Institutional and country level determinants of vertical integration: New evidence from the oil and gas industry

The aim of this study is to identify the determinants of vertical integration in the oil and gas industry at the firm and country level. A sample dataset of oil and gas companies in the top ten oil-producing countries spanning 10 years (2011-2020) is analysed. Using pool-fixed regression techniques, a firm's size, firm's age, and reserves replacement ratio create incentives for vertical integration in the oil and gas industry at firm-level have been identified. While country-level factors such as oil price and oil demand are negatively correlated with vertical integration, drilling productivity is positively correlated with vertical integration. The findings are important not only for the managers of oil and gas firms but also for the policymakers and regulatory authorities of oil-producing and exporting countries.