Procurement, Innovation and Competitiveness in the Construction Industry

Centre for Interdisciplinary Built Environment Research
Publication Type:
Conference Proceeding
Building Across Borders Built Environment Procurement, 2007, pp. 326 - 334
Issue Date:
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The implications for analysis of innovation in construction of theoretical developments in industrial organisation are considered in this research, as an attempt to outline a new approach to construction innovation incorporating the implications of knowledge based, technology centred models. The paper firstly summarises characteristics of the construction industry, focusing on their effects on innovation, before surveying some of the ideas about the sources of innovation and the expansion and application of knowledge. Construction can be seen as an industry with limited scope for knowledge externalities, where the procurement methods used by the industryâs clients do not pay for innovation. The following discussion uses recent developments in the theory of industrial organization, such as research intensity and the theory endogenous sunk costs in competitive, fragmented, low research intensity industries. Then the effects on R&D from industry structure and procurement methods are highlighted. The paper concludes that the procurement methods used for building and construction projects appears to have been a determining factor in the level of innovation in the construction industry.
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