Inter-organizational network in project-based
architectural services and building sectors:
its role, structure and impact on innovation
Fandy TSUI (10726446)
MSc. in Business Administration – International Management Track
Date submitted (final): 29 June 2015 Supervisor: Dr. Lori DiVito
Statement of originality
This document is written by Student Fandy Tsui who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Table of Contents
Abstract ...3
1. Introduction ...4
2. Theoretical background ...7
2.1. Innovation and knowledge networks in the construction industry ...7
2.2. Inter-organizational network relations in the construction industry ... 12
2.3. Network, knowledge and innovation ... 14
2.4. Inter-organizational network structures and innovation ... 15
3. Research methodology ... 17
3.1. Data collection: firms and projects selection criteria ... 17
3.2. Data collection: sources of evidence ... 19
3.2.1. Informal conversations ... 19 3.2.2. Interviews ... 20 3.2.3. Direct observations ... 20 3.2.4. Documentary information ... 21 3.3. Data analysis ... 21 3.4. Data constructs ... 23
3.4.1. Network structures: cohesive network and dynamic network ... 23
3.4.2. Project partnership and strategic partnership in construction ... 23
3.4.3. Innovation ... 23
4. Findings ... 24
4.1. Inter-organizational relations in the construction industry ... 24
4.1.1. Types of inter-organizational relations ... 24
4.1.2. Inter-organizational relations for external knowledge and the underlying factors ... 26
4.1.3. Towards longer-term strategic partnerships across projects ... 29
4.2. Impacts of inter-organizational relations in construction on innovation ... 30
4.3. The influence of multiple-actor relations on innovation ... 33
5. Discussion ... 37
6. Conclusion ... 42
7. References ... 44
8. Appendices ... 52
8.1. Appendix 1 – Interview guideline ... 52
8.2. Appendix 2 – Representative quotes: outcomes of inter-organizational relations ... 53
Abstract
Inter-organizational networks are crucial for accessing external knowledge to foster innovation in the construction industry. Knowledge resides in various organizations that temporarily collide in complex product system projects. Such project-centric nature makes long-term commitment difficult, hampering learning and innovation. This paper investigates the knowledge-accessing role of inter-organizational networks on innovation in a project-based architectural services setting. It examines the two conflicting views of network structures on innovation in previous research. The network density hypothesis suggests that closed, stable network is important for innovation, while the structural holes theory argues that open, dynamic network drives better innovation performance. Drawing on multiple case studies of six architectural firms consisting of 77 dyadic inter-organizational relations within 44 projects, this explanatory study adapts a multi-actor network perspective to uncover how innovation is facilitated in the Dutch architectural services and building sectors. The key findings include: architectural firms are shifting away from adversarial, arm’s length relations towards longer-term, cohesive collaborations across projects; dynamic networks are significant for innovations that reward greater novelty; cross-industry collaborations are key to innovation. Overall, a balance of cohesive networks for sustaining business operations and dynamic networks for driving greater novelty is preferred. This paper offers a theoretical model for explaining the relationships between network structures, types of partnerships, degrees of novelty and relation outcomes. Managers are advised to leverage different networking approaches towards dynamic networks or cohesive networks, within or across industries depending on specific innovation behaviors or strategic network benefits they intend to achieve.
Keywords: Architectural firms, construction, innovation, inter-organizational relations, network
1. Introduction
Construction is often considered as a conservative, non-innovative industry. With a stronger focus on innovation, it has been undergoing tremendous improvements in technology and processes in the last three decades. Researchers recognize that the innovative behavior of this knowledge-intensive industry is distinct from that of the manufacturing sectors, yet there are close similarities with project-based services industries (Jewell, Flanagan & Anaç 2010; Reichstein, Salter & Gann 2008; Squicciarini & Asikainen 2011). They also agree that the common measurement of innovation largely concerns technological product innovation that is not applicable in this ‘low-technology’ service-based setting (Farshchi & Brown 2011; Seaden & Manseau 2001; Winch 2003). The innovation literature has paid little attention to this sector but focused on leading manufacturing industries and professional services such as biotechnology, consulting, IT, etc. However, construction contributes around 11 percent of Gross Domestic Product (GDP) and eight percent of the total employment in the European Union in 2007 (FIEC 2008 in Squicciarini & Asikainen 2011). It also plays a fundamental role in producing sustainable infrastructure that improves living standards and supports social activities that enable citizens to connect to each other in all economies. In light of this important part of economics, businesses and policy makers point to the need for a better understanding of the success behind innovation processes in construction.
