International division of labour in product development activities: Towards a selective decentralisation?

Abstract

This paper aims to contribute to the debate on the international division of labour among headquarters and subsidiaries located in emerging markets, concerning product development (PD) activities. We argue that market proximity and technological sourcing, often claimed as reasons for decentralising PD activities, are not sufficient to explain some cases of integration of subsidiaries located in emerging markets in their headquarters' PD structures. We then propose that this integration may arise in order to reduce development time and costs; also, the integration of subsidiaries depends on their relationship with headquarters and on the role played by host and home governments. Finally, we present some proposals on how the division of labour occurs, concerning the development of platform and derivatives and the stages on the PD process. These propositions are based on case studies conducted in four major car assemblers in the last four years, examining their headquarters as well as their Brazilian subsidiaries.