ASSESSMENT OF LOCAL CONTENT POLICY IMPLEMENTATION ON ABSORPTIVE CAPACITY OF DIGITAL TECHNOLOGIES IN NIGERIA UPSTREAM PETROLEUM INDUSTRY

Abstract

The study assessed the effect of factors affecting local content policy on its implementation in the Nigerian upstream petroleum industry, and evaluated the effect of factors influencing on the level of absorptive capacity (ACAP) in the Nigerian upstream petroleum industry. It further analyzed the mediating effect of ACAP on the relationship between local content policy implementation and digital technologies innovation capabilities in the study area. This was done with a view to improving the digital technologies innovation capabilities of the Nigerian upstream petroleum industry. Questionnaire was administered to 306 respondents. The survey data was analyzed using SmartPLSM3 and SPSS 25.0. The first objective/hypothesis of the study findings revealed the significant of the factors affecting local content policy on the extent of local content implementation in the Nigerian upstream petroleum industry. The result of the hypothesis testing as showed positive standard beta value, among the firm sampled, the effect of influencing factors of absorptive capacity on the level of absorptive capacity was positive and significant (β = 0.441, t = 7.090, p < 0.1), thus negates the null hypothesis. Hence, the alternate hypothesis was accepted. The second objective/hypothesis investigation revealed a positive standard beta value. The results revealed good measurement model and the structural model revealed the significance of path coefficient. The result of the hypothesis testing showed positive standard beta value for the hypothesis, the effect of influencing factors of absorptive capacity on the level of absorptive capacity was positive and significant (β = 0.847, t = 33.511, ρ < 0.05), thus negates the null hypothesis and the alternate hypothesis was accepted. Finally, the last objective which aimed at analyzing the mediating effect of absorptive capacity (ACAP) on the relationship between local content policy implementation and digital technologies innovation capabilities in the study area. Following the mediation analysis procedure conducted, the study concluded that absorptive capacity fully mediates the relationship between local content policy implementation to digital technologies innovation capability. The findings provided empirical support for the mediating role of ACAP in the model. More specifically, the relationship between LCPI and DTIC is reaffirmed; ACAP serves as a full mediator.