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Paper info: Industrial renewal within the construction network


Industrial renewal within the construction network


Håkan Håkansson
Norwegian School of Management
Håkan Håkansson and Malena Ingemansson

Place of Publication

The paper was published at the 27th IMP-conference in Glasgow, Scotland in 2011.


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The construction business network is generally seen as conservative and non-innovative. A
number of reasons for this have also been identified. One major reason is claimed to be
related to the way the business is organized – that all important activities are taking place
within time limited projects. This makes it difficult to develop long term relationships with
customers and/or suppliers which in turn complicate development issues. Another often
mentioned reason is the local character of the business – business networks related to
construction is limited in space – dominated by local actors and that international actors
therefore are lacking. From a governmental point of view this is seen as a problem as the
construction sector is an important economic activity in most countries – not least in Sweden.
A first question is if the construction network is as non-innovative as claimed in the Swedish
public discussion. One reason for its bad reputation can be that the way in which innovation
in general is defined and measured is not suitable for the construction business. Another
interesting and complicating factor might be that there is an important variation within the
total network – that all parts of it are not so conservative. There are examples of innovations
within the area that gives reason to at least investigate this aspect. Thus a first research
question has to do with identifying both the degree and the variation of innovativeness within
the construction network.
The second issue has to do with factors making it possible/necessary to innovative and factors
acting as obstacles to innovate. Put differently, what are the reasons for why the degree of
innovativeness is on the level identified in the first question, as well as for why there is a
variation (if this is the case)? The ambition is to identify a set of factors acting as driving
forces and a set of factors hindering innovations to take place.
In order to identify both the degree of innovativeness as well as the factors affecting it, we
have conducted a survey to managers in Swedish construction companies. We have asked
business managers (CEOs and managers being responsible for a division or local region in the
four largest companies) to give their picture of what has happened during the last five years
and also what they think is necessary or possible to change within the next five years. This
investigation is the first study in the larger program where also a number of specific
innovations later will be studied using a case methodology.
The analysis reveals that we have found an interesting variation among the companies. We
have found some very distinct influencing variables to the variation in renewal. The most
significant one is the network position and especially the existence of an internal network. It
is more common for units within larger companies to have a high degree of renewal compared
to independent companies.
Looking closer into renewal we have found that it involves both the internal and external
network and concerns partnering with customers as well as use of foreign
suppliers/subcontractors. It also concerns resources and activities in terms of for example the
use of technical platforms, virtual construction models, and foreign labor. Both platforms and
virtual construction are also important tools to handle customer and supplier relationships.