Strategic partnering in oil and gas: A capabilities perspective

A firm's strategy typically is defined in terms of its position in the industry or landscape that operates in and the competitive advantage of the firm on that landscape. This competitive advantage, in turn, derives from a combination of assets (what the firm owns) and capabilities (how the firm does what it does). While the image of the oil and gas industry is that it is all about assets, competitive advantage generally results from a combination of tangible assets, capabilities, and intangible assets such as reputation and intellectual property (IP). The types of capabilities that are most likely to set one firm apart from others in a highly competitive field like oil and gas are complex bundles of complementary capabilities that are required to solve key challenges and that are hard to develop and emulate, particularly when the challenges are new and require new bundles of capabilities. Thus, the differentiating capabilities may be integrative, dynamic, or both. This paper identifies a set of integrative dynamic capabilities that are emerging as differentiators in the oil and gas industry and discusses what these imply for partnering at the company and asset levels.