Independents Abroad: the pursuit of expansion by independent oil companies into non-traditional petroleum countries

Gavin Reid and Torcail M. Stewart

No 507, CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: This 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).

Keywords: independent oil companies; petroleum industry; negotiation; non-traditional contracting; political risk (search for similar items in EconPapers)
JEL-codes: D8 L1 L7 L71 M21 (search for similar items in EconPapers)
Date: 2005-06
New Economics Papers: this item is included in nep-ene and nep-sea
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