From Wells to Windmills: Resource Redeployment and New Technology Investment in the Energy Sector

Research summary: this study examines how multi-business firms redeploy resources following an industry shock. Using the case of oil and gas firms diversified into wind power, the author shows that firms reduced expenditure in oil and gas—particularly on complex offshore projects—while increasing investment in wind after the 2014 oil price crash. These investments tended to involve newer, more powerful technologies (turbines) when co-located with existing offshore oil and gas assets. The study provides detailed empirical evidence of resource redeployment and documents conditions under which firms shifted away from one industry and pursued more demanding projects in another. The findings underscore the role of asset colocation in shaping redeployment patterns. They also highlight that market-based inducements may not be sufficient in driving the energy transition. Managerial summary: how should firms respond when a core industry experiences a downturn? This study shows that multi-business firms—specifically oil and gas companies diversified into wind power—responded to the 2014 oil price crash by cutting investment in oil and gas, especially in offshore projects, and increasing investment in wind power. Importantly, firms were more likely to invest in newer, higher-capacity wind technologies when they could co-locate these with existing offshore oil and gas assets. These findings suggest that firms facing industry shocks can redeploy resources into more promising sectors, but their propensity to do so may depend on the possibility of leveraging existing assets across domains.