Relationship between Construction Firm Strategies and Innovation Outcomes

Abstract

(2009) The relationship between construction firm strategies and innovation outcomes. Abstract: Survey results provide a preliminary assessment of the relative contribution of a range of tactical business strategies to innovation performance by firms in the Australian construction industry. Over 1,300 firms were surveyed in 2004, resulting in a response rate of 29%. Respondents were classified as high, medium or low innovators according to an innovation index based on the novelty and impact of their innovations and their adoption of listed technological and organizational advances. The relative significance of 23 business strategies concerning (1) employees, (2) marketing, (3) technology, (4) knowledge and (5) relationships was examined by determining the extent to which they distinguished high innovators from low innovators. The individual business strategies that most strongly distinguished high innovators were (1) 'investing in R&D', (2) 'participating in partnering and alliances on projects', (3) 'ensuring project learnings are transferred into continuous business processes', (4) 'monitoring international best practice', and (5) 'recruiting new graduates'. Of the five types of strategies assessed, marketing strategies were the least significant in supporting innovation. The results provide practical guidance to managers in project-based industries wishing to improve their innovation performance. Introduction Innovation is an important contributor to economic growth. Although this relationship was contested in the past, innovation is now widely considered to improve the competitive advantage of nations, industries and firms (OECD 2000). Since the early work of influential economists Joseph Schumpeter (1943) and Robert Solow (1956), innovation researchers have generated a vast literature covering a broad range of objectives, perspectives and levels of analysis. Academic and business interest in Australia and elsewhere is burgeoning as it is increasingly accepted that innovation is key to improving performance in both mature and emerging industries. This acceptance is exemplified by the opinion of leading consultants PricewaterhouseCoopers (PWC) that 'the time has come for innovation to enter the main stream of management thinking, to achieve its rightful place alongside financial management and strategic planning as a determinant of firm success' (PWC 2003, i). However, innovation performance by construction firms is very patchy. Although many firms recognize the value of innovation, many are uncertain about how to improve their performance. One of the best ways to assist these firms is to provide empirically valid information about the strategies used by the most innovative firms. The study reported here was undertaken to provide guidance in this way to construction firms seeking to improve their innovation performance. The construction industry is responsible for shaping the built environment that underpins all social and economic activity, but has received little attention in innovation research compared to other sectors such as the manufacturing industry. The study reported here was designed to answer the following two questions: Are business strategies identified in the literature as supportive of innovation performance used significantly more often by highly 1