Innovation in Small, Project‐Based Construction Firms*
| Author | Martin Sexton,Peter Barrett |
| Date | 01 December 2006 |
| Published date | 01 December 2006 |
| DOI | http://doi.org/10.1111/j.1467-8551.2005.00461.x |
Innovation in Small, Project-Based
Construction Firms
*
Peter Barrett and Martin Sexton
Research Institute for the Built and Human Environment, University of Salford, The Old Fire Station,
Salford, M5 4WT, UK
Corresponding author email: p.s.barrett@salford.ac.uk
Relevant literature is synthesized to provide a holistic picture of our current knowledge
of innovation in small, project-based firms, highlighting significant gaps in the broad
areas of ‘focus and outcome’, ‘organizational capabilities’, ‘context’ and ‘process’.
Research findings from fieldwork focused on the construction industry are offered to
address these gaps. In particular, a consensus model is given of the organizational
factors dynamically at play. It is shown that typically the innovations of small, project-
based firms are closely tied to their operational activities and are pushed forward by
owners who utilize very scarce resources to make progress in the interstices of normal
business. This leads to an emphasis on taking up established technologies through
‘learning on the job’. Growth per se is not an important target. The motivation to act is
generally to get past a survival mode of operating and to achieve stability by satisfying
clients. These characteristics contrast with large organizations, especially in terms of
the role of the owner, the close focus on niche markets and the lack of slack resources to
innovate in parallel with normal business. It is hoped that these results will be of interest
to other sectors where small, project-based firms operate.
Introduction
The notion of sustainable competitive advantage
is increasingly interwoven with the ability of
nations and firms to successfully create, manage
and exploit appropriate innovation. Two key
strands can be identified.
First, the enhanced understanding of the impor-
tant role small firms plays in industrial markets.
Acs and Audretsch (1991, pp. 150–151) list four
key contributions from small firms: ‘they play an
important part in the process of technological
change; . .. generate much of the turbulence that
not only creates an additional dimension of com-
petition . . . but also provide a mechanism for
[market] regeneration; . . . international competi-
tiveness in newly created product niches . . . [and]
job generation’. Interest in the contribution of
small firms to innovation-led wealth generation
and job creation has been revitalised in recent
years at national and international levels (DTI,
2001; European Commission, 1996; OECD, 2000).
Second, firms across a variety of industries are
increasingly experimenting with project-based
models of organization to accommodate and
exploit fundamental changes in the nature and
roles of markets and technologies (Ayas, 1996;
Bonaccorsi et al., 1999; DeFillippi and Arthur,
1998; Kanter, 1997, 1983). Project-based organi-
zation focuses on the production and/or delivery
*
The research project described in this paper was funded
by the EPSRC/DETR: IMI Construction – Link
programme (grant number: GR/M42107/01), and this
support is gratefully acknowledged. The academic team
was supported by Marcela Miozzo and Alex Wharton,
University of Manchester Institute of Science and
Technology and Erika Leho, University of Salford.
The seven collaborating firms were Bosco Construction,
Christodoulou Marshall Architects, Contract Services
(R&R), Parker Wilson, PLP Construction, Taylor
Hutchinson & Partners and Wardle Associates. Thanks
are due to all the members of staff involved.
British Journal of Management, Vol. 17, 331–346 (2006)
DOI: 10.1111/j.1467-8551.2005.00461.x
r2005 British Academy of Management
side of a firm’s business (Artto, 1998, pp. 19–20),
and is characterized by ‘the coexistence of a con-
tinuing organization structure, typically based on
functional departments with a temporary orga-
nizational structure based on project teams’
(Grant, 1997, p. 160).
Taken together these two strands form an
expanding locus of innovation and economic
growth: namely, the small, project-based firm.
This focus can fruitfully be addressed within the
project-based context of the construction indus-
try. The construction industry is generally driven
by single and unique projects, each creating and
disbanding project teams (Betts and Wood-
Harper, 1994; Carty, 1995; Halpin and Wood-
head, 1998; Tatum, 1986). The scale of small-firm
activity in this collage of disjointed projects is
considerable, with, in 1999, 99% of UK con-
struction firms having between 1 and 59 staff
(Department of the Environment, Transport and
the Regions (DETR), 2000: Table 3.1), delivering
some 52% of the industry’s workload (DETR,
2000: Table 3.3). Therefore any innovation-led
performance improvement in this industry is
significantly influenced by these small firms.
In this context the construction industry’s
unusual emphasis on projects and preponderance
of small firms has the potential to provide useful
insights for innovation efforts in other industries
This is especially so given the fact that, as
measured by relative Gross Value Added to
the economy, construction has significantly out-
performed the manufacturing sector over the last
25 years (DTI, 2003). This achievement is all the
more impressive given the prevailing climate in
the UK construction industry, where the princi-
pal determinant of competition is on price rather
than value added through innovation (Gann,
1997), reinforced by Egan’s (DETR, 1998)
observation that R&D investment by the UK
construction industry is consistently lower than
any other sector, and that in absolute terms,
R&D expenditure in the industry has fallen by
80% since 1981.
Gann and Salter (2000, p. 955) observe ‘[con-
struction] project-based, service-enhanced forms
of enterprise are inadequately addressed in the
innovation literature’. The aim of this paper is
therefore to contribute to the development of this
area of study by offering new theoretical and
practical insights and models grounded in de-
scriptive case studies and action research, focused
on innovation in small, project-based construc-
tion firms. The findings will be contextualized in
the broader literature to make them of relevance
to policy makers, practitioners and researchers
interested in small, project-based firms in general.
Key issues from the literature
Generic innovation model
A simple generic innovation model is given in
Figure 1. It suggests that enhanced performance
owing to successful innovation is achieved by first
taking an appropriate innovation focus. This
focus should reflect organizational capabilities,
but must also be responsive to contextual factors,
so that energy is channelled through effective
innovation processes. The model is offered
primarily as a way of structuring this section.
The scale and complexity of the subject negates
any one form of analysis providing a ‘complete’
picture (Dodgson, 1993). The discussion here
presents a particular ‘lense’ to innovation (Mar-
ceau, 1992) that has its own focus on innovation
with respect to small, project-based firms.
Innovation focus and outcomes
In the general innovation literature, the focus for
innovation is broadly seen as being something
new to the firm and beneficial; for example,
‘innovation consists of the generation of a new
idea and its implementation into a new product,
process, or service, leading to the dynamic growth
Innova tion
process
Innovation
focus
Context of
innovation
Organisational
capabilities for
innovation
Enhanced
performance
Innovation
process
Figure1. Generic innovation model
332 P. Barrett and M. Sexton
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