The “Indy way”: Lessons from Brazilian sugar-cane biofuel supply chain

Abstract

This paper explores how the Brazilian sugar-energetic processors used Indycar racing to increase exports to the United States and create value by transforming the Brazilian ethanol from a commodity fuel to an advanced biofuel, between 2009 to 2012. This case study uses the relationship between Brazilian Sugar-cane Industry Association (UNICA), Brazilian Trade and Investment Promotion Agency (APEX-Brazil), and the IndyCar Racing League (IRL), to show the ability to learn and perform in a competitive scenario. Absorptive Capacity (ACAP) theory is used to understand how the Brazilian sugar-energetic processors identified, assimilated, transformed, and exploited knowledge from this relationship, as well as how this experience could be used in other industries. As a trading result, Brazilian biofuel exports to the United States increased 758.22% during the studied period and the Volumetric Ethanol Excise Tax Credit (VEETC), an American tax act in vigor since the 1970’s, was extinguished at the end of 2011.  The main contribution of this study: Identify how the Absorptive Capacity Theory can explain such impacts in the Brazilian Biofuel exports through the relationship between partners in the U.S. and Brazil.