Integrating contractor and property developer for product system innovations
Journal article, 2017

Purpose: The aim of this paper is to explain why construction groups facing opportunities for product system innovations, such as green buildings, may choose to integrate construction and property development, taking on facilities management (FM) for a limited period. Design/methodology/approach: Conceptual analysis based on prior literature and illustrated by a single case of integration. Findings: For product system innovations, an in-house developer should be more able to reduce uncertainty than independent developers, due to unobservable long-term technological quality for customers, because the property becomes associated with lower risk after having been owned and operated. Alternatives such as building certification systems support incremental innovations, warranties suffer from double moral hazard in the long run and risk allocation in public–private partnership projects often fails to encourage system innovations. Integration allows the contractor to work continuously with innovative projects, developing new capabilities, which allow the firm to signal proficiency to the market, employees and the investment community. Research limitations/implications: The phenomenon is new, and further empirical surveys are needed to confirm the hypothetical conclusions drawn here. Practical implications: The value of close collaboration between those who develop innovative green building technologies and facilities managers is outlined. Originality/value: The relation between the scope of corporate activities in construction groups, technological innovations and FM has not been studied before.

business development

technological innovation

facilities management

green issues

clients

corporate strategy

Author

Magnus Holmén

Halmstad University

Jan Bröchner

Chalmers, Technology Management and Economics, Service Management and Logistics

Shahin Mokhlesian

Chalmers, Technology Management and Economics, Service Management and Logistics

Facilities

0263-2772 (ISSN)

Vol. 35 9-10 511-524

Areas of Advance

Building Futures (2010-2018)

Subject Categories

Civil Engineering

Business Administration

Building Technologies

Driving Forces

Innovation and entrepreneurship

DOI

10.1108/F-10-2016-0094

More information

Latest update

3/31/2021