Contingency-Based Approach to Firm Performance in Construction: Critical Review of Empirical Research

AbstractIn management literature, a fundamental research question is why some companies succeed while others fail. The contingency-based approach proposes that organizational performance is a consequence of the fit between a set of contingencies, e.g., structure, people, technology, strategy, and culture. This approach has been adopted implicitly and increasingly by construction management (CM) researchers. The purpose of this paper is to examine the development of contingency thinking, theoretical and analytical issues of its application, and the measurement of firm performance in the empirical research in construction. After reviewing the literature of firm performance research approaches in construction, firm performance measurement in the empirical research, and contingency theory, a total of 36 empirical papers addressing firm performance in construction are reviewed in-depth and their content is analyzed. These papers are selected from four leading journals in construction: ASCE Journal of Construct...

[1]  Irem Dikmen,et al.  Strategic Group Analysis in the Construction Industry , 2009 .

[2]  Chimay J. Anumba,et al.  An integrated business improvement system (IBIS) for construction , 2005 .

[3]  Jeffrey S. Russell,et al.  Long-Term Entropy and Profitability Change of United States Public Construction Firms , 2005 .

[4]  David Arditi,et al.  Performance of MBE/DBE/WBE Construction Firms in Transportation Projects , 2010 .

[5]  Wooyong Jung,et al.  Empirical Assessment of Internationalization Strategies for Small and Medium Construction Companies , 2010 .

[6]  Charles Y. J. Cheah,et al.  Strategic analysis of large local construction firms in China , 2007 .

[7]  Stephen L. Kajewski,et al.  Relationship between Construction Firm Strategies and Innovation Outcomes , 2009 .

[8]  Noël Houthoofd,et al.  Business definition and performance implications: the case of the Belgian construction sector , 2009 .

[9]  Christopher D. Ittner,et al.  Does measuring intangibles for management purposes improve performance? A review of the evidence , 2008 .

[10]  Chee Hong Wong,et al.  Contractor Performance Prediction Model for the United Kingdom Construction Contractor: Study of Logistic Regression Approach , 2004 .

[11]  Liane Thuvander,et al.  An absorptive capacity model for green innovation and performance in the construction industry , 2009 .

[12]  T. Jick.  Mixing Qualitative and Quantitative Methods: Triangulation in Action. , 1979 .

[13]  Karim S. Rebeiz,et al.  Relationship between Governance Structure and Financial Performance in Construction , 2006 .

[14]  Soo-Yong Kim,et al.  Performance measurement of construction firms in developing countries , 2008 .

[15]  Simon Washington,et al.  Framework for measuring corporate safety culture and its impact on construction safety performance , 2009 .

[16]  S. Cheung,et al.  An analysis of the relationship between learning behaviour and performance improvement of contracting organizations , 2008 .

[17]  Jasper Mbachu,et al.  Conceptual framework for the assessment of subcontractors' eligibility and performance in the construction industry , 2008 .

[18]  L. Donaldson.  The Contingency Theory of Organizations , 2001 .

[19]  Luis F. Alarcón,et al.  Benchmarking System for Evaluating Management Practices in the Construction Industry , 2004 .

[20]  Zg Jin,et al.  A proposed framework for evaluating the international construction performance of AEC enterprises , 2012 .

[21]  H W Marsh,et al.  Is More Ever Too Much? The Number of Indicators per Factor in Confirmatory Factor Analysis. , 1998, Multivariate behavioral research.

[22]  David Arditi,et al.  Competitive positioning in United States construction industry , 2002 .

[23]  H. Smyth,et al.  An epistemological evaluation of research into projects and their management: Methodological issues , 2007 .

[24]  Harinder Jagdev,et al.  Performance: Its meaning and content for today's business research , 2007, Comput. Ind..

[25]  Stephen O. Ogunlana,et al.  Modelling the dynamic performance of a construction organization , 2003 .

[26]  Neil A. Morgan,et al.  Antecedents and consequences of market orientation in chartered surveying firms , 2002 .

[27]  C. Judd,et al.  When moderation is mediated and mediation is moderated. , 2005, Journal of personality and social psychology.

[28]  Low Sui Pheng,et al.  A comparative study of top British and Chinese international contractors in the global market , 2004 .

[29]  Naomi Garnett,et al.  Benchmarking for construction: theory and practice , 2000 .

[30]  Sangyoon Chin,et al.  Comparable Performance Measurement System for Construction Companies , 2007 .

[31]  C. B. Schoonhoven.  Problems with contingency theory: testing assumptions hidden within the language of contingency "theory.". , 1981, Administrative science quarterly.

