title: Local content policy and value co-creation: adopting information technologies in the oil and gas industry
Creators: name: Heim, Irina
Publisher: name: University of Reading
Year: 2019

description: This thesis contributes to the growing body of literature on economic development in oil and gas (O&amp;G) emerging resource-rich countries (ERRC) where the energy sector dominates the economy. This gives rise to the question - how will these countries manage the economy when fossil resources are depleted? The service sector, including information and communication technologies (ICT) potentially are the likely a cornerstone of the world economy in the future. Therefore, ERRCs face the need to adopt strategies to invest and diversify their incomes from O&amp;G industry to the growing service sector, namely the ICT industry, among others. This can be done using policy aimed at increasing domestic capacity, which is called in ERRC local content policy (LCP). The objective of this policy is therefore to achieve spillovers from extractive industry in order to diversify the economy. The aim of this thesis is to examine the impact of LCP – a type of industrial policy - on the O&amp;G industry explaining strategic responses of O&amp;G companies to this policy. The thesis provides a theoretical explanation of the role LCP plays in the development of indigenous technological capabilities through value co-creation under conditions of the ongoing digitalization. This dissertation offers a new approach to how LCP in O&amp;G industry of ERRC, namely Kazakhstan, can be adjusted to meet current global trends of digitalisation after Kazakhstan’s accession to the World Trade Organisation (WTO). LCP was previously approached by researchers predominantly from the macro-economic and political economy perspective. The understanding of how companies are affected by this policy is missing. Therefore, this dissertation is aimed at focusing on expanding the existing academic research on LCP by analysing it from the micro-economic as well as from the industry perspective. To deal with the complexity of this exploratory research, both a conceptual and qualitative analysis have been conducted, bringing together multiple complimentary case studies and value co-creation theory. Case studies, in turn, were built upon the interviews with industry experts, companies’ representatives at top management level, and contain extensive document reviews conducted specifically for this research. Throughout three main chapters of the thesis, theoretical foundation is provided to demonstrate the application of value co-creation theory to the local content development (LCD). While building a strong theoretical background for the strategic perspective on LCP, the research is based on qualitative analysis, hence leaving space for further research based on quantitative data when such data is accumulated and made available to the researchers. This thesis includes three main interconnected empirically based chapters which are centred on the O&amp;G industry and LCP. The first chapter provides the theoretical background for the whole dissertation elaborating on the steps which lead to the LCD. A new strategic perspective on LCP is based on the value co-creation between various actors in the O&amp;G industry in Kazakhstan. The second chapter explores how value co-creation leads to the technological upgrade in the indigenous industries. A model of value co-creation between different actors, including an ICT provider, is developed based on the case studies of China National Petroleum Corporation, National Oil Company KazMunayGas and indigenous small and medium-sized companies. The third chapter considers the value co-creation process to combine the value co-creation theory with the international business theory. This part of the research is focused on the example of the foreign-owned ICT provider in Russia. In combination, the case studies explore the core components of the framework of value co-creation and provide the foundation for a collaborative approach suggesting a new conceptional model for the LCD.