Extant studies have shown that regulatory environment, organizational features such as technological capability and absorptive capacity of a firm, and the project-centric nature of the construction sectors are both innovation drivers and inhibitors (Bossink 2004; Pries & Janszen 1995; Slaughter 2000; Winch 1998). There is a growing body of literature affirming the importance of inter-organizational networks for access to external resources, emphasizing the need to understand how innovation-related knowledge is exchanged within construction (Bygballe & Ingemansson 2014; Erbil, Akıncıtürk & Acar 2013; Farshchi & Brown 2011; Pries & Dorée 2005). Such emphasis on inter-organizational relationships and innovation seems to be in line with the contemporary
Chesbrough’s (2006) ‘open innovation’ concept: firms no longer create value through internal learning, instead they innovate collectively by accessing a broader range of external knowledge through strategic collaborations (Chesbrough 2006; Diaz 2009; Grant & Baden-Fuller 2004). In today’s knowledge-based economy (Drucker 1969), network relations are critical sources of fresh ideas (Gulati 1999; Kogut 2000; Lavie 2006) that complement internal efforts (Bierly & Chakrabarti 1996; Zack 1999) to drive innovation (Huggins, Thompson & Johnston 2012; Powell, Koput & Smith-Doerr 1996).
Yet, the effects of different network structures on innovation remains uncertain. Proponents of the network density hypothesis suggest that a closed, stable network is beneficial to innovation (Ahuja 2000; Coleman 1988; Walker, Kogut & Shan 1997). In contrast, the structural holes theory argues that an open, dynamic network in which organizations share complementary knowledge drives better innovative performance (Burt 1992; Gargiulo & Benassi 2000; Maurer & Ebers 2006) To avoid knowledge redundancy caused by the sharing of practices and norms between firms in a stable environment (Molina-Morales & Expósito-Langa 2013), there is an increasing emphasis on continuous reconfiguration of networks to facilitate innovation (Gargiulo & Benassi 2000; Huggins & Johnston 2010). Considering these conflicting perspectives, Phelps, Heidl and Wadhwa (2012) introduce untested propositions arguing that stable, cohesive networks may be beneficial for innovation in rapidly changing environments consisting of non-redundant and complex knowledge.
Regarding the recent argument asserted by Bygballe and Ingemansson (2014): ‘little is known with regards to the implications for innovation for balancing in the network context in which construction occurs’, I take the inter-organizational nature of the construction industry as the focal point to understand the respective linkage to innovation. Much of the partnering literature in construction is survey-driven (Reichstein et al. 2008) concerning dyadic formal project partnerships between clients and main contractors (Bresnen & Marshall 2000), as projects are mostly initiated by these key actors. There are very few strategic partnering exploratory studies because long-term
commitment is traditionally perceived as impossible (Bygballe et al. 2010; Gadde & Dubois 2010). Gann and Salter (1998; 2000) blame the project-based nature in such a loosely coupled system (Dorée & Holmen 2004; Dubois & Gadde 2002) in construction that favors short-term productivity, and the lack of longer-term strategic relationships across projects that hampers learning and innovation.
In light of the rising international acclaim of ‘Dutch Architectural Design’, this paper extends the empirical research from the manufacturing context to the project-based architectural services setting in the Netherlands. I ask architectural firms to indicate the key partners involved in projects and to elaborate on partners’ influence on the degree of innovation that shapes the execution of these projects. This multi-actor qualitative approach allows me to embrace all contracting parties such as suppliers and consultants, and to explore possible strategic partnerships to address the call in the literature about how project networks and companies co-exist (Bygballe & Ingemansson 2014).
This study presents preliminary results to clarify the contrasting views concerning the impacts of inter-organizational network structures on innovation. I adapt the social network perspective to the inter-organizational context to cover the social and evolutionary aspects of relationships that evolve into collaborations between organizations through adaptations and interdependences over time (Allen & Cohen 1969; Bresnen & Marshall 2000). Network scholars have largely focused on the informal and relational dimensions of social networks highlighting the effect of trust, cultural value and reciprocity on interpersonal relations among individual actors (Boer, Berends & Van Baalen 2011; Capaldo 2014; Østerlund & Carlie 2005). As Putnam (2000) ascertains that organizations possess less social capital invested by individuals, this paper builds on Huggins’s (2010) inter-organizational network capital concept which accentuates that firms access knowledge through strategic yet calculative inter-organizational networks to reap economic returns. Thus, the term ‘organization’ is used to capture the business and professional aspects of inter-organizational networks as knowledge is exchanged among multiple actors (Huggins & Johnston 2010; Huggins & Thompson 2014).
