Energy, uncertainty, and entrepreneurship: John D Rockefeller’s sequential approach to transaction costs management in the early oil industry

Abstract

This article delves into the challenge of successful entrepreneurship in the energy industry under conditions of uncertainty by examining the case of John D Rockefeller’s Standard Oil Company, which rapidly seized control of an initially-uncertain industry. It finds that Rockefeller cemented control through a willingness to internalise contextual uncertainty (related to the nature of the energy business) as a stepping stone to managing contractual uncertainty (related to transactions with other parties). This finding suggests that thinking sequentially about the management of contextual and contractual uncertainty aids entrepreneurial success in the field of energy. This suggestion accords with standing calls in the transaction costs literature, which means that findings may generalise to some extent. However, the exploratory nature of the analysis implies the need for further research about the argument’s compatibility with modern energy practices and its generalisability.