[32]  A. Camanho,et al.  Performance assessment of construction companies: A study of factors promoting financial soundness and innovation in the industry , 2012 .

[33]  Hong Long Chen.  Model for Predicting Financial Performance of Development and Construction Corporations , 2009 .

[34]  S. Mohamed.  Performance in International Construction Joint Ventures: Modeling Perspective , 2003 .

[35]  David Arditi,et al.  Impact of Resources and Strategies on Construction Company Performance , 2010 .

[36]  Charles Y. J. Cheah,et al.  Interactions between Business and Financial Strategies of Large Engineering and Construction Firms , 2006 .

[37]  R. Edward Minchin,et al.  Firm Performance and Information Technology Utilization in the Construction Industry , 2006 .

[38]  Deborah J. Fisher,et al.  Benchmarking in Construction Industry , 1995 .

[39]  T. Thorpe,et al.  KPIs: a critical appraisal of their use in construction , 2004 .

[40]  D. Neeleman,et al.  A Monte-Carlo study , 1973 .

[41]  Chuan Chen,et al.  Chinese Contractors in Africa: Home Government Support, Coordination Mechanisms, and Market Entry Strategies , 2009 .

[42]  N. Venkatraman,et al.  Measurement of Business Economic Performance: An Examination of Method Convergence , 1987 .

[43]  David J. Ketchen,et al.  THE APPLICATION OF CLUSTER ANALYSIS IN STRATEGIC MANAGEMENT RESEARCH: AN ANALYSIS AND CRITIQUE , 1996 .

[44]  Andy Neely,et al.  Performance measurement system design: developing and testing a process‐based approach , 2000 .

[45]  Ghassan Aouad,et al.  Performance management in construction: a conceptual framework , 2001 .

[46]  Umit Bititci,et al.  Towards a contingency approach to performance measurement: an empirical study in Scottish SMEs , 2007 .

[47]  Gregory G. Dess,et al.  Measuring organizational performance in the absence of objective measures: The case of the privately-held firm and conglomerate business unit , 1984 .

[48]  R. Kaplan,et al.  The balanced scorecard--measures that drive performance. , 2015, Harvard business review.

[49]  Gerry Johnson,et al.  Using Frontier Analysis to Evaluate Company Performance , 2010 .

[50]  Monica Franco-Santos,et al.  The performance impact of using measurement diversity in executives’ annual incentive systems , 2007 .

[51]  Aidan Kelly,et al.  The Association of Business Schools: Academic journal quality guide, version 3 , 2009 .

[52]  Anil Sawhney,et al.  Structural equation model for assessing impacts of contractor's performance on project success , 2011 .

[53]  A. Wald,et al.  A Bibliometric View on the Use of Contingency Theory in Project Management Research , 2012 .

[54]  John H. Grant,et al.  Construct Measurement in Organizational Strategy Research: A Critique and Proposal , 1986 .

[55]  David Arditi,et al.  Performance of International Joint Ventures in Construction , 2010 .

[56]  David Arditi,et al.  Effect of host country and project conditions in international construction joint ventures , 2007 .

[57]  Andy Neely,et al.  A framework of the factors affecting the evolution of performance measurement systems , 2002 .

[58]  Mike Kennerley,et al.  Managing through measures: a study of impact on performance , 2005 .

[59]  R. Edward Minchin,et al.  Management of Construction Firm Performance Using Benchmarking , 2007 .

[60]  Andrew D.F. Price,et al.  Building a conceptual framework for measuring business performance in construction: an empirical evaluation , 2005 .

[61]  Jorge Moreira da Costa,et al.  Performance Assessment of Construction Companies Integrating Key Performance Indicators and Data Envelopment Analysis , 2010 .

[62]  R. Eccles.  The performance measurement manifesto. , 1991, Harvard business review.

[63]  Ashraf Elazouni.  Classifying construction contractors using unsupervised-learning neural networks , 2006 .

[64]  T. Scandura,et al.  Research Methodology In Management: Current Practices, Trends, And Implications For Future Research , 2000 .

[65]  C. Anumba,et al.  Business performance measurement practices in construction engineering organisations , 2005 .

[66]  I. Tsolas.  Modelling profitability and effectiveness of Greek-listed construction firms: an integrated DEA and ratio analysis , 2011 .

[67]  Kenneth F. Reinschmidt,et al.  Effects of Contractors’ Risk Attitude on Competition in Construction , 2011 .

[68]  David Arditi,et al.  Implications of Culture in the Performance of International Construction Joint Ventures , 2008 .

