Determinants of Operational Efficiency in the Oil and Gas Sector: A Balanced Scorecard Perspective
Al-Qubaisi, Salama Saeed
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The oil and gas industry have experienced several boom and bust cycles. The industry is known to hardly, if ever, react in a constant manner to the highs and lows. External economic factors pressurize the industry to be more efficient and cost effective without compromising the health, safety and environment (HSE) performance. All these factors provide the opportunity to explore the realization of Operational Efficiency (OE). The impact of Knowledge Management Practices (KMP) and Organizational Culture (OC) in realizing Operational Efficiency (OE) has been evaluated in this study. The use of KMP initiatives is fast gaining popularity worldwide. The competitive benefits of Knowledge Management Practices (KMP) initiatives were established within the private and public sectors as well as academia during the early 21st century. Many researchers have been interested in KMPs and their role in making Oil and Gas organizations more efficient and effective. Organizational Culture (OC) on the other hand plays a significant role in improving the learning capability of the organization and is considered a critical success factor in Knowledge Management (KM). However, existing studies have found the relationship between OC and OE unclear. This is attributed partially to the limited research in this particular area, and partially because OE is a relatively new area and most studies have focussed on it as a whole, rather than examining specific elements. While understanding how KMP can be implemented to maximize the efficiency of the organizations, strategic business managers should also know how to assess and measure performance improvement and the impact of KM implementation by creating the right OC. Numerous studies suggest that strategic management tools, such as the Balanced Scorecard (BSC), can be used to evaluate the performance of KMP, as they play a vital role in the success of any project, business or operation. It has been claimed that well-developed BSC could align KMPs to business objectives and consequently, link the output to the input (investment). There is limited research that indicates the relation between KMPs, OC and OE using Balanced Scorecard (BSC) four strategic perspectives, specifically in the Oil and Gas sector. However, this relationship has not yet been acknowledged through empirical tests. This research aims to fill this gap by providing a better understanding of that relationship and its importance with regard to the business outcomes, and by attaining a theoretical model that is validated and empirically tested in the context of Oil and Gas organizations. This study also seeks to provide empirical evidence for the theoretical assertion that OC can visibly improve OE through KMPs that are capable of leveraging intellectual assets.