Gaining Competitive Advantage in the Oil & Gas Industry by Building Capacity in Educational Institutions in Latin America

Abstract

Abstract During the 1990s, the world trend to consider the concept of sustainable development in government development policies has become popular in Latin America. Among other important issues, capacity building is essential for the successful implementation of these models. Considering that many oil and gas companies have moved to Latin America, it is important to explore their roles in terms of cooperation with LACs to increase the capacity of educational institutions and, at the same time, gain competitive advantage within the industry. Multinational corporations can gain competitive advantage by developing knowledge-based capabilities.1 The benefits include better public image and reputation locally, nationally, and internationally; access to new markets and resources; and cost reduction. Introduction During the twentieth century, Latin American countries (LACs) have applied different economic development models oriented to overcome the poverty, hunger, and underdevelopment of the region. Ironically, current economic, environmental, and social situations are indeed the results of the applications of such models. Although, since the 1960s, many attempts have been made by LACs to improve their industrial production processes and technology to become less dependent on developed countries, they have not been possible without foreign direct investment considering the amount of financial resources needed for this process. In the end, more dependency has been created, and the economic, environmental, and social situations of the countries have been aggravated. At the end of the 1980s and early 1990s, a global environmental concern dominated debates on development models. The world trend to consider sustainable development principles in government policy development has become popular in Latin America. The publication of Agenda 21 in Rio de Janeiro in 1992 and the Summit of the Americas on sustainable Development in Santa Cruz de la Sierra, Bolivia in 1996, strengthened this tendency in which capacity building became key issues to implement new development models in Latin America. Considering that many oil and gas companies have moved to Latin America, it is important to explore their roles in terms of cooperation with LACs to increase the capacity of educational institutions and, at the same time, gain competitive advantage within the industry. Multinational corporations can gain competitive advantage by developing knowledge-based capabilities.1 The benefits include better public image and reputation locally, nationally, and internationally; access to new markets and resources; and cost reduction. The success of the implementation of this approach relies on the corporate culture of the firm, its commitments to pursue sustainable development practices, and the adequate use of its human, physical, and organizational resources. This paper will describe and analyze six strategies for improving the capacity of educational institutions. The main conclusions developed from this paper are:LACs should concentrate on human resource development and institutional capacity building to facilitate the absorption of imported technologies; andMultinational corporations can contribute to increase capacity building in Latin America, and at the same time, can gain competitive advantages, no larger investments are required to accomplish this objective.