Empirical Study of Strategic Performance of Global Construction Firms

Abstract

This paper presents an empirical study of factors contributing to the success and failure of 24 large international construction firms originating in the United States, Europe, and Japan. The study is conducted using fundamental analysis, a methodology that is commonly applied in economics and investment practices to study the prospects of a company. Based on publicly available data, both quantitative and qualitative measures are developed and assessed collectively to derive insightful knowledge about corporate strategy and firm outlook. Preliminary conclusions drawn from this study include: (1) A universal formula for success is elusive—critical success factors can be uniquely derived from different modes of operational, financial, technological, and human-related conditions and (2) causes of failure are diverse, thus construction firms must consistently check the downside risks of all measures. Thus, debates concerning the merits of common dichotomies such as diversification versus focused differentiation appear rather hollow. These aspects of strategy are far from fixed and should instead be treated as variables. The findings suggest that an open perspective of strategy is necessary in construction organizations and provide the foundation for the development of a new strategic model for the industry.