Business models and performance of international construction companies

Abstract

As the construction business environment becomes ever more competitive and intense, business models are receiving considerable attention as potential sources of sustainable survival and growth. In order to design sustainable business models in today's global construction market, it is important to understand the business models that would make a construction company achieve higher performance in terms of profitability, growth and market competitiveness. Therefore, this study identifies the business model variables of international construction and statistically analyzes the relationship between business model variables and firm performance guiding 72 international construction companies over a six-year period from 2009 to 2014. We examine the effect of business model variables on firm performance and how different business model variables can lead to different outcomes. The results show that business models play significant roles in determining the performance of international construction companies, with financial resources being a major determinant of profitability and regional diversification a major determinant of revenue growth and market competitiveness. Each business model variable had a different effect on profitability, growth and market competitiveness. This confirms that there are ideal combinations of business model variables that can help firms achieve higher performance. These findings are expected to provide useful guidance to assist executives' decision making when designing a business model that will enable their firm to thrive in the global marketplace.