International value-chain configuration

The discussion of value-chain configuration (VCC) touches the essence of the phenomenon of multinational companies. A company only becomes multinational because the location of its operations in different countries gives it competitive advantages. At the same time, in order to settle in a foreign country the company has to rely on distinctive competitive advantages relative to both local and international competitors. The international value-chain configuration (IVCC) provides a depiction of the strategy of a multinational company, its achievements, the forces to which it is subject and perhaps also signals its future intentions.

The aim of this chapter is to show how the Brazilian multinationals are configuring their international value chains and how they are managing them to compete in international markets. For that, the primary information is the spatial dispersion of activities: what activities are they doing and where. A second level of information relates to why: what are the reasons that justify the adoption of the configurations observed. The third level relates to how: what strengths are mobilised to move into the international locations? Finally, it is important to assess how the Brazilian multinational companies are managing their international value chains to gain competitiveness.

Innovation in Brazil

Brazil is not considered a good performer when it comes to innovation. The observation is not wrong but it is also not correct. Brazil is not well ranked in specialised lists which evaluate the performance of the country as a whole according to the traditional indicators: investment in research and development (R&D) and number of patents. However, Brazilian firms are internationalising successfully and innovations play an important role in their strategies.

The approach to innovation adopted by Brazilian companies takes on a perspective different from the traditional scientific research leading to technological break-through, so much appreciated in developed countries. In this chapter, we will show that other approaches to innovation are being developed by Brazilian multinationals in order to gain competitive advantage.

We will show that these approaches are the result of a series of factors and circumstances involving: the evolution of the country’s social and political environment that affected organisational culture and entrepreneurship; the obliviousness of the national innovation system; the unfolding of economic development policies that prescribed areas where local companies could grow in the face of competition from the subsidiaries of foreign multinationals; and, finally, the competences and resources which supported the strategies of Brazilian multinationals to compete in the international markets.