1st of may, 2014. The first barrels of North Pole oil arrive in the Rotterdam harbour (volkskrant, 2014). As part of a larger campaign against oil drilling in Nort Pole waters, Greenpeace tried to block the deliverance of the oil by ship. The action resulted in 30 greenpeace crewmembers arrested, including the captain of the Rainbow Warrior ship.
The North Pole drilling plant is owned by Gazprom, the largest (and only) Russian gas and oil company. The company locates and extracts oil and gas, in order to expand the sales of these two. With the most prominent stocks depleting all over the world, it is important for Gazprom to search for new stocks of gas and oil by all means to keep maximizing sales. This is how they found a stock of oil in the North Pole area, started drilling and became the first exploiter of North Pole fossil fuel stocks. The company aims to improve stock value (Victor, 2008)
This message aims to show how rational decision making (1) and rational organization processes (2) finally lead to actions, using the example concerning Gazprom described above. Using the 2003 article by Jones (bounded rationality and pilitical science), the two processes are motivated. To conlcude, a quick idea will be givin on what factors can be highly influential on Gazproms' rational organization process.
This decision by Gazprom can be seen as a rational decision. This actor has moved to action, which can be explained by three processes (Elster, 2007) that may have played a large role when taking the decision:
- Given the beliefs on the world Gazprom operates in, the action extracting oil from North Pole area's is optimal (expanding sales).
- Engineers/economists at Gazprom most likely came up with evidence that support the beliefs described above (eg. expected profit)
- The evidence provided must result from an optimal investment in information gathering (eg. possible scenarios on politics, economic processes and consumer behavior)
Another way to look at Gazproms' decision is using the bounded rationality theory that Jones(2003) brings forward. Jones names different aspects of bounded rationality at the organizational level, in other words, an environment of limited information, can constitute a rational decision, but bound to the limits of this environment and the information one is able to obtain within the environment.
An example of this can be described by the Agenda Setting aspect of bounded rationality. Greenpeace is something that must have been on the agenda of Gazprom, though in spite of Greenpeace's actions, Gazprom continues their drillings in the North Pole. From this we can conclude that Gazprom has put Greenpeace in a less prioritized category.
Another underlaying process that motivates Gazprom for continuing extracting oil from the Norh Pole is the periphal(parallel) processing aspect of bounded relationality, stating that this type of processing describes how companies deal with multiple streams of input simultaniously, using the method that the company is used to (the known solutions). Serial processing states that a firms' search for new solutions will only occur if past prepared solutions are recognized as invlalid. So far, Gazprom is doing well at reaching its' goal (increasing stock value). Their current activities in the gas and oil industry are succesfull and therefore there is no reason to alter their organizational routines: locating and extracting oil and gas. It has always made profit and greenpeace actions have not caused serious damage or problems to the company before, so why change would Gazprom change behaviour?
Appearently, Greenpeace has little influence to change the agenda setting of Gazprom. So what could be influencial? Victor (2008) describes Gazproms future as challenging, mainly due to uncertenties in oil and gas prices and political pressure. American and European regulations can highly influence Gazproms' sales. It is likely that these subjects will have a much higher priority on the agenda then Greenpeace has.
References:
Jones, 2003. Bounded rationality and political sciences
Victor, 2008. Gazprom: Gas giant under Strain.
Volkskrant, 2014. Consulted sep 2014.
http://www.volkskrant.nl/vk/nl/2664/Nieuws/article/detail/3646403/2014/05/01/Russische-olietanker-houdt-Rotterdam-en-Den-Haag-bezig.dhtml
I think that you explain this quite nicely. The narrow mindedness of Gazprom has lead to their routines and priorities to remain as they are. Indeed in order for Greenpeace to be influential, they would need to create a scenario, where their past solutions are invalid and propose a better solution. Is this just a matter of time with all the uncertainties?
BeantwoordenVerwijderenHi Daniel,
BeantwoordenVerwijderenI find your topic thought-provoking because when you analyse if Gazprom did rationally made the decision to drill in the North Pole, by using the rational actor model, it seems quite evident that Gazprom made a rational decision by pursuing actions that will help them accomplish their objective. Nevertheless, by bounded rationality, I believe that (according to last week’s course) we are supposed to use all the 6 mechanism stated by Jones. You only used agenda setting and serial processing, while not mentioning anything about the other 4, which are: organisational memory, parallel processing, emotional contagion, and identification. Perhaps, you omitted them because they did not apply to your case but I find it useful to mention the reason why you didn’t include them.