Innovation in small construction knowledge‐intensive professional service firms: a case study of an architectural practice

Abstract

Small construction knowledge‐intensive professional service firms (SCKIPSFs) are becoming increasingly important agents of innovation within the construction industry. The nature and process of innovation in SCKIPSFs, however, is generally considered through the constraining prism of research results generated from significantly different contexts, such as from manufacturing sectors or non‐project based firms. A theory of innovation for SCKIPSFs is developed from a longitudinal 22‐month case study of a small architectural practice. Two forms of knowledge‐based innovation were discerned from the empirical work: exploitative innovation and explorative innovation. ‘Explorative innovation’ was found to be located in immediate ‘new’ project domains, and entailed search, variation, experimentation, activity to solve project‐specific problems; while ‘exploitative innovation’ concentrated on developing generic organisational infrastructure to ‘refine’ and ‘improve the efficiency’ of the firm operations to nurture capability for future activity. The key challenge for SCKIPSFs is to develop and manage an appropriate balance between explorative and exploitative innovation over time in order to generate sustainable competitive advantage.