Strategic Alliances and Capability Evolution: Two Essays about Big Oil Going Green

This dissertation investigates the role of network dynamics and strategic capabilities in guiding the oil and gas industry’s transition toward sustainable energy practices. It addresses the incumbent's dilemma of whether to explore new technological frontiers or adapt existing operations to meet evolving environmental and market demands. Through a detailed analysis of alliances and joint ventures from the SDC Platinum database spanning 1982 to 2022, the 2 essays explore how firms can leverage their positions within an industry’s alliance networks to foster innovation and adapt strategically. The first essay analyzes how firms utilize their network positions to enhance strategic capabilities and respond to environmental pressures, finding that reducing reliance on core capabilities adversely affects the transition to greener energy. The second essay employs Temporal Exponential Random Graph Models (TERGMs) to examine the impact of broader network structures on strategic capabilities, revealing that open and dense networks enhance firms' strategic flexibility and innovation potential. Collectively, the findings demonstrate that maintaining a balance between exploring new capabilities and sustaining core operations is crucial for enabling firms to navigate the complexities of shifting to sustainable practices effectively. This work advances theory-building in strategic management by illustrating the dynamic interplay between network embeddedness and capability development during industry transitions. It provides practical insights for industry leaders on structuring strategic alliances to enhance innovation while preserving operational stability. For policymakers, the dissertation underscores the importance of supporting policies that facilitate both technological innovation and the optimization of existing infrastructures to accelerate sustainable transformations within the energy sector.