Identifying latent classes to successful AEC innovation through a survey of Finnish construction companies

Purpose: The purpose of this study is to describe latent classes explaining the innovation logic in the Finnish construction companies. Innovativeness is a driver of competitive performance and vital to the long-term success of any organisation and company. Design/methodology/approach: Using finite mixture structural equation modelling (FMSEM), the authors have classified innovation logic into latent classes. The method analyses and recognises classes for companies that have similar logic in innovation activities based on the collected data. Findings: Through FMSEM analysis, the authors have identified three latent classes that explain the innovation logic in the Finnish construction companies – LC1: the internal innovators; LC2: the non-innovation-oriented introverts; and LC3: the innovation-oriented extroverts. These three latent classes clearly capture the perceptions within the industry as well as the different characteristics and variables. Research limitations/implications: The presented latent classes explain innovation logic but is limited to analysing Finnish companies. Also, the research is quantitative by nature and does not increase the understanding in the same manner as qualitative research might capture on more specific aspects. Practical implications: This paper presents starting points for construction industry companies to intensify innovation activities. It may also indicate more fundamental changes for the structure of construction industry organisations, especially by enabling innovation friendly culture. Originality/value: This study describes innovation logic in Finnish construction companies through three models (LC1–LC3) by using quantitative data analysed with the FMSEM method. The fundamental innovation challenges in the Finnish construction companies are clarified via the identified latent classes.