iBusiness, 2013, 5, 136-146
Published Online December 2013 (http://www.scirp.org/journal/ib)
Open Access IB
Changes in Multinational Industrial Enterprises through
the Adoption of Innovation: Case of E-Business in
Brazilian and Foreign Capital Companies
Silvia Novaes Zilber, Marcelo Scorsato de Rosa
Graduate Program in Business, Uninove University, Sao Paulo, Brazil.
Email: silviazilber@gmail.com
Received June 11th, 2013; revised July 10th, 2013; accepted August 5th, 2013
Copyright © 2013 Silvia Novaes Zilber, Marcelo Scorsato de Rosa. This is an open access article distributed under the Creative
Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original
work is properly cited.
The objective of this study was to understand the changes that took place in large multinational industries acting in the
physical world that, by adoptin g e-business, started acting in the virtual world, as well as the needs that led to this adop -
tion. Method: multi-case study with two companies, a national industry (“A”) and a subsidiary of a developed country
(“B”) in Brazil. Results: In terms of motivation, both companies mention ed an increase in revenue, but “B” highlighted
its alignment with global strategy, focused on innovation and e-business, as a “showcase” of the company’s innovative
side. Logistical transformations: “A” hired a logistics operator; “B” developed internally adapted logistics, taking ad-
vantage of knowledge from its h eadquarters.
Keywords: E-Business Adoption; Multinational Industries; Innovation; Logistics; Organizational Structure
1. Introduction
Most large industries established in Brazil have their
roots in the “physical world” and did not have activities
in the “virtual world” at th e time when the Internet came
to be. However, with the advent of the Internet as a busi-
ness tool, many companies began to understand that this
tool could be a way to further their business, leading
companies to adapt their operations to the virtual world
and expand their commercial frontiers.
Turban et al. (2006) [1] define “e-business” as activi-
ties that use the Internet to facilitate the trade (purchase
and/or sale) of goods, the provision of services to the
consumer, collaboration with commercial partners and
the performance of transactions within an organization.
One of the great innovations brought about by the
Internet was disintermediation. Large industries histori-
cally did not directly connect to their end clients and
therefore required that middle-men could now make such
a connection. Mehta & Shah (2011) [2] identify several
reasons to incorporate e-business as a new distribution
channel for companies, with particular emphasis on the
potential for geographic expansion and greater exposure
in current markets.
E-business has been growing in recent years. Data
from the Brazilian Institute of Public Opinion and Statis-
tics (Instituto Brasileiro de Opinião Pública e Estatís-
tica)—IBOPE (2012) [3] show that the number of Bra-
zilians that access the Internet has reached 79.9 million
in the fourth quarter of 2011, an increase of 8% relative
to the same period in 2010. Th e website e-commerce.org
(2011) [4] states that, in Brazil, online sales clearly tend
to increase and that since 2008, the billing of e-business
has grown 30% yearly and is expected to maintain this
rate over the next three years. The website Internet
World Statistics (2011) [5] reports that Brazil currently
has 76 million Internet users, a number that has grown
900% since 2000.
Tigre & Dederick (2003) [6] state that e-business has
become an instrument that is increasingly used by tradi-
tional organizations as a means to complement their
business. Of the various types of transactions that occur
in e-business, perhaps one of the most well-known is
business-to-consumer (B2C), i.e., business between com-
panies and end consumers, a practice also known as elec-
tronic commerce or e-commerce for short.
By adopting e-business or, more specifically, e-com-
Changes in Multinational Industrial Enterprises through the Adoption of Innovation:
Case of E-Business in Brazilian and Foreign Capital Companies 137
merce, industries establish an innovation process regard-
ing the implementation of new ideas in a given context
and assume collective interactions (Sternberg; Pretz;
Kaufman, 2003) [7]. Porter (2001) [8] states that the is-
sue is not whether companies should use the Internet to
do business but rather how best to use it if the company
is to remain competitive. Regarding achieving this aim,
the key challenge is the possession or implementation of
an organizational structure capable of handling this de-
Many companies in the real world are trying to change
their structures to support a virtual business model, as
stated by Kalakota & Robinson (2004) [9]. Although
there has been considerable study on the subject of retail
companies operating in the electronic world, little has
been written about industries using B2C as a means to
directly contact their end clients. This new operation im-
pacts various segments of the company. Once disinter-
mediation takes place, tasks that were previously dele-
gated to an intermediary, such as delivering products to
the end consumer, must now be addressed by the Indus-
try itself, which did not have to do this before adopting
e-business. When implementing B2C models, industries
also need to adapt with respect to merchandise volume,
because traditionally, industries sell to distributors and
wholesalers, who tend to require large production vol-
umes. However, the logistics of an e-business model gen-
erally involves small volumes; this transition is a very
complex operation for industries that did not previously
operate in the virtual world.
In this context, the goal of this study was to understand
the changes caused by the adoption of e-business or,
more specifically, e-commerce (a B2C relationship), in
large multinational industries that acted in the physical
world and started acting in the virtual world, as well as
the needs that led to this adoption. Of the changes that
were investigated, the focus was first on those taking
place in the organizational structure of the companies
under study, given the relevant role of a company’s or-
ganization in taking advantage of the opportunities of
e-business. Secondly, attention was also given to the
transformations that took place in these companies’ lo-
gistics because, although the adoption of e-business is
associated with significant advances in commercial tran-
sactions, according to Barlow et al. (2004) [10], the same
does not happen with logistic flow, subjecting B2C con-
sumers to new logistic bottlenecks in addition to those
that existed in the normal distribution process. To Fuchs
& Fleury (2003) [11], fractionating delivery to the B2C
client is recognized as one of the greatest challenges to
companies, due to both the geographic comprehensive-
ness and the obligation to deliver the product directly to
the consumers’ house.
