Can a mature resource-based industry become high-tech? Transformations of sectoral innovation systems in upstream petroleum industry

This article analyzes the transformation of sectoral innovation systems in upstream petroleum industry and its drivers. The evidence collected shows that this sector has experienced three distinctive phases since the early 1970s over which both upstream industry architecture and innovation systems have changed in configuration and performance. This study shows that the major driver behind transition from the first to the second period was collapse of oil prices. However, the major factor behind transition from the second to the third period was emergence of ‘qualitatively’ different demand for complex upstream projects in harsh and less accessible environments which drove innovation opportunities and pushed emergence of integrated service companies. In contrast to the conventional industry life cycle model, this study shows that a mature and established industry can transform to a high-tech sector, when major agents in the sector actively participate in the innovation system to meet the new technical requirements. It also shows transformation of sectoral innovation systems can be analyzed in terms of interaction between changes in architectural changes and innovation dynamics.

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