Master Thesis Msc. International Business & Management Industry
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Master thesis MSc. International Business & Management Industry effects in state-owned enterprise internationalization: ‘A study on state-owned Russian oil and gas firms’ By D.J. Niekel S3838986 [email protected] University of Groningen Faculty of Economics and Business June, 2020 14,902 Supervisor: Dr. O. Lindahl Co-assessor: Prof. Dr. H.J Drogendijk 1 ABSTRACT The purpose of this thesis is to explore which factors influence Russian oil and gas state-owned enterprises (O&G SOEs) to internationalize. While SOE internationalization, in general, has been studied frequently, the role of industry effects in this process has been largely ignored. This thesis seeks to contribute to filling this gap by focusing on SOEs from one country and industry, namely Russian O&G. The O&G industry are considered unique, in part because of their strategic nature. This gives reason to believe that O&G SOEs have other, additional factors influencing their internationalization. These unique influencing factors are more likely to be identified thru studying Russian O&G SOEs, since they are considered extreme cases. Thus, to fulfill its purpose, this thesis conducted a dual-case study on two large Russian O&G SOEs. Eight managers, four from each SOE, were interviewed about their experiences with O&G SOE internationalization. Additionally, nine annual reports (2010-2018) from both case companies were analyzed to complement, and strengthen, the interview data. From this data eight influencing factors were identified, of which three are already discussed in the extant literature. Denoting that this thesis has identified five new influencing factors, which are: importance to the governmental budget, long-term view of the controlling shareholder, inter- government tie strength, discrimination in the host country, and home government foreign policy goals. These five factors differ, between negative and positive, in how they influence the internationalization of O&G SOEs. The findings of this thesis highlight that O&G SOEs indeed have unique factors influencing their internationalization. Therefore, this thesis can function as a springboard for future research on SOE internationalization. A topic which, due to the rapidly growing number of SOEs, has never been more important. Keywords: State-owned enterprises (SOEs), oil and gas (O&G), internationalization, Russia, government, strategy, business, (geo)politics. 2 TABLE OF CONTENTS ABSTRACT .................................................................................................................................................. 2 LIST OF TABLES .......................................................................................................................................... 5 LIST OF FIGURES ......................................................................................................................................... 5 LIST OF APPENDICES ................................................................................................................................... 5 LIST OF ABBREVIATIONS ............................................................................................................................. 6 ACKNOWLEDGEMENTS............................................................................................................................... 7 1. INTRODUCTION ...................................................................................................................................... 8 2. THEORETICAL BACKGROUND ................................................................................................................ 11 2.1 BACKGROUND ON THE OIL AND NATURAL GAS INDUSTRY ......................................................................................... 11 2.1.1 Oil industry .......................................................................................................................................... 11 2.1.1 Natural gas industry ........................................................................................................................... 13 2.2 STATE-OWNED ENTERPRISES .............................................................................................................................. 14 2.3 INTERNATIONALIZATION .................................................................................................................................... 16 2.3.1 Internationalization of SOEs ............................................................................................................... 18 2.3.2 Internationalization of oil and gas SOEs. ............................................................................................ 19 3. METHODOLOGY ................................................................................................................................... 21 3.1 RESEARCH DESIGN ........................................................................................................................................... 21 3.2 RESEARCH STRATEGY ........................................................................................................................................ 21 3.2.1 Dual case study ................................................................................................................................... 22 3.3 RESEARCH SAMPLE ........................................................................................................................................... 22 3.4 DATA COLLECTION ........................................................................................................................................... 23 3.5 DATA ANALYSIS ............................................................................................................................................... 25 3.6 VALIDITY AND RELIABILITY.................................................................................................................................. 26 4. FINDINGS ............................................................................................................................................. 28 4.1 CLASSIFYING THE FACTORS ................................................................................................................................. 28 4.2 FREQUENCY ANALYSES ...................................................................................................................................... 28 4.3 CROSS-CASE ANALYSIS ...................................................................................................................................... 32 4.3.1 CONCLUDING REMARKS ON FINDINGS ............................................................................................................... 41 5. ANALYSIS ............................................................................................................................................. 43 5.1 THE INFLUENCING FACTORS ............................................................................................................................... 43 5.1.1 Importance to the governmental budget ........................................................................................... 43 5.1.2 Long-term view of the controlling shareholder .................................................................................. 44 5.1.3 Inter-government tie strength ............................................................................................................ 46 5.1.4 Discrimination in the host country ..................................................................................................... 46 5.1.5 Home government foreign policy goals.............................................................................................. 47 5.2 CONCEPTUAL MODEL ........................................................................................................................................ 49 6. CONCLUSION........................................................................................................................................ 50 6.1 CONCLUSION & DISCUSSION. ............................................................................................................................. 50 6.2 THEORETICAL IMPLICATIONS .............................................................................................................................. 52 6.3 MANAGERIAL AND POLICY IMPLICATIONS ............................................................................................................. 53 6.4 LIMITATIONS ................................................................................................................................................... 53 6.5 FUTURE RESEARCH ........................................................................................................................................... 54 REFERENCES ............................................................................................................................................ 55 APPENDICES ............................................................................................................................................ 62 APPENDIX I: INTERVIEW QUESTIONS......................................................................................................... 62 3 INTERVIEW QUESTIONS ........................................................................................................................................... 63 1. INTERVIEW START – INTERVIEWEE