Product Development (PD) carried out in subsidiaries of multinational corporations (MNCs) located in countries with emerging economies provides advances in factors of production, creates high-quality jobs, increases specialisation of the workforce, and it is favourable to a strategic insertion of the host country in the international division of labour. This paper analyses the overall conditions of Product Development competence building at subsidiaries of automotive companies located in Brazil, and puts forward an aexplanatory model of this competence building process. The study was held at two Brazilian subsidiaries that had effectively developed new products - General Motors do Brasil and Volkswagen do Brasil - with the use of Grounded Theory. The model shows that competence building is caused by global factors such as the need for adapting global models and the impossibility of performing this adaptation in a centralised way; and local factors such as local conditions of Brazilian business environment, gradual learning by adaptation and links to competence sources. Implications for theory and managerial practice are discussed.
Automotive industry; product development; strategy of the subsidiary; competence building
