The Power of Resistance: India's national Oil Company and International Activism in Sudan

In October 2002 the Canadian oil company Talisman announced that it was selling its stake in a profitable venture in Sudan.Talisman had been the target of a fervent divestment campaign orchestrated by international activists calling on the company to halt its activities on account of the detrimental influence oil development was having on a long-standing civil war in the country. Soon enough other western oil companies would follow suit and sell off their investments in the face of condemnation from activists. However, despite the influence international activists had on some oil companies, there was a noticeable difference in the reaction of others. India’s national oil company, ONGC Videsh or OVL for short, would purchase Talisman’s abandoned oil stake and those of other exiting western oil companies. Rather than comply with the wishes of activists OVL resisted the pressure, expanding its activities in Sudan and in the following decade it expanded its operations in the international oil industry significantly. The purpose of this study is to explain the resistance of OVL to international activists in Sudan and to explain how this reaction may have been related to OVL’s fantastic ascent in the international oil industry. To answer this empirical puzzle the study constructs an analytical framework that draws from various strands of academic literature on international norms and business power. It aims to contribute to debates on the role of norms in corporate behaviour by exploring a case of corporate resistance rather than one of corporate compliance to international activists.
From its pragmatic methodological approach and in-depth empirical analysis this study sets forward three theoretical insights into the role of norms in corporate behaviour. Firstly, the resistance of OVL in Sudan demonstrates that the norms of corporate responsibility promoted by international activists do not have a uniform impact on the behaviour of multinational corporations. In Sudan, if international activists were to be successful as socializing agents they had to win the political support of influential states – mainly the US government – to overcome the economic prerogatives of oil companies. Secondly, in narrowing in on the reasoning behind OVL’s resistance, this study finds that the historical development of the domestic norm of energy security in India shaped the state interests and institutions which ultimately resulted in OVL’s resistance to Sudan activists. After India as a net oil importer suffered several economic shocks from sharp spikes in the international oil price following political crises in the Middle East, the state developed protective institutions of government ownership around its oil sector and later supported the interests of its national oil companies to capture foreign oil and gas assets. Finally, this study argues that OVL was able to garner significant business power through the Indian state on account of the domestic norm of energy security. As a result its competitive position in the international oil industry was significantly leveraged. Rather than multinationals influencing state and non-state actors through their control of capital and technology, it was the Indian state that was instrumental in leveraging the business power of OVL due to the social legitimacy attached to its position as upholder of India’s energy security.
Altogether, this study proposes that international and domestic norms interact across international, national and firm levels to help define corporate behaviour. In particular, understanding how domestic norms influence a company in its national context is crucial in determining its response to international norms. In a world where the activities of Indian, Chinese and other non-western companies is on the rise in resource-rich yet conflict-affected countries, the importance of developing new knowledge about the complex role of norms in corporate behaviour remains urgent.