Predicting construction firm performance: An empirical assessment of the differential impact between industry- and firm-specific factors

Abstract

It is obvious that the performance of firms hinges upon the dynamics of both industry- and firm-specific factors. A less obvious, and perhaps a more important, line of inquiry is that to the extent that they have a bearing on firm performance, how much do these two groups of factors respectively predict firm performance? To date, performance differences among construction firms that stem from industry- and firm-specific differential effect has remained largely unexplored. Using a dataset comprising 526 firms across various construction-related sectors, the sector-by-sector firm performance variation that is attributable to the heterogeneity of both industry- and firm-specific characteristics was empirically examined. That statistically significant results of different effect sizes are found indicates that although these factors are often assumed to be intertwined it is possible to study their respective impact on firm performance. Future studies could usefully replicate and extend this study to construction firms in other countries to further investigate what drives firm performance under different national, industry and firm contexts. © 2006 Taylor & Francis.