This study had t he follo wi n g goal s:
Identify the needs that led organizations to adopt
Verify the main changes that took place in the logistic
processes and the organizational structures of the in-
dustries under study due to the adoption of e-business,
specifically B2C;
Identify the benefits and difficulties stemming from
the adoption of e-business.
To achieve these goals, two multinational industrial
enterprises were studied; one with roots in a developed
foreign country that was active in Brazil as subsidiary
and another of national orig in that was founded in Brazil.
The companies chosen, aside from being high-profile
multinationals, have one particularly relevant difference.
The national company is a headquarters, while the for-
eign multinational is a sub sidiary. These companies were
chosen to determine the differences in the adoption of
innovation due to either a headquarters or a subsidiary.
For the headquarters, e-business is something completely
new, while for the subsidiary, e-businessis a roll out be-
cause its headquarters has already implemented this
process in other countries and therefore has knowledge
and experience obtained outside of Brazil.
According to Stal & Campanario (2011) [12], the aca-
demic interest of national capital in Brazilian multina-
tional companies is relatively new, not older than two
decades. There are dozens of studies focused on compa-
nies of Southeastern Asia but v ery few about Latin Ame-
rican companies, further justifying the study of adopting
such a Brazilian multinationa l innovation.
The following section is a review of the literature used
to elaborate the questionnaire and analyze the results
obtained. Next, the investigation methods applied in the
study are presented, followed by the results and analysis
and closing remarks.
2. Literature Review
The theoretical foundation for the present study is pre-
sented here. First, we describe the concept of e-business,
understood as an innovation, and how this innovation is
related to the concepts of organizational structure and
logistics, followed by the concepts of Brazilian and for-
eign multinationals.
Turban et al. (2006) [1] observe that the origin of
e-business dates back to the 1970s, starting with data
transfer, more commonly known as electronic data in-
terchange (EDI). These authors claim that new applica-
tions followed the initial ones, from stock negotiation to
the purchase of flight tickets. Mishra (2010) [13], states
that e-business is becoming one of the best ways to do
business. However, companies in emerging countries still
struggle to develop e-business in a sustainable way and
Open Access IB
Changes in Multinational Industrial Enterprises through the Adoption of Innovation:
Case of E-Business in Brazilian and Foreign Capital Companies
often need to modify their internal structures to promote
this innovation. E-business is a fusion of commercial
processes, enterprise applications and organizational
structure required to create or enhance the traditional
model of the company (Kalakota; Robinson, 2004 [9]).
In Brazil, e-business initially spread through financial
transactions and inside company networks that supported
this functionality (Tigre; Dedrick, 2003 [6]). With the
widespread use of the Internet, e-business extended its
reach to end users, raising companies’ revenues along
with the number of consumers using this channel to ac-
quire product s and servi ces.
Because the adoption of e-business is understood as an
innovation for the adopting industry in the present study,
it behooves us to define what is meant by innovation and
its adoption. Rogers (1995) [14] defines innovation as an
idea or object that is identified by the individual as some-
thing new. The development process of innovation con-
sists of all decisions and activities, as well as their re-
spective impact in the event of a necessity or problem,
during there search, development and commercialization
of an innovation. In the Oslo Manual (OCDE, 2005) [15],
innovation is a vision based on knowledge and focused
on interactive processes through which knowledge is
created and exchanged within and between companies.
Tidd, Bessant & Pavitt (2008) [16] define innov ation as a
change process driven by the ability to establish rela-
tionships, detect opportunities and take advantage of
them. These authors divide it into four distinct categories:
product, process, position and paradigm innovation. For
the present study, one may consider the adoption of
e-business as a process innovation.
For large industries that operated only in the real world,
adopting e-business is an innovation. However, there are
obstacles, as noted by Johnson (2010) [17], including
risk perception, lack of knowledge, trust and organiza-
tional availability.
In multinational companies, innovations can be trans-
ferred between subsidiary companies, from the head-
quarters to subsidiaries and vice-versa. Thus, multina-
tionals develop three types of organizational competence
capable of contributing to the diffusion of innovation,
according to Dunning (1993) [18], as follows: local com-
petences, non-local competences and specific compe-
tences. Competences are important for the diffusion of
innovation among subsidiaries because they enable com-
panies to create or adapt innovation to their local envi-
ronment. Subsidiaries that adapt innovations transferred
from their head quarters are creating local innovation;
those that develop innovation but have difficulty trans-
ferring it back to the headquarters, or vice-versa, create
specific innovations; and finally, subsidiaries that adapt
or develop innovations that are later adopted by others
are creating non-local innovations. According to Oliveira
Jr., Boehe & Borini (2009) [19], the greater the auton-
omy of a subsidiary, the greater its decision power and
the capacity to develop innovation initiatives are. How-
ever, excessive autonomy may hinder the exploitation of
internal initiatives by the multinational corporation and
may lead to innovation decisions that target diverging
objectives, causing a rupture in corporate strategy.
