In this research paper the innovative and strategic behaviour of the construction industry and the companies within that sector are analysed. In other sectors, but in particular for builders, a clear relationship with their environment is shown. When these external circumstances are positive the industry is apparently very capable of innovation. Recently we have noticed increasing environmental turbulence, which will have an enormous impact on management. Companies in the construction industry will have to compete in a more extrovert and market-driven way and they will have to reconsider their capabilities. Specialization and diversification on various subjects are probably the most important strategic choices. Innovation creates possibilities of achieving competitive advantage, but only when managed properly. The existing `engineers paradigm' in the construction industry will be an important obstacle, but at the end of this process companies will increasingly have the character of what Chandler refers to as `modern industrial enterprises'.
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