ABSTRACT
The whole philosophy of multi-divisional corporate management runs against the rather rigid approach of vertical integration. The argument in favour of the international oil industry's natural tendency towards vertical integration was made a long time ago by Frankel and questioned by, among others, Penrose and Adelman. Potentially, oil companies could very well try to stabilize their oil supplies and vertical balance from sources outside the Arab world: some in fact do exactly this, as we shall argue. Cooperation for the development of a petrochemical industry in the oil exporting countries may thus become an occasion for the chemical companies to integrate vertically into the oil business, and react to an offensive' in the opposite direction to that in which some of the oil companies have been developing for many years.