Foreign multinationals have well-known brands, in-
novation processes tested in other countries, sophisti-
cated technologies, efficient management systems, finan-
cial resources that do not always have their origin in the
host country because they seek lower interest rates and
efficient networks of suppliers, distributors and logistics
(Khanna; Palepu, 2006 [20]). According to Khanna &
Palepu (2006) [20], multinational companies that are
developed in emerging nations have institutional defi-
ciencies consisting of the lack of efficient innovation
systems and regulation, as well as volatile political and
economic environments and consumers who, although
demanding, are sensitive to prices; an efficient innova-
tion management might mitigate such difficulties. In the
case of a subsidiary acting in an emerging nation, knowl-
edge may be transferred from the headquarters in a de-
veloped coun try; knowledge is of particu larly high value,
considering that foreign markets grant access to new
ideas and stimuli that can be applied in emerging nations
where the multinational operates (Oliveira Jr., 200 7 [21]).
The comparison between national and foreign multina-
tional companies in the domestic markets of emerging
nations shows that the former develop competence, sk ills
and trust that allo w it to compete with foreig n companies
(Stal; Campanario, 2011 [12]), and, as a consequence, it
becomes more competitive in the market in which it op-
erates. Therefore, the study of these multinationals and
their innovations, which can lead to competitive advan-
tages, is an important part of the study presented in this
Regarding the transformations that may occur in the
organizational structure of companies that adopt innova-
tion, in this case, e-business, Vasconcellos & Hemsley
(2003) [22] claim that the speed of change and the in-
crease in the complexity of the environment in the last
few decades made it necessary to develop structures to
effectively respond to these changes. For a long time, a
certain set of structural patterns were employed by many
kinds of organizations. These structures are defined as
the result of a process in which au thority is distributed to
activities in all levels, from the lowest to the highest.
Responsibilities are specified, and a communication sys-
tem is designed to allow people inserted in this structure
to perform tasks and exert the authority they have to
achieve the company’s objectives (Vasconcellos; Hem-
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Changes in Multinational Industrial Enterprises through the Adoption of Innovation:
Case of E-Business in Brazilian and Foreign Capital Companies 139
sley, 2003 [22]). In terms of organizational structure,
Costa et al. (2010) [23] state that structures without
many hierarchical levels that are oriented towards multi-
functional teams are better able to adapt to mutating en-
vironments that seek innovation.
Regarding the impact of the adoption of e-business on
the logistics of the adopting companies, Bornia et al.
(2006) [24] state that, as a result of this new age of eco-
nomics where each Internet access may result in a new
purchase, logistics serve e-business as a value-aggregate-
ing activity, and companies exploiting this strategy may
obtain competitive edges that will allow their survival
and grant financial return. Following Coelho & Cristo
(2007) [25], B2C e-business requires differentiated logis-
tics with particular characteristics that are not tradition-
ally available, such as the integration between informa-
tion on the availability of a given product on the site
(front end) and the actual availability of the said product
in stock (back office). In traditional logistics, a material
good is thought of as a well-estab lished physical positio n;
in virtual logistics, however, what matters is that the
product be available when necessary. According to Alves
et al. (2005) [26], while traditional logistic systems are
developed to serve commerce between companies with
orders of large volume, in which most deliveries are
made to distribution centers or stores, the logistics of
virtual commerce are characterized by a large number of
small orders that are geographically spread out and frag-
mentally delivered, resulting in low d emographic density
and high delivery cost (ALVES et al., 2005 [26]). B2C
e-business requires differentiated logistics with particular
characteristics that are not provided by traditional logis-
tics. True, its logistics do present, in a sense, the same
concepts as the traditional ones, but they are adjusted to
the specific characteristics of an e-business environment
(BORNIA et al., 2006 [24]). Tools that are very similar
to those used in traditional logistics are employed here;
however, they must be adapted according to the particu-
lar traits of the process. The adaptation can be c ons ider ed
an innovation for companies that were not founded in a
virtual environment but wish to enter this model to ser-
vice previously unreachable clients.
3. Investigation Method
This study was undertaken with an exploratory aim, is of
a qualitative nature, and employed a multiple case study
method in which the companies were studied by means
of interviews using semi-structured questionn aires, docu-
ments made available by the companies and analysis of
their websites, thus allowing data triangulation. Vieira
(2004) [27] states that qualitative study has been used in
some specific fields of study in applied social sciences,
and it can be defined as having its main fo undation in th e
analysis of qualitative d ata, i.e., it is characterized by not
making use of statistical instruments of data analysis.
According to Yin (2003) [28], qualitative methods allow
the researcher to gain an overview of events within the
context of real life, and their use is appropriate in studies
that aim to understand complex social phenomena. Given
that this study tries to understand, first, the transforma-
tions caused by the adoption of e-business, and more
specifically, e-commerce (B2C relationship), by large
multinational industries that were originally active in the
physical world and then started acting in the virtual
world, and secondly, the motivations for this adoption,
exploratory research of a qualitative nature seemed ap-
propriate. The method chosen for this exploratory inves-
tigation was the multiple case study, which allowed for
acomparison between the companies participating in the
study in terms of how they innovated, their different ad-
aptation processes and the difficulties encountered while
adopting innovatio n.
