Strategic decisions and innovation in construction firms

Abstract

Current research on the process of innovation has focused attention on the crucial role of the business firm as the place where new ideas are developed and then implemented in the marketplace. Based on current knowledge, a model was developed which attempts to replicate the strategic decision‐making process in a construction firm. It links perceived business environment variables to various business strategy variables (i.e. marketing, human resources and technology). These two sets of variables are linked to the innovativeness of the firm, measured by the number of advanced technologies and/or business practices currently used. Innovativeness is subsequently linked to outcomes (i.e. profitability, competitive advantage) to assess overall effectiveness. The model was tested empirically, using data from the Survey on Innovation, Advanced Technologies and Practices in the Construction and Related Industries carried out by Statistics Canada in 1999 with 1739 usable responses. The results generally support the proposed model; certain perceived business environment and business strategy variables are significantly related to firm innovativeness, however the link between innovativeness and outcomes requires further confirmation. Many construction firms introduce new approaches in information and construction technologies as well as in business practices. A large number of these were found to provide significant competitive advantage. In general, innovative behaviour varies with the size of the firm.