Abstract
This paper analyses the process of innovation in the Brazilian Industry of Oil and Gas
(BIOG). From the beginning, Petrobras, a state owned company, was at the command of
the innovation process at the BIOG as a lead user, problem solver and risk taker. From
learning by using, the company moved progressively the innovation ladder to the
present situation at which it has developed the prospective capacity to take
technological risks. This study compares the comfortable option of moving along the
current technological trajectory and the alternative of intensifying the technological
complexity of domestic suppliers for the BIOG. Our study identifies the fragility of
knowledge bases among the Brazilian research community as a critical constraint for
both trajectories. However, the new scale of the domestic oil and gas production offers a
window of opportunities for radical innovations and improvement of the domestic
knowledge base. To explore these opportunities, Petrobras must be able to use its the
prospective capacity to innovate to induce the network of equipment and services
suppliers (NSES) of the Brazilian industry of oil and gas (BIOG) to take larger
innovative risks. We suggest that a larger knowledge base is crucial to see beyond the
contemporary windows of opportunity and to reduce technological uncertainty.