Innovation policy analysis and decision making: a systems approach

Abstract

The construction industry is one of the largest and most diverse of the sectors with continuous development. The momentum and impact of the industry’s development is highly influenced by a complex system of different elements including innovation. However, the sector is relatively weak at all stages of the innovation process and the strength of collaboration among government, industry and academia is insufficient. It is generally accepted that construction companies invest less in new knowledge and process development as well as engage significantly less in innovation related activities than firms in other sectors. Hence, it is very important to control and manage the significant factors that affect success in innovation taking into account the complexity and the inherent dynamics of the construction innovation diffusion. By doing so, this study addresses the decision making process within the complex innovation process in the construction industry by employing a step-by-step modelling process consisting of a multi-stages analysis, stakeholder-based and modelling approaches. Construction is closely connected to the national social structure and is highly influenced by various institutional actors and interactions among components and, consequently, can be presented as a sectoral system. Hence, the overarching objective of the paper is to introduce a systems approach aiming to conceptualise and formulate an initial simulation model of a complex construction innovation system representing correct and continuous interactions between government, the construction industry and academia. Moreover, the research underpins future development of scenariogenerating modelling in order to reveal potential pathways to rational decision-making along with potential policy recommendations and various innovation planning strategies that improve construction innovation performance in the Russian Federation. Innovation in the construction industry can take various forms and, as a result, is not well represented by official statistics. Therefore, active stakeholder engagement is required to develop appropriate metrics and build the foundations for such a dynamic model, given the level of complexity. As a part of participatory modelling, stakeholder engagement involves: (i) stakeholder identification and stakeholder analysis; (ii) questionnaire-based survey and face-to-face interviews; (iii) consultations with academic and industry professionals; (iv) opinion survey; and (v) facilitated expert workshops. In other words, involvement of stakeholders is an essential requirement given the multi-actor nature of the system under study and lack of data involved. The first research stage aims to identify the most significant barriers, enablers and strategies that most significantly affect construction innovation diffusion in Russia. The results suggest that the construction industry requires assistance and support from the government in order to endure existing impediments and to improve the current lacklustre rate of construction innovation. The next stage determines the degree of influence that the different system’s components have on each other. Then, the structural analysis is performed using MICMAC (Cross-Impact Matrix Multiplication Applied to Classification) technique in order to generate the required information about interconnections between the key variables. This stage is effective in building a comprehensive conceptual model, followed by an ongoing dynamic model development, integrating both qualitative and quantitative variables. The model structure highlights that construction companies and academia representatives, along with decision-makers need to acknowledge innovation as a process of development and accumulate innovation capabilities in the whole construction innovation system in order to achieve the benefits of high-level innovation performance. One of the dynamic hypotheses describing the problem under study, centres on how the industry, academia and the government can collaborate to most effectively diffuse innovations throughout the industry