TY - JOUR
T1 - Breaking up global value chains
T2 - Evidence from the global oil and gas industry
AU - Inkpen, Andrew
AU - Ramaswamy, Kannan
PY - 2017
Y1 - 2017
N2 - This chapter examines the oil and gas industry and the efficacy of vertical integration strategies. Using multiple theoretical lenses ranging from the resource-based view, transactions costs, and parenting perspective, the chapter considers different arguments associated with vertical integration. The 2011 breakup of ConocoPhillips and its global value chain helps address the question of which strategy is best integrated or nonintegrated. We provide several conclusions about the structure of integration and value chains within the oil and gas industry. First, vertical integration based on the physical transfer of products between value chain activities will generate little firm advantage in the form of classical integration benefits, such as control over input quality or speed to market. Second, competing across the industry value chain as a hedge or strategy against industry cyclicality is not theoretically defensible. Third, pure play industry specialists can create value through management focus, agility, and, transparency for investors. Fourth, firms that compete across a wide range of industry value chain activities can create value-adding corporate strategies if they are able to leverage knowledge and assets across different industry sectors.
AB - This chapter examines the oil and gas industry and the efficacy of vertical integration strategies. Using multiple theoretical lenses ranging from the resource-based view, transactions costs, and parenting perspective, the chapter considers different arguments associated with vertical integration. The 2011 breakup of ConocoPhillips and its global value chain helps address the question of which strategy is best integrated or nonintegrated. We provide several conclusions about the structure of integration and value chains within the oil and gas industry. First, vertical integration based on the physical transfer of products between value chain activities will generate little firm advantage in the form of classical integration benefits, such as control over input quality or speed to market. Second, competing across the industry value chain as a hedge or strategy against industry cyclicality is not theoretically defensible. Third, pure play industry specialists can create value through management focus, agility, and, transparency for investors. Fourth, firms that compete across a wide range of industry value chain activities can create value-adding corporate strategies if they are able to leverage knowledge and assets across different industry sectors.
KW - ConocoPhillips
KW - oil and gas
KW - value chains
KW - Vertical integration
UR - http://www.scopus.com/inward/record.url?scp=85027168409&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85027168409&partnerID=8YFLogxK
U2 - 10.1108/S1571-502720170000030003
DO - 10.1108/S1571-502720170000030003
M3 - Article
AN - SCOPUS:85027168409
SN - 1571-5027
VL - 30
SP - 55
EP - 80
JO - Advances in International Management
JF - Advances in International Management
ER -