Drawing on the insights from the knowledge network literature, the partnering and innovation literature in construction, I address the following questions: 1) How do project-based architectural firms access knowledge in collaboration with external organizations that affect innovation? 2) How do different structures of inter-organizational networks (i.e. cohesive network and dynamic network) stimulate innovation?
This paper consists of six sections. Next section reviews the theoretical background on knowledge network, partnering and innovation in the construction industry. Section 3 describes the research methodology. Section 4 summarizes the findings from the case studies. Section 5 presents the theoretical prepositions and framework along with the research implications for theory, business and policy. The conclusion and future research questions are discussed in the final section.
2. Theoretical background
2.1. Innovation and knowledge networks in the construction industry
Dosi (1988a, p.222) defines innovation as ‘the search for, and the discovery, experimentation, development, imitation, and adoption of new products, new production processes and new organizational set-ups’. Innovation processes vary significantly across sectors, which have differences in technology development, knowledge and organizational structures (Malerba 2005). The majority of the innovation literature associates innovation with technological breakthroughs as the result of research and development (R&D) investment in a manufacturing context. Chesbrough (2006, p.ix) refers innovation to ‘invention implemented and taken to market’. This dominant view neglects the growing economic weight of services in most OECD countries over the past decades. The services sector accounts for more than 50% of the variation in employment rates across most of the developed countries (OECD 2005a), replacing traditional manufacturing as the key economic driver. Recent studies have recognized the importance to take a broader view of innovation that goes beyond technology (Weissenberger-Eibel & Koch 2007). The OECD innovation strategy (2010) has presented new measures to cover non-technological innovation resulting from intangible assets such
as design and research. In formulating research guidelines for innovation, the Oslo Manual published by OECD (2005b) distinguishes four types of innovation: new products or services, new processes, new marketing methods and new organizational methods. This manual also presented three measures for the novelty of innovation: ‘new to the firm’, ‘new to the market’ and ‘new to the world’.
Despite its substantial contributions to economies, there is little known about how innovation occurs in the conservative construction industry. Innovation in the construction industry refers to the ‘actual use of a non-trivial change and improvement in a process, product, or system that is novel to the institution developing the change’ (Slaughter 1998, p.1). Slaughter (1998) presented five types of construction innovation: incremental, modular, architectural, system and radical to companies as a basis to implement in different projects. The innovation processes in this project-based, service-oriented complex product system share a lot of common characteristics with other professional services sectors, but differ to a great extent from manufacturing approaches (Jewell et al. 2010; Reichstein et al. 2008; Squicciarini & Asikainen 2011). Common innovation measurements in the manufacturing industries such as R&D and patent data are, therefore, not applicable in the construction settings (Farshchi & Brown 2011; Seaden & Manseau 2001; Winch 2003).
Inter-country research of construction innovation has acknowledged the slow rate of technological innovation and the incremental nature of how innovation is adapted from existing know-how (Pries & Dorée 2005; Pries & Janszen 1995; Squicciarini & Asikainen 2011; Yusof et al. 2014). For instance, Yusof et al. (2014) contend that adapting innovation based on proven successful designs, rather than initiating innovation, is the dominant practice among most developers and contractors in Malaysia. The building sectors are largely characterized by incremental innovations that continuously advance the process of a series of small adaptive changes. Simulation and modeling are essential to architectural firms to demonstrate technical and structural innovations because new design concepts cannot be tested in full-scale (Gann & Salter 2000). In contrast, manufacturing sectors are distinguished by radical technological breakthroughs as a result of internal
R&D inputs to accumulate knowledge from experiences in laboratories that often transform the industry (OECD 2005b; Schumpeter 1934; Slaughter 1998; Winch 2003).
Researchers have recognized both internal and external drivers of construction innovation (Bossink 2004; Bossink 2011; OECD 2008; Pries & Janszen 1995; Slaughter 2000; Winch 1998). Some focus on endogenous factors such as technological capability of architectural firms to develop new technical building methods, and their ‘absorptive capability’ to access and integrate knowledge of external actors (Cohen & Levinthal 1990). Conversely, others argue that exogenous factors play a larger role in facilitating innovation and highlight that environmental pressures exerted by global competition and changing governmental regulations are fundamental (Bossink 2011; Pries & Dorée 2005; Seaden & Manseau 2001). Although most of the public policy instruments play a marginal role in promoting construction innovation (Seaden & Manseau 2001), the recent growth of performance-based regulations and ‘design-and-build’ procurements have altered the traditional price focus bidding processes in the construction industry in support of innovation. Bossink (2011), in addition, ascertains that demands of safety and environment protection are reflected in the public regulatory framework to drive sustainable innovation.
