Competitive advantage in the construction industry: Firm-specific resources and strategy

The concept of competitive advantage which captures the cornerstone of academic research and business practice is explored in the context of the construction industry by integrating three predominant perspectives of organizational studies: the open system view of organizations, the industrial organization economics view of competitive advantage and the resource-based view of the firm, The conceptual framework of the research builds on these three perspectives and postulates that firm strategy and firm-specific resources are major sources of competitive advantage and hence superior performance. It also postulates that internal and external firm-specific resources contribute to a construction company's performance over and above the contribution of firm strategy. These propositions were empirically tested by a survey of 103 U.S. construction companies. Research findings point out that firm strategy which is operationalized by measuring competitive positioning, and external firm-specific resources which are operationalized by measuring the quality of the relationships with the key constituents of the task environment are strongly related with construction company performance in terms of growth in contract awards, profitability and overall performance. Research findings however do not provide any empirical support to the research proposition that internal firm-specific resources, which are operationalized by measuring organization structure affect construction company performance. Research findings also indicate that the quality of the relationships with the key constituents of the task environment (an external firm-specific resource) contribute to construction company profitability but not to growth in contract awards and overall performance over and above the contribution of firm strategy.