[69]  N. Venkatraman,et al.  On the Measurement of Business Performance in Strategy Research: A Comparison of Approaches , 2015 .

[70]  Charles Y. J. Cheah,et al.  Fundamental Analysis of Profitability of Large Engineering and Construction Firms , 2006 .

[71]  David Arditi,et al.  Toward a Multidimensional Performance Measure for International Joint Ventures in Construction , 2011 .

[72]  Chimay J. Anumba,et al.  Review and implementation of performance management models in construction engineering organizations , 2005 .

[73]  Andy Neely,et al.  The success and failure of performance measurement initiatives: Perceptions of participating managers , 2002 .

[74]  Rhonda K. Reger,et al.  A Content Analysis of the Content Analysis Literature in Organization Studies: Research Themes, Data Sources, and Methodological Refinements , 2007 .

[75]  Andrew D.F. Price,et al.  Benchmarking: Performance Improvement Toward Competitive Advantage , 1995 .

[76]  J. Pennings.  Structural Contingency Theory: A Multivariate Test , 1987 .

[77]  Andy Neely,et al.  Designing performance measures: a structured approach , 1997 .

[78]  Fadia Nasser,et al.  A Monte Carlo Study Investigating the Impact of Item Parceling on Measures of Fit in Confirmatory Factor Analysis , 2003 .

[79]  D. Arditi,et al.  Differentiation, Conformity, and Construction Firm Performance , 2003 .

[80]  M. Hitt,et al.  Contingency Hypotheses in Strategic Management Research , 2012 .

[81]  D. A. Kenny,et al.  The moderator-mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. , 1986, Journal of personality and social psychology.

[82]  A. Neely,et al.  Measuring performance in a changing business environment , 2003 .

[83]  Peter E. D. Love,et al.  Construction business performance measurement: the SPM alternative , 2000, Bus. Process. Manag. J..

[84]  E. Claver,et al.  Strategic groups and firm performance: the case of Spanish house-building firms , 2003 .

[85]  R. Chenhall.  Theorizing Contingencies in Management Control Systems Research , 2006 .

[86]  Van Truong Luu,et al.  Improving project management performance of large contractors using benchmarking approach , 2008 .

[87]  Florence T. T. Phua,et al.  Determining the relationship between fee structure and project performance between firms: an empirical study based on institutional and task environment perspectives , 2005 .

[88]  Florence T. T. Phua,et al.  Predicting construction firm performance: an empirical assessment of the differential impact between industry‐ and firm‐specific factors , 2006 .

[89]  Jun Luo,et al.  Assessing management and performance of Sino-foreign construction joint ventures , 2001 .

[90]  Marko Sarstedt,et al.  PLS-SEM: Indeed a Silver Bullet , 2011 .

[91]  Marc Wouters,et al.  The role of existing measures in developing and implementing performance measurement systems , 2005 .

[92]  Graham Winch,et al.  Towards a theory of construction as production by projects , 2006 .

[93]  Andy Neely,et al.  Designing, implementing and updating performance measurement systems , 2000 .

[94]  M. Hitt,et al.  Construct measurement in strategic management research: illusion or reality? , 2005 .

[95]  Robert Johnston,et al.  Exploring strategy‐misaligned performance measurement , 2008 .

[96]  Stuart D. Green,et al.  Lean construction: arenas of enactment, models of diffusion and the meaning of ‘leanness’ , 2005 .

[97]  David Arditi,et al.  Performance of minority firms providing construction management services in the US transportation sector , 2010 .

[98]  Hedley Smyth,et al.  A CRITICAL REVIEW OF PMS IN CONSTRUCTION: TOWARDS A RESEARCH AGENDA , 2012 .

[99]  Pierre J. Richard,et al.  Measuring Organizational Performance: Towards Methodological Best Practice , 2009 .

[100]  Robert E. Chapman,et al.  Impact of Information Technologies on Performance: Cross Study Comparison , 2008 .

[101]  Sai On Cheung,et al.  Moderating Effect of Organizational Learning Type on Performance Improvement , 2008 .

[102]  Henk W. Volberda,et al.  Contingency Fit, Institutional Fit, and Firm Performance: A Metafit Approach to Organization-Environment Relationships , 2012, Organ. Sci..

[103]  Johannes T. Voordijk,et al.  Balanced framework for measuring performance of supply chains in house building , 2012 .

[104]  D. Arditi,et al.  General contractors’ relationships with subcontractors: A strategic asset , 2001 .

[105]  Henry L. Tosi,et al.  Contingency Theory: Some Suggested Directions , 1984 .