The effect of business network characteristics and industrial regulation on local content practice in oil and Gas companies in Tanzania

The effect of business network characteristics and industrial regulation on local content practice in oil and Gas companies in Tanzania Hemed Juma Msuya PhD (Business Administrations) University of Dar es Salaam, Business School, 2020

The effect of business network characteristics and industrial regulation on local content practice has not been explained adequately. As a result, the host countries suffer in the determination of the appropriate approach towards local content requirements. Therefore, this study was proposed specifically to explore the effect of the structural and functional characteristics of business network on local content practice. Also, the study examined the effect of interactions between business network characteristics and industrial regulation on the local content practice in oil and gas companies operating in Tanzania. Industrial Marketing and Purchasing (IMP) theory and the theories of economic regulation were used to inform the study regarding the tendency and behavior patterns of the study variables. The research pursued a post-positivism philosophy, whereby a survey design was adopted. Data were collected through self-administered standard questionnaires from a sample of 191 respondents, obtained randomly from employees working in middle and senior positions in oil and gas companies. Both descriptive and inferential statistics were used to analyses the collected data, whereby principal component analysis and regression analyses were conducted. The findings showed that business network characteristics have a positive effect on local content practice, while interactions between business network characteristics and industrial regulation produce a negative effect on the local content practice in the companies. The findings imply that, given the new market constraints, oil and gas companies will provide opportunities to local suppliers without any forceful inducement from the host country, while the use of forceful inducement reduces the local content practice in the companies. This further implies that when forceful inducement towards local content requirements is used, oil and gas companies will always opt to protect their relationship with key suppliers rather than the one with the host government. Therefore, the study recommends that forceful inducement should not be used with respect to local content requirements except where there is a proven need.