Nevertheless, the creation of inter-organizational knowledge networks is the most prominent driver of construction innovation. It is crucial to promote collaboration and co-innovation among organizations, which is embedded across multiple levels in the construction network (Bossink 2004; Dubois & Gadde 2002; Pries & Dorée 2005). In a longitudinal research, Pries and Dorée (2005) observed that cooperation has become a popular strategic management tool in the Dutch construction industry, whereas half of the innovative activities are the result of inter-organizational collaborations. Recent studies have therefore increasingly emphasized the importance of networks for external knowledge access to complement internal efforts of construction firms to innovate (Bygballe & Ingemansson 2014; Erbil et al. 2013; Farshchi & Brown 2011).
The Dutch SBI 2008 (CBS 2008) classifies architectural and engineering activities as consultancy, research and other specialized business services. This industrial classification suggests the design functions of architectural firms as knowledge-intensive business services (Jewell et al. 2010; Winch 2003) whereas businesses provide knowledge-based services as either primarily sources of information or intermediate inputs to their clients (Miles et al. 1995). The building sectors are characterized by a high degree of interdependence among temporary coalitions of organizations that are obligated for reciprocity at any time to sustain a relationship (Gann & Salter 2000). These interdependent relations are the contrary of the arm’s length, adversarial buy-sell relations between manufacturing firms (Sako 1992).
Projects are the most prominent way for architectural firms to access new knowledge from external organizations (Grabher 2002). Architectural firms arrange resources and strategies around the needs of projects and primarily use projects to coordinate main business functions including production and R&D for innovation and competition (Hobday 2000; Pryke 2004). They temporarily work together with numerous organizations within construction and across industries in project-centric, non-routine design and production processes. Such project-based operation networks mainly involve long-term business-to-business interactions among end-users, customers, suppliers, governmental authorities, specialist consultants, educational institutes etc. Construction projects are usually demand-led whereas architectural firms produce highly customized buildings and complex infrastructure for clients by integrating new and existing competencies resided within and between organizations (Gann & Salter 2000).
Compared to product-based activities, the project-based nature of the knowledge-intensive architectural services and building sectors implies the importance of knowledge networks for construction innovation (Bossink 2004) due to services intangibility, customer interaction and external partner influence (Chesbrough 2011; Den Hertog 2010; Grönroos 2000; Miles 2008). Architectural firms have a high degree of interactions with clients and business partners, and are
co-producers of customers’ innovation (Den Hertog 2010; Skjølsvik et al. 2007). Knowledge is widely distributed across diverse sources in these networks. Therefore, architectural firms, which have no clear organizational boundaries, have to manage collaborating relations with organizations in complex network interfaces in order to deliver values to clients. Reputation is also critical because each construction project is associated with different levels of risk and complexity that affect project performance (Gann & Salter 2000; Hobday 2000). Architectural firms must prove to clients that they have the required competences to complete specific tasks in order to win new tenders. While the government is the most dominant client with a high degree of interference through regulatory frameworks (Bossink 2011; Pries & Janszen 1995), end-users have been increasingly involved in construction innovation activities (Den Hertog 2010; Slaughter 1993). Architectural firms take the initiative to co-design with clients and end-users to create new building concepts with external quality assurances (OECD 2009) that provide predictability to customers (Normann 2002).
It is important to understand the distinctive roles of organizations in the construction industry. According to Winch’s (1998) complex systems industry model, clients, regulators and professional institutions are innovation superstructures, while trade contractors, specialist consultants and component suppliers are innovation infrastructures. Architects are crucial to integrate knowledge between actors in this complex network in the early stages of design conceptualization (Erbil et al. 2013; Slaughter 1993; Winch 1998). Innovation brokers including professional associations and educational institutes help facilitate collaborations and innovation-related knowledge exchange between organizations across industries (Blayse & Manley 2004). Extant studies accentuate the importance of customers, suppliers, contractors and consultants in driving construction innovation, while competitors and public clients are less significant (Bygballe & Ingemansson 2014; Pries & Dorée 2005; Reichstein et al. 2008; Rigby et al. 2012; Slaughter 1993). Nevertheless, cross-country evidence of these relationships is not universal. Whereas Pries and Dorée (2005) suggest that suppliers are key sources for product innovation in the Netherlands, Reichstein et al. (2008) argue
that suppliers are critical in facilitating process innovation in the UK. Universities are not the main focus of innovation in Turkey (Erbil et al. 2013), although they are sources of new product ideas in Britain (Reichstein et al. 2008).
