Does senior executives’ perception of environmental uncertainty affect the strategic functions of construction firms?

Abstract

Insofar as the dynamic interaction between construction firms and their external environment is concerned, little empirical work has been done to examine how the external environment as it is perceived by senior executives affects the way firms operate. Results from 526 firms across various construction-related sectors show a link exists between senior executives’ perceived environmental uncertainty and the kinds of activities or strategic functions that firms use. Results also show that while the day-to-day firm support activities are not generally affected by differences in perceived managerial environmental uncertainty, firms do not seem to consistently put more emphasis on strategic functions like long-range planning process, and R&D activities even when the perceived environmental uncertainty is high. The contradictory results indicate that broader industry characteristics might be at play in influencing this lack of innovativeness by firms to pursue high-end strategic functions that could potentially improve the competitiveness of the industry.