporation: the emergency of Brazil as a center of global product development

Type de publication:

Conference Paper

Source:

Gerpisa colloquium, Berlin (2010)

Résumé:


 
The multinational companies have consolidated global networks of innovation, locating in different countries R&D (research and development) responsibility for certain technological activities. According to Frost, Birkinshaw & Esign (2002), such “centers of excellence” embodies a set of capabilities that has been explicitly recognized by the corporation as an important source of value creation that can be disseminated to other parts of the firm. The center of excellence concept is also strongly related to the "global subsidiary mandates" (ROTH & MORRISON, 1992). When assuming a relevant paper, the subsidiaries gain a global mandate of product, being responsible for the development inside the corporation.  
Such tendency reveals that nowadays the technology is advanced abroad faster than ever before in that only the manufacture activities were internationalized. The degree of R&D internationalization is rising. Although the Triad - the group of countries that includes United States, Europe and Japan – is still responsible for the most part of the foreign direct investment (FDI) in R&D, some emergent economies have getting more attention. The case of BRIC - Brazil, Russia, India and China - has been representative of recent efforts and business strategies of investments in technological activities (UNCTAD, 2005).  

Such discussion became much more emblematic and representative when applied to the automobile industry. The recent and huge economical crisis that affected the most part of the car manufacturing sector, specially the American one, has been associated with a new phenomenon characterized by the reorganization of the R&D management – from central countries for emerging economies – that have been recognized by the companies as an important source of value creation and save costs.

The tendencies of the R&D management reorganization and global mandates responsibilities could be better understanding if analyzed from the Brazilian car makers perspective. The recent experiences of some major assembler subsidiaries and their accumulated design competencies suggest the possibility that they are becoming partners to their headquarters in global product development. The main finding support the assumption that some Brazilian subsidiaries have been following a more decentralized product development strategies associated with product policies that are oriented toward local, regional and also global markets with a certain degree of autonomy (DIAS, 2003; CONSONI, 2004; CONSONI & QUADROS, 2005; BALSET & CONSONI, 2007; AMATUCCI & BERNARDES, 2008; QUADROS & CONSONI, 2009). As a result, the most part of the major Brazilian car makers have investing in expanding the technological infrastructure and hiring qualified professional, specially engineers.

According to officials dates from Brazilian Ministry of Labor and Employment (RAIS - Annual Social Information Report) the number of engineers employed by car makers industry in Brazil (that includes assemblers and auto-parts) increased from 3.928 professionals in 1994 to 7.797 engineers in 2006 – in relation to the employment composition in the car makers industry, it means 1,4% of the total workforce in 1994 to 2,2% of the composition in 2006. During the same period of time the participation of engineers in the entire Brazilian manufacturing industry was no more than 0,7% of the total workforce following a very stable labor composition. It is, the increase in the number of engineers employed on automobile industry was above the hiring rhythm of engineers of the manufacture industry.

The importance of engineering and engineers in the Brazilian automotive sector is also noticed when we looks for the technological activities. Dates from Brazilian Innovation Survey (PINTEC/ IBGE) in their three rounds (2000, 2003, 2005) reveal that the most part of the engineers employed by automotive industry as related with the technological activities. Data show that, relative to entire Brazilian manufacturing industry, investment in total R&D by the automobile industry has increased substantially more. The auto industry spending on R&D grew 250%, from R$ 549 million, in 2000 to R$ 1,9 billion in 2005. R&D spending by Brazilian manufacture industry as a whole grew 85% in the same period. In 2005, technological intensity, that is, the ratio of R&D expenses to net sales in the automobile industry was 1,4% (up from 1% in 2000), whereas the average ratio for the manufacturing industry was 7% (QUADROS & CONSONI, 2009).

These issues are the starting point of this paper. Even in crisis period, emerging economies, as the Brazilian one, has been consolidating the position as a center of excellence in R&D activities due to more competitive costs and high technological efficiency in certain knowledge areas. Then, the idea of this article is re-thinking the process of R&D strategies reorganization and the related decisions inside the international innovation, especially during crises context.
We developed the analyses from an extensive study-case at General Motors of Brazil (GMB) with in-depth interviews with product, process, design and marketing management during the 2010 year. Why the study was conduced with GMB? The GMB has been one of the most representative examples of recent strategies of rethinking the R&D management in a global perspective. For example, GMB has been strongly incorporate in the R&D global networking as one of the five global centers with capability and mandate to design, engineering and manufacturing of medium-sized utility vehicles although with freedom do be involved in many other global project. Due to such global decision, GMB has significantly improved the qualified workforce. During the last four years GMB more than duplicated the number of engineers with actual staff around 1500 engineers in Product Development Center that includes laboratories and the proving ground. It is worth to mention that such investments were approved from the corporation during a phase of economic crises that strongly affected the GM headquarter.  

Among the contributions of that study, we would like to point out two of them: firstly, the study tend to improve the knowledge concerning the potentialities of getting global mandates of R&D from Brazilian subsidiaries of car makers; secondly, we hope to contribute with the construction of a theoretical and practical debate about the strategies of management to conduce innovative projects, specially in R&D areas, in a adverse environment with high business complexity.

References

AMATUCCI, M.; BERNARDES, R. C. Building Competence for Product Development in Brazilian Subsidiaries Automotive Industry. SAE Technical Papers, v. 36, p. 36-56, 2008.
BALSET, Giovanni; CONSONI, Flávia L. Global Technology and Knowledge Management: Product Development in Brazilian Car Industry. International Journal of Automotive Technology and Management. Vol. 7, Nos 2/3, 2007. pp. 135-152.
CONSONI, Flávia L.; QUADROS, Ruy. From Adaptation to Complete Vehicle Design: a case study of product development capabilities in a car marker in Brazil. International Journal of Technological Management. Special Issue on Strategies for Learning and Innovative Capability Building within Firms in Emerging Economies. Vol. 36, Nos 1/2/3, 2006. pp. 91-107.
FROST, T; BIRKINSHAW, J e ENSIGN, P. Centers of Excellence in Multinational Corporations. Strategic Management Journal, vol.23, p. 997-1018, 2002.
QUADROS, Ruy; CONSONI, Flávia. Innovation capabilities in the Brazilian automobile industry: a study of vehicle assemblers’ technological strategies and policy recommendations. International Journal of Technological Learning, Innovation and Development  (IJTLID). Vol. 2, Nos. ½, 2009. pp 53-75.
ROTH, K.; MORRISON, A. Implementing global strategy: characteristics of global subsidiary mandates. Journal of International Business Studies, vol23, n. 4, p. 715-736, 1992.
UNCTAD, World Investment Report – transnational corporations and internationalization of R&D, New York and Genebra, United Nations, 2005.

 

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Concéption Tommaso Pardi
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