2.2. Inter-organizational network relations in the construction industry
The Construction Industry Institute (CII 1991, p.iv) defines partnering as: ‘A long-term commitment by two or more organizations for the purpose of achieving specific business objectives by maximizing the effectiveness of each participant’s resources.’ However, the common business practices in the construction industry go against this mostly cited definition. The benefits of developing cooperative relations with shared understanding and trust are not yet recognized in the construction industry (Winch 2000). Inter-organizational relations in the building sectors are characterized by short-term interactions and standardized business exchange between independent businesses (Brown et al. 2001; Gann & Salter 2000). The main reason for such ‘arm’s-length distance’ relations (Gadde & Dubois 2010; Sako 1992) is that architectural firms try to avoid becoming ‘locked-into’ interdependent relations. Architectural firms set their priorities on cost efficiency and short-term benefits in tendering, entailing a competitive atmosphere of low loyalty between business partners (Thompson, Cox & Anderson 1998).
Partnering in the construction industry has been primarily organized on the project level (Larson 1995). Because intense interactions among firms takes place in projects in the efforts of adjusting standardized materials to the unique conditions of specific projects (Love, Li & Mandal 1999). Most studies refer project partnership to the establishment of a limited cooperation between entities aiming to achieve separate but complimentary objectives for a single project (Beach, Webster & Campbell 2005; Cheng & Li 2001; Stralkowski & Billon 1988). Turning contractual relations into a cohesive project team encourages learning and development of novel ideas to solve specific problems in each project. Therefore, the majority of new solutions are created within a system of temporary project networks (Gadde & Dubois 2010). Nevertheless, projects hamper learning and innovation on the
firm level (Gann & Salter 2000). Holmen, Pedersen and Torvatn (2005) argue that learning across multiple projects is not easy to implement as architectural firms switch partners around each project according to specific conditions. The groups of organizations are continually changing across projects (Gadde & Dubois 2010). Knowledge and experience accumulated from previous projects are not likely to be transmitted to new assignments (Von Krogh 1998) or to be recombined with existing knowledge for innovation (Ajmal et al. 2010). Hence, ‘a new learning curve is climbed by the supplier each time’ (Cox & Thompson 1997, p.128). The introduction of partnering in the construction industry by CII (1991, p.iv), therefore, calls for a change from ‘traditional relationships to a shared culture without regard to organization boundaries’ to improve industrial performance.
There is a growing number of studies adapting an industrial network perspective to examine the inter-organizational context of innovation, expressing the need to focus on informality and social aspects of relation dynamics and network issues evolving over time through collaborations (Bresnen & Marshall 2000; Bygballe et al. 2010; Gadde & Dubois 2010). It is argued that a relation is not only a formal contract, but also a creation of shared culture and understanding between two entities (CII 1991). The literature has increasingly recognized the importance of strategic partnership on a longer-term basis across projects (Bennet & Jayes 1995; Bygballe et al. 2010; Gadde & Snehota 2000) to complement the strong project focus in the construction industry (Bresnen & Marshall 2000; Gadde & Dubois 2010). In strategic partnering, architectural firms adapt to one another to work continuously towards mutual objectives across projects in a long-term orientation by utilizing each partner’s resources for joint performance (Beach et al. 2005; Cheng & Li 2001; CII 1991). Such continuous cooperation reduces the need of overcoming new learning curves in new projects by architectural firms, improving operational efficiency and cost effectiveness (Bygballe et al. 2010). This provides organizations time to learn and to explore new alternatives, increasing the possibilities for quality improvement and innovation (CII 1991; Eriksson 2007; Gadde & Dubois 2010; Love et al. 2002). Dubois and Gadde (2002) argue that ‘tight coupling’, longer-term relations among
construction firms beyond a single project could facilitate the diffusion of novel solutions from ‘temporary network’ to ‘permanent network’, elevating innovation from projects to the firm level.
2.3. Network, knowledge and innovation
The resource-based view of the firm (RBV) has focused on the internal resources and capabilities of firms (Barney 1991). Recent studies have extended this view to recognize the importance of network in gaining competitive advantages (Kogut 2000; Kogut & Zander 1992; Lavie 2006). A network perspective suggests that firms are embedded in networks of relations with multiple organizational actors (Granovetter 1988; Gulati 1999). These networks provide firms access to information, resources and technologies and to opportunities for learning. Network resources, therefore, allow firms to leverage knowledge from external organizations to create inimitable resources (Gulati 1999; Gulati, Nohria & Zaheer 2000). However, internal factors of companies influence the knowledge-creation performance. Several scholars argue that human capital and R&D efforts are the major drivers of knowledge creation and economic growth (Romer 1990). Firms differ in their ‘absorptive capacity’ to value, assimilate, utilize and exploit new knowledge gained from external sources (Cohen & Levinthal 1990), which affects innovation performance. Tsai (2001) has recently revealed that the interaction between absorptive capacity and network position has significant impacts on business unit innovation and performance.
