Programa de Pós-graduação em Administração de Empresas EAD5952 – Strategy and Innovation in Multinationals Prof. Moacir de Miranda Oliveira Jr Felipe Mendes Borini, Moacir de Miranda Oliveira Jr., Franciane Freitas Silveira, Ronald de Oliveira Concer 2012 Alessandra Frediani The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals

Agenda Introduction Paper’s structure analysis Paper's content 1.1. About the authors 1.2. About the paper Paper’s structure analysis Paper's content Critical evaluation Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

1.1 About the Authors Felipe Mendes Borini is ESPM/SP and FEA/USP Professor of Management Studies Documents: 171 Citations: 685 H index: 13 Franciane Freitas Silveira is FEA/USP Professor of Management Studies Documents: 36 Citations: 88 H index: 05 Moacir de Miranda Oliveira Junior is FEA/USP Professor of Management Studies Documents: 120 Citations: 1148 H index: 13 Ronald de Oliveira Concer is FGV PhD student of Management Documents: 08 Citations: 52 H index: 3 Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

1.2 About the paper Title: The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals Publiched on: 2012 Times cited: 06 ( Web of Science) 43 ( Scholar Google) Journal: European Management Journal (2012) 30, 219– 231 Impact Factor: 1.437 (Q2) Journal description: The European Management Journal is a flagship scholarly journal, publishing internationally leading research across all areas of management. EMJ articles challenge the status quo through critically informed empirical and theoretical investigations, and present the latest thinking and innovative research on major management topics, while still being accessible and interesting to non-specialists. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

Agenda Introduction Paper’s structure analysis Paper's content 2.1. Parts of the paper 2.2. Research question 2.3. Metodologie 2.4 Conceptual framework Paper's content Critical evaluation Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

2.1 Paper’s structure analysis Summary Introduction Theoretical background The strategic orientation of the r&d function in foreign subsidiaries. H1 The effect of integration between the parent company and its subsidiaries. H2 Entrepreneurial orientation. H3 The mode of entry. H4 The subsidiary's period of existence. H5 Methodology Construction of variables Results Discussion Conclusion References Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

2.2 Research question To understand what factors allow the subsidiaries of emerging multinationals to develop innovations that are used by the parent company, that is, what factors drive reverse innovation. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

2.3 Method The research population consisted of Brazilian MNCs engaging in manufacturing or supplying technological services with operations abroad. In December 2006, 42 Brazilian enterprises with overseas operations were identified. The questionnaire pre-testing was achieved with three multinationals. The questionnaire was sent to 42 CEOs of multinationals by e-mail and was used to reinforce replies to telephone calls. Thirty of the 42 firms responded to the questionnaire, and 12 of the 30 firms were one among the 14 Brazilian New Global Challengers. The second stage consisted of having the firm’s̃ corporate headquarters send a custom-designed questionnaire to all of their subsidiaries. The 30 Brazilian MNCs sent this questionnaire to 93 overseas subsidiaries. Sixty-six of the 93 subsidiaries responded by letter or through the electronic questionnaire found on the project’s website. The hypotheses were tested through the statistical techniques of correlations and multiple linear regressions. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

2.4 Conceptual framework The article proposes that the reverse transfer of innovation relies on the following: (i) the strategic orientation of the foreign subsidiary's R&D functions; (ii) strong integration (communication) between the parent company and its subsidiaries; (iii) the entrepreneurial orientation of the corporation, in addition to (iv) the entry mode and (v) the subsidiary's period of existence. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

Agenda Introduction Paper’s structure analysis Paper's content Critical evaluation Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

3. Paper’s content H1. The reverse transfer of innovation relies on an R&D structure of the subsidiary with global orientation. This article argues that, for multinationals in emerging markets, the existence of a functional structure of R&D with a global orientation with respect to foreign subsidiaries is positively associated with reverse innovation. Figure 1. Reverse transfer of innovation in foreign subsidiaries. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

3. Paper’s content H2. The reverse transfer of innovation relies on a strong integration (communication) between the parent company and its subsidiaries. Integration in the multinational network is related to sharing values between the units, which allows a parent company to understand its subsidiaries, and vice versa. It seems that like multinationals from developed countries, strong integration drives the development of capabilities of emerging multinationals because the parent company has more confidence in the subsidiary and realizes the opportunities for development of non-local skills outside the country of origin. Thus, a higher investment is directed towards the development of competences in the subsidiaries because has a reliable corporate strategies. Figure 1. Reverse transfer of innovation in foreign subsidiaries. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

3. Paper’s content The concept of entrepreneurial orientation suggested in this article focuses on the analysis of corporate entrepreneurship, or widespread entrepreneurship in a corporation that allows entrepreneurial actions of employees, arising from the stimulation and support of the visionary character of each employee. H3. The reverse transfer of innovation relies on a strong entrepreneurial orientation provided by the parent company. Figure 1. Reverse transfer of innovation in foreign subsidiaries. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

3. Paper’s content The organizational structure and processes of the acquired company are very different from those of the rest of the corporation. The adaptation of processes and systems for innovation transfer requires great effort. Therefore, innovations arising from acquisitions would be less likely to become global innovations as compared with innovations that come from greenfield investments. H4. The reverse transfer of innovation comes mainly from foreign subsidiaries that entered the market through greenfield investments. Figure 1. Reverse transfer of innovation in foreign subsidiaries. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

3. Paper’s content H5. The reverse transfer of innovation comes mainly from foreign subsidiaries that have experienced a longer period of existence abroad. Figure 1. Reverse transfer of innovation in foreign subsidiaries. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

3. Paper’s content – Conclusion H1, H2, H3, H3 and H5 were confirmed by the results. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

3. Paper’s content – Field data Brazilian manufacturing multinationals constitute 79% and service businesses constitute 21% of the sample. Abroad, 42% of the Brazilian MNCs perform manufacturing activities, 33% develop service activities and the remainder (25%) perform both activities. The subsidiaries of Brazilian MNCs are mainly located in Latin America (35%), followed by Europe (17%) and North America (15%). Individually, the country with the largest number of subsidiaries is the US (15%), followed by Argentina (14%) and Mexico (8%). China (7%) already stands as a major destination of Brazilian subsidiaries. Regarding the markets served, 40% of the subsidiaries are exclusively focused on serving the host country. The market that represents the largest destination of sales is Latin America (33%), followed by Europe (23%) and North America (23%). Africa is the market for 15% of the subsidiaries, and Asia, Eastern Europe and the Middle East each account for 10% of the market share of the subsidiaries. The entry mode of Brazilian MNCs abroad is divided into acquisitions (58%) and direct investment (42%). Approximately 60% of subsidiaries opened after the year 2000, and approximately 75% of them have operated for less than ten years. Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

Agenda Introduction Paper’s structure analysis Paper's content Critical evaluation Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

4. Critical evaluation Why Is This Research Important? What was add to previous literature and theories? How this impact your Research? Borini et al. The reverse transfer of innovation of foreign subsidiaries of Brazilian multinationals, 2012

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