Managing renewal in fragmented business networks

Abstract

Purpose: We argue that the construction industry is characterised by a fragmented business context with three main features: the project-based character, the strong focus on price in all parts of the supply chain along with the great importance of suppliers. This fragmentation has been identified as problematic for the industry’s ability to innovate and engage in renewal. The purpose of this paper is to investigate this further by focusing on how construction companies manage renewal in a fragmented business context. Design/methodology: We use an in-depth case study of a housing project in Sweden to discuss how firms manage renewal in a fragmented type of business environment. We identify the challenge of achieving renewal in an individual construction company as an issue of handling intra- and inter-organisational issues in both intra- and inter-project environments. Findings: Our case study indicates that renewal can be partly handled and managed through long-term business relationships and partly through opening up to new business relationships. Moreover, innovations and learning developed in other projects can be used in the focal project, and due to a repetitive task it is possible for the construction company to use a core network of individuals and organisations to enhance overall renewal among actors. Limitations: The study needs to be supported by further empirical observations. The paper encourages IMP scholars to further investigate projects from an industrial network approach. Originality/value: The paper addresses why firms in fragmented (project-based) businesses might struggle with achieving renewal in a novel way by outlining and investigating four organisational challenges they must handle.