Abstract: The Fragility of Globalization: Global Firms, Nation States, and the Fragmentation of the International Oil Industry, 1950s-1970s
This paper examines the forces that resulted in the fragmentation of the international oil industry in the 1970s, when the international oil regime, which for decades had been dominated by a handful of major transnational Western oil corporations, was rudely shattered by the oil exporting states organized in OPEC. While business history has offered some empirical accounts of these events, the main theoretical insights have come from international relations, in particular from the proponents of hegemonic stability theory. Consistent with their "Realist" roots, hegemony theorists have focused primarily on relations between states and have paid little attention to the relations between the transnational oil majors and nation states. Focusing on the complex relations between the major transnational oil firms and nation states, the paper calls into question the validity of hegemonic stability theory in explaining the collapse of the globally organized, company-centered international oil regime and the resultant fragmentation of the industry as nation states took increased control.