The companies chosen for the study were selected be-
cause they are multinational, one from an emerging na-
tion (Brazil) and one from a developed country, and also
because are both large businesses that sell directly to the
consumer through e-business (B2C). These criteria great-
ly constrained the scope of this study because there are
few industries in Brazil that sell directly to the end client
through the Internet. Th e comparison between companies
of different origins is pertinent because the aim is to in-
vestigate whether the branch office acting in Brazil can
benefit from the knowledge obtained from the experi-
ences of the headquarters. The companies that were in-
terviewed do not belong to the same segment; however,
both are characterized by the production of consumer
goods and by having their own websites where they sell
directly to the end consumer. This choice was made be-
cause two multinationals in the same field but of differ-
ent capital, i.e., one nationa l and one fo reign, both sellin g
their product directly through the Internet, could not be
found. Data were gathered through semi-structured inter-
views and via examination of documents provided by the
company, newspaper and magazine articles, the compa-
nies’ websites and academic articles about the companies.
Regarding the semi-structured interviews, nine employ-
ees of company “A” and eight of company “B” were
interviewed; these employees held positions such as
Wholesale Director, Marketing Manager, E-business
Manager, New Media Communications Manager, Dis-
tribution Manager, Transport Manager, Distribution Cen-
ter Operator, Supply Chain Manager and New Business
Manager, among others. Each interview took approxi-
mately one hour, and the subjects were persons desig-
nated by the companies themselves as those best quail-
fied to help reach the objectives of the present study.
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Changes in Multinational Industrial Enterprises through the Adoption of Innovation:
Case of E-Business in Brazilian and Foreign Capital Companies
Complementary data were obtained later through tele-
phone communication and also by e-mail exchange to
clarify some details. The analysis of the data consisted
ofexamining, categorizing, and classifying or, alterna-
tively, recombining the qualitative evidence to meet the
end goal of the study. No statistical procedures w ere used
to analyze the data because the whole study was
grounded on a qualitative approach (Godoy, 2006) [29].
Because this study’s investigation is of exploratory char-
acter, there was no intention to establish variable correla-
4. Results and Analyses
The obtained results are presented in this section; both
companies under study are introduced, and the evidence
that was analyzed to reach the proposed objectives is
4.1. Implementation of E-Business in Company
The national capital company, referred to in this stud y as
company “A”, is the largest shoe company in Latin
America in terms of units produced, with R$ 3 billion in
revenue in 2011, of which R$ 2.5 billion was from the
domestic market. It holds 16% of the national shoe mar-
ket and 55% of the rubber sandal market. It has 12,000
employees in Brazil and approximately 5000 abroad.
Because the company was structured to sell large vol-
umes to wholesalers, department stores or retail outlets, it
did not have the knowledg e of how to sell directly to the
end consumer through e-business. “[...] The company
had never before sold directly to the end consumer, and
that was a change in our processes [...]”, stated the mar-
keting manager. Technical areas, such as Information
Technology, had to hire consultants to develop the web-
site, and at a later stage, specialized personnel were hired
to manage the e-business component. The idea of adopt-
ing the e-business system sprung from the company itself
and was fully developed in Brazil. The development of
the Brazilian website served as a reference for the de-
velopment of the online store for the US, Europe and
some e-business initiatives in Southern Asia. The com-
pany has branches outside of Brazil; however, there was
no knowledge transfer from these other units to Brazil.
Instead, the Brazilian unit was the head quarters for the
institutional develop ment of e-business in its subsidiaries.
In the interview, this fact is made evident by the e-busi-
ness manager: “[...] we worked together with other com-
panies because e-business is a completely new business
that normally nobody in an industry fully masters and
often, also, in physical retail, it is business-specific”.
The project to develop e-business in company “A”
started in a planned manner in 2007 and was consoli-
dated in 2009, when the company put two brands of its
portfolio at the end consumer’s disposal. The develop-
ment of e-business as a new channel for the consumer
was not a simple task because of the size of the company,
which had a large number of departments and personnel
involved, in additio n to the lack of sp ecific training in the
company to adopt this innovation at the time. Addition-
ally, the development of e-business studied here was its
second experience in selling products directly to the
consumer. The first one occurred in 2005, was not suc-
cessful and was abandoned in 2006. The adoption of
e-business was attempted again in 2007. The interviews
and accounts obtained in the present work refer to the
second attempt by company “A” to adopt this type of
business in 2007. The development took place in Brazil,
but the internal knowledge necessary to promote the de-
velopment of e-business was not available because this
was a new activity for the company; therefore, technical
training was sought by hiring specialized companies.
Technical areas such as Information Technology hired
consultants to develop the website, and at a later stage,
specialized personnel were hired to manage the e-busi-
The Brazilian headquarters did not interfere in the op-
erational structure (warehousing and distribution) of the
e-business in other countries. Therefore, subsidiaries had
autonomy to hire locals for these services. The guidelines
from the head quarters were focused on visual alignment,
product organization and brand appeal (pictures of new
products, colors and the company logo), in conformity
with the Brazilian website, to guarantee brand preserva-
In company “A”, the departments involved in this
adoption understood that the objectives of this company
behave differently, and further, there was no alignment
between the objective of adopting e-business and the
company’s strategic objectives. However, during the in-
terview process, it was concluded that the true motiva-
tion had been to increase sales. The process to develop
e-business involved, in itially, sales and marketing execu-
tives and, later, information technology executives. The
involvement of logistics in the project’s conception and
implementation phase was not so markedly present as
that of IT, as revealed by the following statements from
the transport and distribution managers: “[...] a superfi-
cial involvement of logistics”; “[...] we know of the im-
portance, but there was no greater involvement of logis-
tics due to lack of appropriate knowledge and acknowl-
edgement of the project’s importance”.
