Product innovation and competence development in a Brazilian subsidary

Nowadays, 90% of the year Brazilian output (and yearly sales), and around 33% of the countrys fleet is already composed of flex-fuel cars. The first flex fuel car launched in 2003 was a Volkswagen Gol model. Magneti Marellis Brazilian subsidiary was responsible for this electronic injection and ignition electronics sub systems development. This study examines this development and its influence in first order competences acquisition and leverage and second-order competences creation and the business benefits from this process (Danneels, 2002). We conducted interviews with engineers and managers who had participated on the development project and compared to relevant literature. Our results show that the engineering division department has since grown almost 3 times, and R&D has become an institutionalized activity in the Brazilian PowerTrain division, that reached the status of Global Technological Development Reference Center for renewable fuel technologies as a consequence of this new fuel injection and also due to the market share and costumers number growth. The flex-fuel system have been influenced the development of first-order competences (market and technological) in engineering and commercial teams and also created conditions to improve second-order competences in order to developing first-order competences that made possible innovations on flex-fuel injection platform as tetra-fuel and ethanol-cold injection systems.