Measuring productivity changes in the Korean construction management industry

Abstract

This paper presents an empirical assessment of productivity changes within the Korean Construction Management (CM) industry using a non-parametric Malmquist bootstrap methodology. For the purposes of this paper, the Global Malmquist productivity index (MPIG)-based productivity measurement procedure is designed to evaluate changes in productivity within the CM market between 2006 and 2012. To do so, it uses data from public announcements related to CM capabilities. Productivity estimates were statistically verified using the bootstrapping method. As a result of these estimations, this study showed that despite quantitative industry-wide growth, the average productivity of the service business firms in the Korean CM industry did not increase between 2006 and 2012. In total, the productivity of Korean CM firms were affected by environmental factors, including changes in the businesses cycle of the CM industry. Decreases in a firm’s managerial and strategic capabilities resulted in a parallel decline in that firm’s actual productivity, despite technical advances in the market. Efforts to promote technical efficiency among some firms, however, could overcome technological declines in the market.