Maintaining Control Over Industry Architecture - The Fuel Retailing Industry

Abstract

The industry architecture of the fuel retailing sector in SE Asia varies both within and across countries, with roles distributed among the oil companies and other players. These variations, or multiple levels of industry architecture, represent the vertical disintegration of the sector to different degrees. Although the regulatory, technological, infrastructure and social constraints of the different countries may force oil companies to use different industry architecture, these constraints alone cannot explain why even a single oil company would operate with multiple levels of industry architecture within a country. The existing literature, which models the sector simplistically as a dyadic relationship between the oil company and their dealers, does not adequately explain this phenomenon. My This research suggests that the emergence of multiple levels of industry architecture in SE Asia is a result of oil companies using different organization structure depending on different institutional environments to manage the risk of operating in this sector. The study shows that oil companies manage risk by distributing roles within the sector to strike a balance between reducing exposure to risk under respective institutional environments and minimizing the impact should an adverse event occur. It is this balancing act of oil companies varying organization structure to manage risk, even within the same network, that led to the multiple levels of industry architecture in this sector.