Product Development in Emerging Market Subsidiaries - The Influence of Autonomy and Internal Markets on Subsidiary Roles

Emerging market subsidiaries constitute an increasingly important asset for the innovative activities of multinational corporations (MNCs). This study examines how different types of these subsidiaries may be integrated into global R&D using two essential coordination mechanisms — hierarchical control and internal markets (competition among MNC units). Based on a sample of 146 Brazil based MNC subsidiaries, the key results suggest that (1) more innovative subsidiaries have higher autonomy than less innovative subsidiary as long as they have local market scope; (2) subsidiaries which develop new products for global or other emerging markets have competitive relationships with peer MNC units. Likewise, the results provide some preliminary support for an instrument which measures competition among MNC unit. Based on a comprehensive classification framework, the study puts forward some recommendations for MNC technology management regarding how subsidiary product development units may extend their market scope and technological capabilities.