The impact of geopolitical risks on the dynamic capabilities of Big Oil

International Oil Companies represent a significant source of capital and expertise, and they consequently continue to play an important role in global energy markets. However, the oil and gas industry is facing an unprecedented amount of change as Big Oil tries to reconcile its legacy businesses with the energy transition unfolding in global markets. Under these kinds of tumultuous conditions, an organization's dynamic capabilities—that is, its ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments—become essential to its financial success and survival. By examining the evolution of an oil and gas supermajor through the lens of dynamic capability theory, this paper sheds light on the moderating role that geopolitical risk plays in how dynamic capabilities contribute to the relative performance of the company's business units. A case study was constructed from semi-structured interviews with 13 senior managers and published secondary data spanning operations in 20 countries around the world. The resulting analysis reveals that geopolitical risks influence the impact of dynamic capabilities on business unit performance in ways that are sometimes complex and pronounced. The practical and policy-related implications of the findings are explored, including a discussion about how the presented evidence will impact the changes that Big Oil will face as these companies navigate their way through the energy transition.