Lim, J N; Schultmann, F and Ofori, G (2010) Tailoring competitive advantages derived from innovation to the needs of construction firms. Journal of Construction Engineering and Management, 136(5), pp. 568-580. ISSN 0733-9364
Abstract
Innovation is often classified as a cost intensive investment in the construction industry with indefinite returns. Due to the clients' tendency to award projects based on the lowest costs, innovation is often seen as an unfeasible strategy toward the competitiveness that construction firms are seeking. This study questions whether it is indeed ineffective for construction firms to develop their competitive advantage through innovation. By the application of statistical data across 18 Organization for Economic Cooperation and Development (OECD) countries and expert interviews in Singapore, innovation systems models are developed for both manufacturing and construction firms, respectively. Through comparison of both models, the results suggest that the peculiarities of the construction industry deem innovation as a poor competitive instrument for direct profits. Instead, construction firms can develop their competitive advantage through manipulating innovations that consumers are willing to pay for and innovations that would reduce construction costs. It is recommended that construction firms first utilize quality improvements to exploit consumers' willingness to pay for innovative products. This initiative would enable construction firms to improve their finances for innovation and develop their "brand" in construction products. Sustainable competitive advantage could then be firmly established when construction firms engage in productivity improvements that lead to lower construction costs and/or faster completion times. This study concludes that innovation can be a useful competitive tool if construction firms aptly strategize it in according to its competitive environment.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | competition; construction companies; construction costs; innovation |
| Index terms: | innovation system, construction product, cooperation, competition, completion time, profit, construction company, construction firm, strategy, willingness to pay, interview, construction industry, competitiveness, quality improvement, construction cost, lowest cost, productivity, competitive advantage, Singapore |
| Subjects: | market analysis, project controls, industry analysis, price determination, management, Geography, psychology, bidding, financial and cost management, project delivery, economic analysis, data collection methods, business, organization |
| Topics: | Geographical Context, Research Practice, Business Strategy, Cost Management, Procurement, Quality Management, Organizational Design, Time Control |
| Descriptive scope: | 4 PCTE |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here