Azman, M A; Chuweni, N N; Halil, F M; Ku Mohammad Asyraf Ku, A; Lee, B L; Farah Nazira, J and Skitmore, M (2024) The impact of the change in institutional regulation on construction productivity: Firm-level evidence in a developing economy. Construction Management and Economics, 42(3), pp. 199-214. ISSN 01446193
Abstract
For many, the business environment is regarded as the main factor determining changes in construction productivity. However, changes in a country’s institutional regulation can contribute to the productivity changes of construction firms over the long term but are often overlooked in construction productivity research. To study the impact of institutional regulation on construction productivity, a sample of 55 public-listed construction Malaysian firms (2009–2020) is used as a case study to estimate total factor productivity (TFP) based on the Geometric-Young Index (GYI). Stochastic Frontier Analysis (SFA) is then used to decompose the TFP-GYI into the technological, environment, technical, scale-mix, and statistical noise components. This is followed by the Generalized Method Moments (GMM) to model the impact of different institutional regulations on TFP and decomposed productivity components. The results indicate that the institutional regulation framework influences construction firms' TFP. Property rights and the rule of law (PRRL), and budget balance and change in wages (BBCW) have a positive impact on TFP, which largely influences technical efficiency. In addition to uncovering the impact of institutional regulation on construction productivity, namely capital availability and regulatory environment, it is concluded that institutional regulation plays a vital role in determining long-term construction firm productivity and needs to be considered by policymakers in formulating supporting incentives and policies.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction firms; total factor productivity; institutional regulation; developing economies; Malaysia |
| Index terms: | total factor productivity, wages, regulation, productivity, construction productivity, evidence, developing economy, rule of law, property rights, estimate, Malaysia, case study, efficiency, construction firm |
| Subjects: | real estate economics, management, legal systems, production economics, evaluation and assessment methods, Geography, data collection methods, operations management, political science, performance management, financial and cost management, organization, business economics, economic development |
| Topics: | Project Management, Quality Management, Governance, Urban Studies, Business Strategy, Cost Management, Geographical Context, Human Resources, Legal Issues, International Construction, Research Practice |
| Descriptive scope: | 4 PCEA |
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