In the organizational structure, the e-business area was
allocated to the Retail Board , which is responsib le for the
management of franchises and company stores. This
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Changes in Multinational Industrial Enterprises through the Adoption of Innovation:
Case of E-Business in Brazilian and Foreign Capital Companies 141
board made their brands available for consumers to pur-
chase through the Internet because this was a new area,
and the company itself was not certain which board
would be responsible for the management of e-business.
One interviewee from retail said that a more appropriate
place for e-business within the company was missing, i.e.,
company “A” did not have a specifically prepared area
for this type of business and thus made use of the exist-
ing structures. There was no consensus regarding the
necessity of conceiving an e-business project. Interview-
ees from sales and marketing admitted that the develop-
ment had its origins in their areas: “[...] everything
started in sales and marketing [...]” or “[...] they [sales
and marketing] had the idea of organizing the products
and making them available through the Internet [...]”.
Thus, it is apparent that the true motivations underlying
adopting innovation were confounded, and there is no
certainty as to what motivated this adoption.
The information gathered from interviewees from
company “A” diverges on the necessity of adopting e-
business. Data obtained in this study show that the com-
pany acted “in an amateur fashion and without a clear
objective” that would justify the development and im-
plementation of e-business, as reported by some e-busi-
ness, company stores and sales managers. Some of the
e-business objectives, as stated in these interviews, are as
[...] “a differentiated status for the product, with a so-
phisticated flair”.
[...] “the opportunity forbrands in a field that grows,
say, around two digits every year ”.
[...] “the goal is to make a mix of products available to
the consumer thatis hard to find in the common store”.
[...] “to make it easier to purchase, and provide a place
where people can research information about the prod-
In its second attempt to implement e-bu siness in 2007,
the organizational structure of the logistics of company
“A” was called “Distribution” and was placed under the
Supply Chain Board. Along with Logistics, the field of
Planning was subordinate to this Board. The company
justified placing logistics (i.e ., distribution) under the
same management because both pertain to the same
chain of operations. In 2009, the cost to process orders
from e-business was lower than that of traditional orders,
even though the shipping cost was higher. The logistic
flow to process an order proved to be advantageous when
compared to the costs of maintaining a physical store,
which has additional costs, such as employees, rent, taxes,
water, electric power and building maintenance, etc.
Although they do not have physical contact with the
product, consumers utilizing the e-business model have
greater variety at their disposal, and in general, products
cost less. Logistics, despite their importance and role as a
strategic area for the success of activities related to this
channel, had only superficial involvement in the process
because the company opted to subcontract the logistic
activities relevant to e-business, hiring a logistics opera-
tor to perform the warehousing, distribution and ship-
ment of orders. The reason given for this subcontracting
acknowledged that logistic operations for e-business are
completely different from what the company already had
in terms of shipment size. This was confirmed by means
of an interview fragment stating “[...] the logistic process
is completely different from that of a normal sto re or of a
company’s shipment’s and the operator we hired had the
required knowledge”. The interviewees in the fields of
Marketing and Logistics stated that clients started re-
ceiving their orders faster, and in addition, they empha-
sized that the service provided by the subcontracted op-
erator is one of the best in the country in terms both of
punctuality and product quality, i.e., the condition of the
merchandise at the moment of delivery.
4.2. Adoption of E-Business in Company “B”
Foreign capital company “B”, founded in 1919 in Swe-
den, is a current global leader in electrical household
appliances, selling over 55 million units per year in over
150 countries. The company focuses on product innova-
tion based on extensive opinion polling to determine the
real needs of consumers.
Oriented towards product and process innovation, it
adopted B2C in 2004 without the intent to significantly
increase revenue; instead, the company aimed to imple-
ment an innovation in Brazil that was already common
practice in other countries, such as Italy. Thus, the main
objective of adopting e-business was the alignment of the
branch office’s objectives with the company’s global
strategy, so that all countries shared the same processes
and procedures, giving the headquarters greater control
over its global operations. However, at the end of the
implementation, they also gained commercial insight into
e-business, similar to company “A”. In the last three
years, the process was considered to be consolidated by
company “B” after a period of transformations in IT (In-
formatio n Te ch no log y) an d Log istic s, ar e as co n sid e r ed to
be essential to and responsible for the high performance
demanded by consumers that favor the e-business chan-
nel to acquire their products.
Company “B” sees the adoption of innovation as
something of extreme importance, reflected in are mark
by the distribution center’s operator: “[...] innovation is
‘in the blood’ of the company [...]”. It is part of the com-
pany’s mission to provide innovative products beyond
consumers’ expectations. However, even if the search for
innovation is part of the company’s mission, the Brazil-
Open Access IB
Changes in Multinational Industrial Enterprises through the Adoption of Innovation:
Case of E-Business in Brazilian and Foreign Capital Companies
ian branch resisted the adoption of e-business (under-
stood as innovation) because, at first, this was not an
opportunity to increase sales but rather a model “sug-
gested” by the headquarters to promote a global align-
ment with the operations in other countries.
Regarding organizational structure, the Brazilian branch
of company “B” consists of five boards. Supply Chain
and Sales are responsible for Logistics and E-Business.