In response to these conflicting views, Chesbrough (2006) underlies the critical balance between internal knowledge creation and external knowledge acquisition. Firms should carefully recombine diverse stocks of knowledge by utilizing both internal and external ideas to advance their expertise (Fleming 2001; Grimpe & Kaiser 2010). In today’s open innovation era, cooperation with external organizations is increasingly important for firms to gain access to a broader range of useful information to drive superior innovative performance (Chesbrough 2006; Elango & Chen 2012). Learning through external networks is crucial to firms as it brings heterogeneous knowledge and fresh ideas that serve as a benchmark for internal efforts (Kessler, Bierly & Gopalakrishnan 2000;
Zack 1999). Innovation involves changes in routines as a result of recombining new and existing knowledge assets (Nelson & Winter 1982; Schumpeter 1934). Firms adapt their existing knowledge in combination with the acquired complementary knowledge from external sources to create new in-house knowledge to specific problems, engendering product and process innovations.
2.4. Inter-organizational network structures and innovation
Two distinct perspectives in the social network literature address the question of whether cohesive and dynamic networks are beneficial to stimulate innovation (Hemphälä & Magnusson 2012). Network scholars have provided dissimilar views regarding the structural properties of networks. Some assert that closed and cohesive networks foster greater cooperation based on mutual trust and shared understanding to enhance the diffusion of novel practices, which is more beneficial to innovation (Ahuja 2000; Coleman 1988; Lawrence, Handy & Phillips 2003; Schilling & Phelps 2007; Walker et al. 1997). It is crucial to increase bandwidth ties between organizations to gain timely access to diverse ideas when the environment is changing rapidly (Aral & Van Alstyne 2011; Phelps et al. 2012) However, negative network effects may arise when searching for knowledge in cohesive networks. Organizations may lock in stable, long-term relations as knowledge becomes more similar and homogenous through sharing of norms and standards among organizations (Monge & Contractor 2003). Knowledge redundancy may occur (Molina-Morales & Manuel Expósito-Langa 2013), which reduces the value of inter-organizational relations and inhibits firm-level growth (Maurer & Ebers 2006).
Conversely, Burt’s (1992) structural holes theory argues that open network structures with multiple disconnections enhance knowledge transfer, allowing firms to access heterogeneous information from external sources. There is an increasing emphasis in the literature supporting Burt’s view on the dynamic and changeable nature of networks, highlighting the need for continuous reconfiguration of networks (Gargiulo & Benassi 2000; Maurer & Ebers 2006). Negative lock-in effects in a cohesive network can be prevented by promoting diversity in industries and organizations
that fosters creative innovation (Martin & Sunley 2006; Molina-Morales & Martinez-Fernandez 2009; White, Gunasekaran & Roy 2014). In a recent study, Huggins and Johnston (2010) have indicated a significant relation between network dynamism and innovation, confirming the need for further research to understand how networks change along with the resources firms access externally. Other scholars, however, emphasize the equivalent importance of network cohesion and dynamism (Björk et al. 2011; Obstfeld 2005; Phelps et al. 2012; Reagans & Zuckerman 2001). Kijkuit and van den Ende (2007) argue that both networks are crucial for different phases of the innovation process. Dynamic networks favor the stage of idea generation while cohesive networks enhance the realization of ideas. Reagans and Zuckerman (2001) acknowledge the advantages of combining both networks which allow diffusion of external knowledge. Partially supporting the argument of Aral and Van Alstyne (2011), Phelps et al. (2012) suggest that cohesive networks are more beneficial for knowledge creation in rapidly changing environments consisting of non-redundant and complex knowledge, while dynamic networks are more advantageous in stable environments involving redundant and simple knowledge. Obstfeld (2005) points to the distinctive benefits: dynamic networks generate new ideas for radical innovation of higher novelty, while cohesive networks facilitate incremental innovation of lower novelty as the result of recombining existing ideas in a coordinated fashion.
Regarding the project-centric nature of the construction industry, large numbers of novel ideas are created to meet unique conditions in each specific project. Thus, a dynamic system of temporary project networks can be beneficial to engender innovations that reward greater novelty. Considering the rapidly changing project environment containing non-redundant and complex knowledge in the ‘low-tech’ construction industry, cohesive networks across multiple projects can be beneficial to facilitate diffusion of innovations of lower novelty among organizations across sectors, impeding the negative lock-in effects of redundant knowledge shared in a closed network (Monge & Contractor 2003) and fostering superior innovation performance (Phelp et al. 2012). Based on the
aforementioned literature review, I develop an analytical model as illustrated in Fig.1 for investigating the impacts of network structures on the intensity of innovation.
