Integrating corporate social responsibility and other strategic foci in a distributed production system: a transaction cost perspective on the North Sea offshore petroleum industry

Abstract

The paper explores the challenges of integrating CSR with other strategic foci into the supply/contractor chain, both conceptually and empirically, with a focus on one sectorial case: the Norwegian upstream petroleum industry. It compares contradictory theories of strategic focus and explores their implications for the organisation of the supply chain and discusses challenges and solutions for operative CSR oriented supply chain manage­ment

Design/methodology/approach The empirical analysis, inspired by the cognitive mapping approach, seeks to elicit the strategic profiles of the oil majors and suppliers/contractors in the petroleum industry. This is based on textual analysis of core statements of overall business strategy such as the CEO’s and the Chairman’s statement letter to the shareholders. The paper also draws on research and workshops with petroleum companies and their suppliers in the North Sea, as well as contracting experts and researchers taking part in the EU-TRENDS project which focused on satisfying Europe’s future demands and needs for sustainable, secure, safe and clean energy supplies.

Findings The strategic profiles of the petroleum companies and their suppliers/ contractors indicate that, while they coincide on many points, there is considerable discrepancy as far as CSR and HSE is concerned. The suppliers/contractors tend to emphasise the technology dimension more strongly than the petroleum companies. HSE and CSR are, on average, strategically under-communicated within the supply industry compared to the petroleum companies, but there is also considerable variation within each group.

Research limitations/implications The paper explores how transaction cost theory may help frame managerial challenges and approaches in integrating CSR consistently throughout supply chains. It shows some of the limitations of the “rationalist” model of industrial organisation both at the firm level and at the supply chain level and discusses possible expansions into broader managerial approaches.

Practical implications The paper highlights some of the managerial challenges and basic approaches for integrating CSR consistently throughout the value chain.

Originality/value The originality of the article lies conceptually in linking the CSR literature to transaction cost theory of industrial organisation. Empirically the article presents new insights into strategic foci of the petroleum companies and their supply chain