The Projects area, physically located in Curitiba (PR), is
subordinate to the Supply Chain Board; this area is re-
sponsible for the development of new processes or pro-
cedures that originate from the headquarters or are ideal-
ized in the subsidiary itself. Company “B” planned to
adopt e-business, and the Project Coordination area, re-
sponsible for the development and implementation of
innovations originating from the headquarters, coordi-
nated the whole process. After implementation, the pro-
fessionals who were part of this coordination area were
no longer part of the e-business staff and returned to the
project area to work on development demands. As stated
by the projects and new business manager: “[...] the
company adopted this condition and invested because
there is a culture of structured innova tion, and it does not
consider chance [...]”.
Interviewees stated that there was no change in the fi-
nal design for e-business implementation as proposed by
the Brazilian branch because the headquarters approved
of and trusted the professionals who were responsible for
the execution. These professionals consisted of a multid-
isciplinary team from the project and e-business areas.
Company “B” thus implemented this electronic sales
channel with a local team without having to hire third
parties or consultants but instead involved all areas, such
as logistics, finance and information technology, pre-
serving the local traits of the country. Company “B” at-
tributes a good deal of the success in this implementation
to the support given by HR to the people who were in-
volved in and affected by the innovation and the use of
The company’s Logistics achieved national coverage,
with a strong concentration in the So utheast. This is to be
expected given that the main clients, large retailers, are
concentrated in this region. With six companies shipping
their products, company “B” acquired relevant experi-
ence in delivering large volumes concentrated in a few
clients, and until the start of the e-busin ess project, it did
not ship directly to the end consumer. The internal opera-
tional structure is the same for the logistics of e-business
as for the traditional one, i.e., the logistics personnel of
company “B” share the management of both channels.
This situation is identical to wh at is found in distribution
centers, cargo aggregators and transportation companies,
according to accounts of interviewees from the e-com-
merce and logistics areas. The first transformation to take
place, as identified by the company, was the delivery of
small shipments, which spiked in amount and number of
destinations. As a result, the company looked for trans-
portation companies that were more fractional-load ori-
ented (small shipments) and specialized in e-business.
Another change perceived by company “B” was that
e-business customers are more demanding in regard to
delivery punctuality.
Table 1 presents a synthesis of the main results found
during the study conducted on companies “A” and “B”,
classified according to the analysis categories identified
by the content assessment. The table below was obtained
from the analysis of the speech of all respondents, iden-
tifying in these discourses possible categories (or labels)
that best translate into the language of business that has
been said by the respondent managers. Therefore, the
answers about the process of adoption of e-business by
companies can be summarized by the following groups
or categories of findings: needs that led to e-business
implementation; difficulties in adop ting e-busin ess; bene-
fits brought about by the adoption of e-business; trans-
formations in logistics; transformations in organizational
structure; process of knowledge transference from the
headquarters to its subsidiaries regarding the implemen-
tation of e-business; commitment to innovation; and
alignment with the strategic objective.
4.3. Analysis of Results
For the analysis of the results, in addition to the primary
data obtained, we use a comprehensive literature review
to support the findings of this research to compare what
was found with what is established in the literature cited,
thus, we can ensure that the analysis made is based in a
theoretical framework that make sour conclusions be
more robust.
For Rothwell (1994) [30], Ahmed (1998) [31], Val-
ladares, Serio & Vasconcellos (2012) [32] and Zilber
(2009) [33], there must be a strategic objective that
“guides” innovation within a company. This objective is
not clear for company “A”, and there is also no align-
ment between strategy and e-business because the execu-
tives never give an indication that e-busin ess is su ppo rted
by a strategy defined by the headquarters. In company
“B”, a foreign multinational and subsidiary of its head-
quarters, the adoption of e-business was done in align-
ment with the overall strategy; in 2 0 04, this multinatio n al
sought to standardize management models across all ar-
eas of its subsidiaries, so that they would have identical
processes, and therefore, headquarters would have better
control of the branches. According to Tidd, Bessant &
Pavitt (2008) [16], developing new processes constitutes
one of the ways companies innovate. This was observed
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Changes in Multinational Industrial Enterprises through the Adoption of Innovation:
Case of E-Business in Brazilian and Foreign Capital Companies
Open Access IB
Table 1. Synthesis of categor ies found in the study.
Category of findings Company “A” Company “B”
Increase in revenue. Alignment with global strategy, focused on i nn ovation.
Channel seen by the consumer as innovative. Increase in revenue.
Attractiveness and ease of purchase.
Easy way to obtain infor mation about products.
Needs that led to
e-business implementation
Variety of products gathered in a single place.
Focus in innovation; e-business as “showcase” of the
company’s innovative facet.
Lack of knowledge to develop the new sales channel.Non-commercial project.
Low technological level. Resistance from departments involved, e.g., logistics.
Lack of an innovation culture. Risk of post-implementation failure.
Difficulties in adopting
Inadequate organizational structure.
Reduced cost to process an order. Refined criteria for hiring third part ies to deliver produc ts.
Removal of intermediaries .
Benefits brought by the
adoption of e-business Greater assortment of pr oduct s made
available to the consumer.
Exposition of products without
resorting to a ph ysical structure.
Cargo profile: small shipments.
Fractioned deliveries.
Assertive delivery dates.
Employment of th i rd party to operate logistics. Same interna l t e am for traditional business and e-business.