Fig. 1. A theoretical model for analyzing the impacts of network structures on innovation intensity
3. Research methodology
Focusing on Dutch architectural firms, this study expanded the research base to explore, in a multi-actor network perspective, how and why possible project and strategic partnerships are pursued and the respective linkages to innovation. Yin (2009) affirms that the use of explanatory case studies is the most appropriate way to answer ‘how’ and ‘why’ questions which concern operational links between themes and patterns that emerged over time instead of frequencies and incidences. Thus, I chose an inductive qualitative research approach which provides a rich understanding (Bryman & Bell 2007) of organizational views and interactions in the innovative processes in construction in order to develop a theoretical framework and propositions as a result of the study. To safeguard external validity (Yin 2009), I used multiple-case studies to describe and unfold the knowledge accessing role of inter-organizational network which engenders diversified knowledge and innovation, and to provide a better grounded generalizable theory that emerged from various evidence (Eisenhardt & Graebner 2007). Owing to the project-based nature of the building sectors, the primary unit of analysis was the project that architectural firms work jointly with organizations within and across industries namely competitors, main contractors, clients, specialist consultants, suppliers, educational institutes and professional associations.
3.1. Data collection: firms and projects selection criteria
The Dutch architectural sectors is an appropriate setting for this research. In 2010, there were approximately 13,100 Dutch architects including architects, interior architects, urban planners and
landscape architects who design buildings and infrastructure such as bridges and parks with the aim of enhancing spatial quality (Holland Trade 2014). The success of architectural firms depends upon their capability to access highly-specialized aesthetic, functional, technical and financial knowledge from various organizations. In the entire building process, Dutch architects play a central role to assimilate all information originated from counterparts in a Building Information Model (BIM) at the early stages with their core competence. Thus, architectural firms rely not only on their internal design expertise, but also on diverse know-how from external entities to deliver innovative solutions.
The Dutch architectural sector is dominated by small and medium-sized enterprises, while the presence of firms with above 100 employees is comparatively rare (Holland Trade 2014; Pries & Dorée 2005). For sampling, I followed two steps. Referring to the website of the trade association of Dutch architects ‘BNA’ and the ‘LexisNexis Academic’ database, I first applied a purposing sampling method to select large and medium-sized enterprises with dissimilar market maturity based on firm size, life expectancy and geographical coverage. Cover emails were disseminated to sizeable firms which are more resourceful to engage in collaborations with large numbers of organizations on a broad geographical scale. Other pre-selected criteria included: the firms were based in the Netherlands and had collaborated with external entities. Afterwards, I employed a snowball sampling method to identify six architectural firms suggested by the interviewees. These firms have different market orientations and focuses in various sectors for instance health-care, education, research and laboratory, public housing and commercial property. Table 1 summarizes the characteristics of the six architectural firms.
The project in which intense interactions among organizations take place (Gann & Salter 2000) was the primary unit of analysis. According to project profiles from the sample firms’ websites, news and interviews about projects and competitions from the two major architectural online magazines: Architectenweb and Arch Daily, I nominated on average five projects from each firm before the interviews. These projects were identified to represent good examples of recent collaboration
practices within the firms’ existing and new inter-organizational networks. Other project criteria included: geographic location, project size and duration. The pre-selected project list was revised by the interviewees when they disclosed the actual interactions and collaborating practices. Extra projects related to this study (i.e. collaborations were key to drive innovation) were added by the interviewees. The final project list consisted of 44 projects with 77 dyadic relations covering all contracting parties in construction (see Appendix 3).
Table 1
Profiles of sample firms Firm No. of
employees
Firm type Market orientation
Project type/ Firm specialization
Job titles of respondents
No. of projects
Alpha 30 Architecture &
urban planning National & International Public housings, commercial buildings COO 3
Beta 40 Architecture National &
International
Health & welfare, education
Architect 8
Theta 100 Architecture &
urban planning
National & International
Health & welfare, education
Partner & director
10
Delta 20 Architecture Local &
regional Education, commercial buildings Architect, PR & tenders manager 10
Kappa 78 Architecture Local &
regional
Health & welfare, education Senior project manager; Construction engineer project manager 9
Sigma 25 Urban planning Local &
regional
Commercial & public buildings, education, residential projects
Director, founder & owner
4
3.2. Data collection: sources of evidence 3.2.1. Informal conversations
To enrich my understanding of the architectural world and inter-organizational network dynamics in the Dutch construction industry, I conducted two informal interviews with two Dutch architectural professionals. Each conversation lasted half an hour and were handwritten and typed. The semi-constructed, open-ended conversations provided in-depth coverage on tendering processes, project operations, inter-organizational relations for the sake of accessing knowledge and fulfilling other networking purposes. I referred to the responses for possible adaptation in the design of the interviews that map the characteristics of the Dutch architectural sector accordingly.
