This paper analyzes the internationalization of new multinationals from emerging countries. It also focuses on Production's role in firm internationalization, a subject seldom addressed because the discipline of International Manufacturing is still embryonic, while International Business tends to overlook production. The authors integrate International Business and International Manufacturing concepts and frameworks in order to analyze new multinationals from emerging countries, using the empirical evidence of a survey plus case studies of Brazilian multinationals for understanding late-movers’ strategies and competences, with emphasis on production.
The difference between a local firm and a multinational is International Manufacturing. This may seem commonsensical, but recent definitions highlight it: “A MNE is a firm with some foreign sales and some foreign production, in which the latter takes place in a wholly owned subsidiary” (Rugman and Li, 2007); and “A MNE is any business that has productive activities in two or more countries” (Hill, 2008).
However, the role of Manufacturing, defined here as “the entire process that takes a product from initial concept to its eventual use by customers, including design, production, marketing, distribution, service and disposal” (Gregory, 2003), in the internationalization processes of firms is rarely addressed. In Production and Operations Management, International Manufacturing has become of interest only recently: M.T. Flaherty's “Global Operations Management” (1996) is the first book entirely dedicated to the theme.
On the other hand, International Business has focused since the 50s on the study of internationalization. However, the Manufacturing function, though often mentioned, is seldom the focus of studies.
Late-movers, i.e., firms from the so-called emerging economies or BRICS, and from Brazil in particular, are now beginning to internationalize, generating an excellent opportunity for studying the role of Manufacturing at this specific and crucial point of the most important firms’ trajectories.
Late-movers are defining their internationalization strategies in an environment densely populated by developed-country MNEs. One of this article's basic arguments is that the current process of internationalization of BRIC firms results largely from the repositioning of advanced-country MNEs and from the reconfiguration of global production systems.
The first issues this article addresses are:
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which are the competitive strengths of late-movers when they internationalize?
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how can they compete with advanced-country MNEs?
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what is the role of late-moving firms in global production networks?
The article has five sections: this introduction; a brief review of the role of Manufacturing in internationalization, as identified in the International Business literature; empirical evidence about how global production systems are evolving, at world level, as well as a framework to describe the changes currently taking place in global production networks; a discussion of the research questions and research design, consisting of a survey of 30 Brazilian MNEs and four in-depth case studies, all of which provide insights into the research questions; and the main conclusions.
This study aimed to discuss the role of Manufacturing in the internationalization process of firms in general, through an historical analysis of the literature for the cases of firms that had already undergone that process, and through field research for the cases of late-movers, focusing on the emergent Brazilian multinationals.
The field research results show that the group of Brazilian late-movers encompasses not only pure manufacturers but also a reasonable proportion of firms that compete in the domestic market based on their systems integration competence.
When those firms begin their internationalization process, their Manufacturing competences come to the forefront, regardless of their classification. This process also demands that their human resources management and organizational competences be mobilized, to provide support to the firm in its launch of international operations. Thereafter, the most important competences become marketing and sales, and client relations, probably reflecting a new stage, in which of the reassessment of international markets and repositioning vis-à-vis clients are top priority. The R&D competence is then mobilized to review products and processes, in order to increase the added value of products and reduce the firm's vulnerability in the global production network.
Therefore, Manufacturing is top priority in the launch of late-movers’ internationalization processes, but it acquires a supporting role once this entry stage has been completed.
The field research also suggests a comparative proposition regarding early-movers’ internationalization, as shown in Fig. 4 below.