Autonomy to ship orders (e.g.: prioritizing e-b u s i n e s s o rders).
Changes in logistics
Lower logistics cost. Hiring of transportation companies with
differentiated, specialized profile.
Shared structure for e-business in administrative
aspects because the operational structure is
dedicated to hiring third-parties.
Dedicated structure for e-business in
administrative aspects because the
operational structure is shared.
Structure out of strategic focus. Structure based in foreign subsidiaries. In Brazil, it is an
autonomous structure, but its innovations must be validated
by the headquarters.
Changes in
organizational structure
Lack of hierarchical importance for e-business
because the company allocated it to the retail
board without strategic grounds.
Stable structure; the area was not shifted
to another board because e-busines s
was given hierarchical importance.
Process of knowledge transference
from the headquarters to its
subsidiaries, regarding
implementation of e-business
The headquarters could not help its subsidiaries
very much because it lacked knowledge of
e-business. At most it provided its opinion on some
issues, e.g. layout of products in the website.
The headquarters, by means of Project Coordinati on,
provided the subsidiary with all information
necessary to imple ment e-business b as e d i n
previous knowledge and experiences.
No innovation management. The company’s mission is to innovate.
It is not part of the company’s mission to
promote and maintain innovation. Innovation is present at all levels of the company.
Little commitment from the board. There are well-defined processes for managing innovation.
Commitment to innovation
Disorganized processes. Dedicated staff area for impleme nting innovations.
Indeterminate objectives in adopting e-bus iness.Global alignment with the operations in other coun tries where
the company already operates e-business.
Low priority for the project. Met the expectations of clients to be constantly innovating.
Project initiated in departments and
not by a board directive.
Alignment with strategic
Strategic planning without impact.
Fulfilled the objective of strategic
alignment proposed by the headquarters.
Adaptation of organizational structure. Standar dization of headquarters and subsidiaries.
Hiring of more efficient service providers.
Success in implementing the company’s strategies.
Main results obtained b y using
e-business Deliveries with better level of service
(punctuality and quality o f p r o du c t ).
Commercial expansion.
Changes in Multinational Industrial Enterprises through the Adoption of Innovation:
Case of E-Business in Brazilian and Foreign Capital Companies
in this study, where both companies developed a change
process to take advantage of a perceived business oppor-
tunity, in this case, e-business, allowing for increased
sales in their markets, independent of the needs that
drove them to innovation.
Company “A” did not show a capacity for innovation,
as evidenced by the lack of trained professionals that
could elaborate and implement a n ew project outlined by
the company as an objective. Ahmed (1998) [31] asserts
that, for a company to innovate, the qualifications of its
executives are fundamental because they enable the ful-
fillment of the plans. The hiring of third parties by com-
pany “A” (logistics operator) capable of serving the
e-business to meet delivery dates and provide warehous-
ing corroborates the findings of Kalakota & Robinson
(2004) [9], who emphasize the need to hire third parties
to plan and execute projects when a company cannot do
everything perfectly and/or there is a lack of technical
preparation by the executives, with the intention of in-
creasing efficiency and reducing costs.
In company “B”, the culture of innovation is evident
because it has an organizational structure oriented toward
innovation that encourage sinter actions with other areas,
which contributed to the success of the project. The Bra-
zilian subsidiary received knowledge transferred from
the headquarters, which had already implemented the
same e-business project in other countries; therefore, the
adoption of e-business occurred in a planned and organ-
ized fashion, involving a department called Project Co-
ordination, which received and processed all information
and brought the right people into the project. The whole
innovation process of company “B” was guided by the
knowledge and experience of the headquarters and was
transferred to the Brazilian subsidiary, in accordance
with what Oliveira Júnior (2007) [21] states about the
importance of knowledge transfer between headquarters
and subsidiaries. Reg arding the autonomy granted by the
headquarters to its subsidiaries for innovation, company
“A” did not differ from company “B”, a multinatio nal of
foreign capital. This corrobo rates the findings of Oliv eira,
Boehe & Borini (2009) [19], who report that there is no
difference between the autonomy given by multinational
companies of either national or foreign capital and that
autonomy is linked to bo th the time that the subsidiary is
in operation and some strategic functions. Regarding the
organizational structure of company “B”, transformations
took place to better serve e-business because, according
to Vasconcellos & Hemsley (2003) [22], the speed and
changes in the environment in which companies operate
force them to develop adequate structures for this elec-
tronic sales channel. Amabile et al. (1996) [34] suggest
that the organizational structure does not impede man-
agement allocation but makes it more difficult to inno-
vate and, later, improve. Because of this, company “A”
takes longer to adapt and, in the future, may be hindered
in making improvements. The development process of
e-business in company “B” was supported from the start
by the subsidiary’s board as well as by the headquarters,
where the issue was first discussed. Zilber (2009) [33],
states that the involvement of high-level ad ministratio n is
fundamental to success, bringing strategic weight to the
dedication to the project. However, in company “A”, the
origin of e-business was not the board of directors, but
the managerial level of the sales and marketing areas,
giving the project an image of low priority throughout
the company, or what Roth well (1994) [30], denotes as
lack of strategic backing, and demonstrates that company
“A” lacked attitudes that assured its commitment to in-
novation. This is in contrast to company “B”, where a
specific department was responsible for the e-business
implementation project and managed it from the begin-
ning (Project Coordination). Once the project had been
implemented, e-business management was elevated to
the managerial level. With regard to autonomy, the
headquarters of company “B” gave total freedom to its
subsidiary to modify its organizational structure. How-
ever, this freedom was limited, and headquarters’ ap-
proval was needed. Oliveira, Boehe & Borini (2009) [19],
state that the autonomy given to subsidiaries is connected
to strategic issues, and therefore, the headquarters of
company “B”, despite approving its subsidiary’s whole
project, also approved every step of the project because it
was an important global strategy for the corporation.
