Supplier Industry and Value Creation (SIVAC)

SIVAC is studying the Norwegian petroleum-related supply industry and its impact on innovation in value creation in the Norwegian oil and gas sector. The main objective is to examine how the supply industry has evolved over the last 15 years and how it has contributed to innovation and value creation through international export of technological expertise, technology transfer from oil/gas to other industries and increased productivity on the Norwegian continental shelf. SIVAC uses an innovation system perspective, which means that we consider the interaction between different actors as a key driver for innovation and value creation over time. SIVAC is a collaborative research project between the University of Oslo, University of Stavanger, Universidade Candido Mendes in Brazil, and Aker Solutions. In work package 1, SIVAC has developed a database about the Norwegian supply industry and its development the last decade, based on a sample of Norwegian petroleum supply companies, and a control sample of 2000 of the largest Norwegian companies. The data set contains data about technological, economic, market and strategic developments of companies in the supply industry the last decade. In addition, it contains data about innovation, R&D and technology development activities of petroleum supplier firms. The analyses indicate that the supply industry, together with the oil sector, is an engine for innovation in the Norwegian economy. There are few industries in Norway that are as innovative as petroleum supply and petroleum companies are. However, not all innovation activities have the same economic payoff for the companies; in particular, innovation through collaboration with customers and suppliers create value. This does not mean that companies do not have significant investments in R & D and technology development themselves. In order to understand more about how innovation takes place and how companies create value from innovation, a considerable number of interviews with firms have been conducted in several Norwegian supply companies. These show how innovation activities takes place in close interaction with the oil companies, which creates opportunities for developing competences, but also long-term challenges for future deployment of the companies' advanced technology expertise in new markets. The qualitative part of the study has focused on how innovation activities in supply companies have been affected by the economic downturn in the industry in the period 2014 to 2017. The results of the work package has resulted in several book chapters, scientific articles and a PhD dissertation published in 2018. Work package 2 has focused on the development of the supply industry in Norway since 2000, particularly the growing internationalization of the industry. A key issue here is the experience Norwegian companies have when entering foreign markets, specifically Brazil and the United States. In this part of the project, fieldwork was conducted in Brazil and the United States in 2016 and 2017. Interviews confirm that the Norwegian supply industry has high status both among authorities and local industrial players in Brazil. Even though several medium and smaller Norwegian companies have been struggling, many Norwegian companies have succeeded. The studies from the United States show that the preferred technological style and contractual relationships that characterize the US supplier market create barriers for entry for Norwegian suppliers. The results of this work package has been published in a paper and three book chapters in 2018. The third work package focuses on industrial diversification from oil and gas to other markets. In this work package, SIVAC has looked at the extent to which oil supply companies have activities outside oil markets and, if so, in which additional markets they are involved. The work package has also investigated diversification strategies in supply companies and what the companies experience as challenges and obstacles to diversification. In short, deployment of existing technologies and competence in new markets is not seen as too problematic, but the prevailing innovation model in oil and gas creates challenges for moving to new markets with considerable uncertainty. In the work package, we have also specifically looked at suppliers that use oil technology and expertise in the offshore wind market. In a book chapter and a new scientific article published in 2019, we demonstrate that diversification to offshore winds is strongly influenced by market conditions in the oil and gas industry and that the involvement in offshore wind is subject to significant fluctuations in line with oil price developments. We also see that the type of investment in new markets affects the scope of activities and the duration of activities in new markets.

Prosjektet hadde to hovedmål: 1) utvikle samfunnsvitenskapelig forskning på norsk oljesektor, og spesielt mer kunnskap om leverandørindustrien, og 2) utvikle forskerkapasitet innen nevnte fagområder. I forhold til mål 1 har vi utviklet ny kunnskap om leverandørselskaper og deres rolle for innovasjon og verdiskaping i oljesektoren som er formidlet gjennom artikler, bokkapitler, i foredrag, i media og som en film. Prosjektet har samarbeidet med ulike brukergrupper som myndigheter, virkemiddelaktører, bransjeforeninger og bedrifter. I forhold til delmål 2 har prosjektet støttet et team av forskere, og har bidratt til utdanning av tre PhD kandidater og flere mastergradskandidater, og har således bidratt til en reell kapasitetsøking på feltet. Utfyllende kommentarer er gitt i "resultatrapporten" som er vedlagt.

The project will study how Norway became an international model for managing the petroleum resources in such a way that it has created the basis for long term economic growth and development. The underlying theoretical basis is that this success is based on the ability to use the petroleum resources to build-up strong technological competences, research capabilities and industrial growth of service/supply industries. This has contributed to increasing available petroleum resources and has influenced the c ost structure of production, but has also becomes the basis for the growth of new export industries. The empirical study uses an innovation system perspective which analyses technological development as an interactive processes between heterogeneous acto rs. The core actors studied are the supply industry (here called the enabling sector) and their relationship with oil and gas companies. The first part of the project analyses how innovation processes actually take place, by focusing on innovation network s between the oil and gas industry, the supply industry and external knowledge partners. The second part of the project studies the development and transformation of the supply industry since the late 1990s, emphasising capacity building in the supply ind ustry and interrelated - the increasing internationalisation of the supply industry. Finally, we study to what extent the build-up of the wide competences and knowledge bases in the petroleum industry has a potential for supporting industry diversificatio n of the Norwegian economy, by studying cses of technology transfer and development of new technological nieches based on competence and technologies initially developed for oil and gas applications.