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Business Networks, Regulation and Local Content in Tanzania's Oil and Gas Sector
(The Extractive Industries and Society, 2021) Juma, H
Free market advocates doubt the ability of industrial regulation to make oil and gas companies adopt local content practices. This study explores this position by assessing the effects of industrial regulations on business networks. Using data collected from a survey of 191 senior practitioners in the oil and gas industry in Tanzania and analysed using the PROCESS tool for moderating effect, the study shows that the continuity, complexity, cooperation, socialisation and formalisation of business networks all have significant positive effects on local content practice. At the same time, however, the conflict has a significant negative effect on local content practice. The findings indicate that the interactions of industrial regulation with continuity, complexity, conflict and cooperation significantly reduce local content practices, while for interdependence, informality, adaptation, socialisation and formalisation the results are not significant. As such, this study implies that host countries should not exclusively depend on industrial regulation to achieve national objectives around local content. Policy formulation should take into account the business interconnectedness of oil and gas companies because local content practices are not only affected by industrial regulation but also by companies’ respective business networks.