Regarding approval from the headquarters, a similar
process occurred in company “A” because the headquar-
ters granted its subsidiaries autonomy in operational is-
sues but not in the conception of innovation.
In the present stud y, logistics was the key po int for the
success of e-business for both companies. Bornia, Don-
adel & Lorandi (2006) [24], highlight the importance of
logistics as a value-aggregating activity in supporting
e-business, allowing a company to survive. Clearly, com-
panies that adopted this sales channel needed to modify
their logistics processes to better serve e-business. The
logistics of company “B” went through transformations
due to the unique characteristics of e-business, starting
with the issue of shipments and deliveries that decreased
in size, increased in number and were delivered to the
houses of end consumers. This transformation was fore-
seen by Alves et al. (2005) [26], Fleury & Monteiro
(2004) [35], and Bayles & Bathias (2000) [36 ], who state
that traditional logistics systems are oriented towards
large volumes and centralized deliveries. Conversely,
company “A” did not adapt, opting to hire a logistics
operator that had the necessary skills to coordinateits
e-business. Johnson (2010) [17] calls this inability to
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Changes in Multinational Industrial Enterprises through the Adoption of Innovation:
Case of E-Business in Brazilian and Foreign Capital Companies 145
adapt the lack of organizational availability, which con-
sists of a learning deficiency and culminates in a barrier
to the adoption of innovation.
5. Closing Remarks
Our finding s corroborate those of Vern on & Wells (1991)
[37], Rothweel (1994) [30], Zilber (2009) [33], Val-
ladares, Serio & Vasconcelos (2012) [32] on the impor-
tance of the existence of alignment between the strategy
and the objective of adopting an innovation, in this case
of e-business. The importance of an organizational struc-
ture, that is adequate to implement e-business, is also
apparent. Such a structure guarantees a level of authority
for making decisions that can meet the intended objec-
tives, as postulated by Vernon & Wells (1991) [37],
Venkatraman & Henderson (1998) [38] and Vasconcel-
los & Hemsley (2003) [22].
The main contribution of this paper is to show which
structure and logistics were used for the adoption of
e-business by an industry, since most of work on e-busi-
ness comes to retail sector and not to industries. Regard-
ing the first goal of this study, i.e., the identification of
changes in industries in th e adoption of e-busin ess with a
focus on the organizational and logistics structure, based
on all the interviews summarized in the previo us session,
company “A” opted for the subcontracting of logistics,
allocating e-business activities at a hierarchical level of
no strategic relevance, while company “B” had a struc-
ture dedicated to the administrative aspect of e-business
and had a Projects area dedicated to its implementation in
Brazil following the headquarters’ directives. Regarding
changes in logistics, both companies obtained a freight
profile with smaller shipments, fractioned deliveries and
accurate delivery dates. Both companies mentioned the
increased revenue as a motivation to adopt e-business.
Company “A” also identified attractiveness and ease of
purchase, ease of obtaining information on products and
the variety of products gathered in a single place as mo-
tivations for adopting e-business, while company “B”
mentioned alignment with the global strategy of innova-
tion, using e-business as “showcase” of the company’s
innovative side as great motivato rs. The main difficulties
in the adoption o f e-business were mostly due to the lack
of training for adopting this innovation (low technologi-
cal capacity, lack of innovation culture and inadequate
organizational structure) for company “A”, while com-
pany “B” mentioned the initial resistance of the depart-
ments involved (e.g., Logistics).
There were also differences between the two compa-
nies regarding the process of adopting e-business. The
foreign multinationals benefited from the headquarters’
previous knowledge of adopting this innovation, while
the national company had a less direct adoption process,
having first failed to adopt e-business. Different methods
of adopting e-business are identified in companies “A”
and “B” because the culture of company “B” is focused
on innovation—also referred to in its mission—and its
consumers expect the company to act innovatively, as
reported multiple times in the interviews given by its
employees. Thus, the adoption of e-business by company
“B” occurred in a more planned and structured way be-
cause this company possessed the necessary structure and
knowledge to implement a new business model in Brazil
(i.e., the use of e-business). Moreover, everyone involved
in new projects in company “B” is coached by a perma-
nent staff detailed in the organizational structure (Project
Coordination), which after training the areas involved in
this innovation, returns to its original position and starts
working on the development of a new process with the
relevant departments.
The innovation of this paper is to compare an emerg-
ing country multinational company (MNC) and a devel-
oped country multinational company (MNC) regarding
the deployment of e-business, showing how the devel-
oped country MNC has advantage over the emerging
country MNC in using all h is knowledg e from h is mother ,
while the emerging country MNC struggles to find the
most efficient way to deploy e-business.
One limitation of the present study is the chosen
method because the results cannot be generalized to all
companies. In future studies, the number of interviewed
companies can be increased, and studies of specific in-
dustry segments can also be performed.
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