Multinationality In The Oil And Gas Industry

Dale, Colin (2010). Multinationality In The Oil And Gas Industry. MRes thesis The Open University.



This Masters Research offers uses new data analysis techniques to address intra-firm data segmented by business and geography for an industry specific set of firms. It tests whether oil and gas firms are global in their operations and hence sales to/revenues from consumers. Rugman and Verbeke (2004) suggest firms demonstrate a preference for local over global strategies when investing abroad and Rugman (2005) augments this theoretical position with industry level analysis and firm level case studies. They make a quantitative analysis of geographic revenue dispersion for 500 firms and find results supporting regional theories.

The analysis takes nine years of data as a longitudinal panel data set that offers, for the first time, trend data analysis into the debate around global versus local strategies. Corporate finance theory informs selection of performance proxies that recover 'missing' observations but high regional focus in revenues is again found in the numerical majority of firms. 67% of
weighted total firm revenue for FY2008 is intra-regional, as suggested by Rugman (2005).

This extended data now shows new global and bi-regional cases, a variation in comparative global focus across the value chain for the largest oil and gas firms and movement away from home country and region. Modelling using this new data shows no support for the existence of multiple-order regression equations linking regionalism to firm performance. No correlation is found between oil price, performance and multi-nationality for these firms but there is an inverse correlation between multi-nationality and revenue. This suggests that extant theories of decreased performance against increased scale are not evidenced in this specific industry and hence suggests that both size and history do matter.

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