The Quest for Innovation and Sustainability
Edited by Wilfred Dolfsma, Geert Duysters and Ionara Costa
Chapter 7: The ‘Making of’ National Giants: The International Expansion of Oil Companies from Brazil and China
Flavia Carvalho and Andrea Goldstein INTRODUCTION This chapter analyses the international expansion of oil firms from two of the largest emerging economies, Brazil and China. With high growth rates (especially in China, to a lesser extent in Brazil) and rising FDI outflows, Brazil and China are both interesting illustrations of the internationalization of firms from the emerging world. Moreover, the oil sector itself is interesting due to its strategic importance for most countries nowadays, especially the high-growth ones. The oil industry has traditionally been at the vanguard of globalization and it remains one of the largest and most internationalized businesses worldwide. The sector is continuously expanding; according to UNCTAD (2007), oil and gas drilling operations have doubled since 2002. For over a century, a few giant companies, mostly from developed economies, dominated this market. The high involvement of the state is another distinguishing feature of the oil industry. In the second half of the twentieth century, developing economies created their own national oil companies (NOCs) in order to secure their access to one of the main fuels of economic development. NOCs first targeted domestic reserves and then started to internationalize, becoming multinationals at surprisingly fast rates, thus also attracting the attention of international business scholars. In particular, the impressive expansion of Chinese state oil companies has been attributed to geo-strategic motivations, while the competitiveness of Petrobras, the Brazilian oil company has been seen as the by-product of a long-term effort to build distinctive resources and capabilities. In this chapter, we...
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