Organisational Transformation in the Russian Oil Industry

Citation

Bhattacharyya, S.C. (2009), "Organisational Transformation in the Russian Oil Industry", International Journal of Energy Sector Management, Vol. 3 No. 3, pp. 324-325. https://doi.org/10.1108/17506220910986833

This volume is the outcome of a doctoral thesis by the author and deals with an issue that has strong relevance in the contemporary hydrocarbon industry. The Russian oil industry is surrounded by myths and non‐transparency due to its legacy of strong state involvement in the economic activities. Outsiders often find it difficult to understand the developments and grasp the underlying logic. The author of this volume provides an insider view of the story due to her involvement with the industry over a long period and her access to information from key players of the industry. This informational advantage along with a systematic approach to analyse the issue from a management perspective makes the work valuable.

The book contains ten chapters that set the research agenda, cover the case studies and then analyse the organisational transformation of the oil industry. The author then formulates an integrated theory of organisational transformation that she presents as an alternative to the existing approaches. The research is based on case studies that relied on triangulation of semi‐structured interviews and external expert views. A total of 74 participants involved in the privatisation and transformation process of the oil industry were interviewed between 2001 and 2005 (either in English or Russian) to gain insider perspective while the external expert opinions provided a basis for cross‐checking.

Chapter 1 introduces the research theme and the problematic. Chapter 2 provides the background information related to the study. It provides an account of the profound changes that took place in the macro‐economic environment of the Russian economy and the consequential influences on the businesses and life in general. This chapter also provides an overview of the Russian oil industry and compares its features with those of the international oil companies.

Chapter 3 provides the theoretical grounding of the work. The author reviews the literature on organisational transformation and comes up with the idea of a three‐stage process of organisational transformation in transitional economies. This involves breaking up with the past, initiating learning and reconfigure resources and finally securing sustainable competitive advantage. The author develops 11 propositions here that represent the author's perception about the drivers and motivations of the organisational changes and the expected manifestation of such changes. The author claims that through these propositions she has extended the existing knowledge – a claim somewhat difficult to accept. Generally, propositions or hypotheses are statements to be verified through appropriate analysis in a research and when validated, such hypotheses or propositions could be used to improve or enhance knowledge. But it is not clear whether this is the case in this research and accordingly, I remain unconvinced about the author's claims here.

Chapters 4‐6 deal with three case studies that form the core of the research presented in the book. Chapter 4 presents the Yukos study; Chapter 5 covers the TNK‐BP case while Chapter 6 deals with the Lukoil and Surgutneftegaz cases. Each case has followed a common structure: the discussion starts with a description of the top‐management team; then the administrative heritage is introduced; this is followed by discussions on the organisational learning, organisational capabilities and organisational transformation. These three cases portray how different firms have adapted to the changed environment and how their transformation influenced their performance. The Yokos study show how the company innovated and adopted the Western style of management and succeeded in transforming the company in a short period of time. A strong top‐down approach to management along with a firm commitment to training and human resource development made the organisation a leader in the Russian oil industry. This quick success and the presidential ambition of the top person brought the downfall of the company in a sudden change of fate. The TNK‐BP study on the other hand shows how two companies with different management style and culture managed to transform the company slowly but steadily. Although after the fall of Yukos TNK‐BP has emerged as the leading oil company in Russia, the chapter brings out the contrast with Yukos quite well. The last case study focuses on two Russian‐style companies and their management style.

Based on the case studies, further analysis is presented in the following three chapters. Chapter 7 presents the analysis of leadership, administrative heritage and absorptive capacity while the following two chapters focus on learning – the former focusing on the development of organisational capabilities while the later on dynamic capabilities. The last chapter presents the conclusion of the work.

The work has relied heavily on interviews with 74 key oil industry players. The book contains extensive quotes from these interviews (often translated from Russian) and the author has used the resource well to present a coherent story. This is the strength of the work. However, heavy reliance on interviews is also the main weakness of the study. There is always the risk of getting a biased view from the key players – especially when they are or were involved in the transformation process itself. Moreover, the statistical robustness of a sample of 74 players remains doubtful. Overuse of the interview extracts led to repetition – especially in the last three chapters. The story lacks a serious, academically oriented critical analysis, which is a matter of concern for a book that has originated from a doctoral research. In addition, the claim of developing a new analytical framework remains unsubstantiated to a large extent.

Despite these weaknesses, the book is a welcome addition, especially for its sound story line. Anyone interested in the transformation of the Russian oil industry would find it a valuable work. It will also inspire researchers to analyse organizational transformation of other types of industries, especially electricity and gas in many countries around the world that have undergone radical changes in the past.