Our study has shown that the network context in which construction companies act impacts on
the logic of innovation in this industry. We have identified two main network related concerns
in relation to how innovation happens; one which is related to the internal network of the single
company, and one which concerns how this network is interrelated with the external network
consisting of suppliers and customers.
The major challenge appears to be how to interconnect the project and company levels of the
single organization, and in so doing also interconnecting explorative and exploitative type of
learning, which is a prerequisite of the innovation process. The innovation process is a
continuum of explorative and exploitative behavior, which means that for new solutions to
become innovations they need to take part in both types of learning situations, regardless if they
are new combinations of existing solutions or new solutions all together. While we have
identified several successful examples of such feed-forward and feedback processes taking
place our findings indicate that these are not yet characteristic ways of working across the entire
industry. There appears to be great room for improvement in terms of learning across projects
and truly adopting new solutions which appear at the project level and exploiting them at
company and industry level. We identify this as a central managerial implication for
construction managers as the study also show that the most important development issue for
construction companies is how to manage the construction process and handle the counterparts
in that process. Understanding how to spread more efficient solutions across the organization
and the projects appears central in this type of process development. Moving on to how this
internal network interconnects to the external network several, reasons have been brought up
as to why there is a lack of inter-organizational interaction within the industry, related to
procurement methods, price focus, project orientation, etc.. We argue that the temporality of
projects and the lack of long-term relationships induce an explorative type of learning behavior
within the projects which rarely is implemented, or exploited, at company and industry levels.
Thus, the lack of interconnection between the internal and the external network of the single
company affects the concurrent feed-forward and feedback processes in which new solutions
can (or rather cannot) become spread across the organization. This lack emphasizes the
importance of the internal network of the construction companies which results in an
exploitative type of learning in terms of learning mainly from people and already implemented
solutions within the company. Generally, although we see single examples of more integration
in the supply chain across projects, this in turn seems to induce innovation in terms of
standardized types of solutions which the rest of the network then will (or will not) accept.
The extent to which construction companies can actually be categorized according to different
logics, reflecting an orientation towards exploration or exploitation, has here been shown to not
be an issue of whether it is the one or the other but rather how it is a combination of both on
different network levels, and how for the successful achievement of long-term change (i.e.
innovation) these logics need to be interconnected. Construction companies should thus be
conscious of their innovation logic in terms of whether they base their learning behavior on a
biased orientation towards exploitation or exploration. This is strongly connected to how the
internal respectively external network is valued in terms of learning opportunities. Our results
indicate that the internal network is presently valued higher than the external, which according
to a network perspective have negative consequences for learning and innovation. Paying
attention to both networks and establishing appropriate relations in both seems to be an
important prerequisite for achieving a balance between exploitation and exploration (March,
1991), and to enable explorations being exploited across levels (Crossan et al., 1999).
While our study has provided some first insights on the issues addressed, more research is
needed on how the networks on project and company level co-exist and what can be said about
the relationship between them. This will bring further knowledge of what characterizes the
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learning behaviors between the two levels and how this influences how and why innovation
takes place within this industry at large. For this purpose performing case studies directed
towards projects would be a suitable approach of investigating the inter-organizational
interaction patterns in more depth.
Acknowledgements
This research project has been financially supported by the Swedish Construction Federation
and the Jan Wallander and Tom Hedelius Founda