Strategic development of firms in the dynamic business environment: a case on the construction industry in Singapore

The strategic development of firms in a dynamic business environmnet - a case study of the construction industry in Singapore. This dissertation is an empirical investigation of organisation performance in the Singapore's construction industry between 1961-1991. It concerns the strategic development of firms in a changing business environment. The study is based on the construction industry in Singapore where the dynamics of the environment can be adequately captured and described to investigate the growth of firms in a detailed manner. Within twenty-five years of post-independent development, Singapore has attained the status of a newly industrialised economy. Besides, the construction industry is also known to be closely linked to the country's economic development program and for its peculiar cyclical business. The rapid development of the Singapore economy during this period also provides an ideal opportunity for a longitudinal case study of the strategic development pattern of firms. In the Strategic Management perspective, optimal performance involves the matching of strategy with the business environment. This is conceptualised in terms of strategic fit. It implies that the determinants of performance vary according to the different industry structures and economic conditions in which firms operate. The relationship between strategy-performance is therefore industry-environment specific. Previous research also appears to support the hypothesis that a relationship exists between strategic stages of a firm's growth and the economic performance of firms. The major proposition in this study is that the performance of firms in the long run can be enhanced by following a model of development, namely, a particular strategic growth trend (SGT) and an identifiable strategic development (SD) process. These developmental changes cover both the pattern of growth strategies and the nature of growth which are necessarily specific to the industry. The SD framework is developed from previous research on strategy and strategic management. It covers two sets of theoretical perspective, namely the economics of industrial organisation and the sociology of organisation. The broad environmental structure, comprising both the macro-environment and the micro-environment (the organisation itself) are separately examined. This study argues the need for a dual-faceted strategy (identified as business-focus and organisation-focus strategies)in the developmental changes of firms. An exploratory SD Model is conceptualised. Briefly, the dimensions of developmental strategies are found in both business-level competitive strategy and corporate-level comparative advantage strategy (Porter 1980, 1985, 1990). The linkage between this two-level strategy provides the evidence of an identifiable growth patterm. The Model also incorporates a logic for and behavioural phenomena of organisation development (Hax and Majluf 1984; Ansoff 1984, 1987) in the strategy formation process. As a result, a set of organisation-based strategic responses is constructed to apprehend the complex nature of growth behaviour of firms. The research design includes a major longitudinal survey to examine the choice of growth strategies and the modes of strategic development (SD process) of construction firms in over a 31-year period. Behavioural trends are then correlated with the performance records of firms to establish their implications. The research processs verifies the applicability of the exploratory Model and establishes the construction industry's SD process-led strategic growth trend (SD-SGT) (ie specific for the construction business). Two Performance Advantage Criteria (PAC) are also verified from the behavioural patterns of successful firms. These PAC may be summarised as follows: firstly, firms which follow a sequential growth pattern (SGP) perform better than those that do not follow this pattern of growth and, secondly, firms which adopt the appropriate SD process (ie distinctive mode of strategic development) perform better than those that do not follow this process of growth.