Independents Abroad: the pursuit of expansion by independent oil companies into non-traditional petroleum countries
AbstractThis paper looks at oil Independents, and potential disabilities on organizational performance which may arise when internationalization is contemplated. The evidence used is field work based, and uses sub-samples of British and North American oil Independents. It is argued, on the basis of grounded evidence, from field work interviews, that companies which do not internationalize, may be constrained by resource weaknesses, rather than by satisfactory strength within domestic territories alone. These weaknesses may rise from an unwillingness to confront the ambiguity of rules, regulations and mores of non-Western countries. Personal attitudes, beliefs, political affiliations, spheres of influence, and so on, may be more important to success in non-Western territories, than more familiar notions of business strategy and organizational competence. This is because, in the ‘non-ideal’ functioning of the non-Western context, decisions are relationship based, rather than based on formal modes of selection. It is shown how Independents have an advantage over Majors in decision-making speed, the authority to commit, the seniority of personnel and the establishment of relationships. This translates into relative success in applying for licenses in non-Western countries. Because of such capabilities, the Independents are more able to target non-traditional, under-explored overseas areas. Indeed, they display an active willingness to engage with countries in which they will encounter relatively high political and/or security risks (e.g. as rated by the IMF Political Stability index).
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Bibliographic InfoPaper provided by Centre for Research into Industry, Enterprise, Finance and the Firm in its series CRIEFF Discussion Papers with number 0507.
Date of creation: Jun 2005
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independent oil companies; petroleum industry; negotiation; non-traditional contracting; political risk;
Find related papers by JEL classification:
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L7 - Industrial Organization - - Industry Studies: Primary Products and Construction
- L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-11 (All new papers)
- NEP-ENE-2005-09-11 (Energy Economics)
- NEP-SEA-2005-09-11 (South East Asia)
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