3.2.2. Interviews
To assure reliability (Yin 2009), I developed a consistent interview guideline (see Appendix 1) with defined constructs based on earlier studies of network structure and innovation, and partnering and innovation in construction. Before data collection, I practiced and tested this interview protocol through a sample of informal conversations with the above-mentioned architects.
The findings were based on in-depth, semi-structured interviews with company owners, directors, senior architects and project managers of the sample firms who directly engage in tendering, architectural designs and collaborative activities with external organizations. The seniority of these interviewees gives them more experiences and knowledge, alongside the authority to decide on corporate network strategies. All the interviewees were key stakeholders in the selected projects and directly responsible for project performance and innovation. From August 2014 to October 2014, I conducted the interviews mostly at the respondents’ offices and on the phone. The interviews lasted one and a half hours on average and were digitally recorded and transcribed. The data collection process was complete once I reached theoretical saturation (Eisenhardt 1989).
There were three components in each interview. The first section aimed at assimilating the preliminary information about the general business operations and the importance of network and innovation perceived by the respondents. The second section focused on the recent projects that shed light on the collaborating approaches, reasons and activities, and the outcomes in which firms were involved in one-time project coordination or network strategies were employed. The final section was designed to measure the degree and pattern of network change at firm level.
3.2.3. Direct observations
During field visits, I directly observed behaviors and workspaces of the interviewees. In most cases, I was explained about complex design and technical concepts, while partnering relations were illustrated by the respondents on paper. At two of the sample firms, I was presented with an internal innovation research report and a project catalogue with photos of building designs and details of
counterparts in specific projects. These observations provided me a better understanding about architectural designs and techniques, and the building processes of infrastructure. I wrote my observations in a notebook for further analysis.
3.2.4. Documentary information
To ensure construct validity (Yin 2009), I performed a triangulation of publicly available sources of evidence (Ritchie & Lewis 2003) to support the interviews. I gathered diverse materials of networking initiatives and partnering activities of the sample firms from the Internet including project factsheets, firms’ blogs and publications, and architectural journals. Previous research on network and innovation in project-based organizations and within construction further enriched my understanding of the important role of inter-organizational networks in the building processes.
3.3. Data analysis
To understand network relations in construction, I gathered documents about inter-organizational collaborations of the selected projects such as firms’ publications and architectural journals from the Internet. Referring to earlier studies of network, partnership and innovation in construction, I designed the initial constructs of network structures, inter-organizational relations and intensity of innovation which were discussed in the literature. The inputs from the informal conversations with the architects were used to select the appropriate initial constructs (see section 3.4) that deductively emerged from the literature for the investigation during the interviews.
All interview transcripts were systematically coded by using the qualitative research analysis software Nvivo. To increase internal validity (Yin 2009), I used within-case and cross-case analysis based on a two-step iterative process. First, I examined the primary interview data within each project extensively to fully interpret the dynamics of the single cases. Second, I compared the data across projects. This variable-oriented analysis strategy (Miles & Huberman 1994) allowed me to focus on the recurring constructs which were supported from time to time in the data across cases. I refined the initial codes and added subsequent codes (non-innovative outcomes, network importance, network
strategy) by highlighting common words and themes that inductively emerged from the data to capture key concepts related to the research questions (see Appendix 2). Though iterative cycles of analysis between empirical data and emerging theories, I sorted the codes into meaningful categories to develop the coding scheme (see Table 2).
Once the coding was complete, in each case, I used a pattern matching logic to compare the observed patterns (greater innovative performance) of dependent variables (network structures and inter-organizational relations) with the predicted patterns based on the literature review (Yin 2009). New insights were combined from an inter-organizational network perspective on innovation. Types of inter-organizational relations in each project and the implications of cohesive or dynamic network on innovation were identified. This analytical framework led me to articulate the relationships between variables that provided insights into why network relations were pursued on the project and the company levels.
Table 2
Coding Scheme
First order codes Second order codes
Dynamic network
Cohesive network Inter-organizational relations: Project interaction Project partnership Strategic partnership Corporate alliance Innovation Non-innovation Innovative outcomes: New to the firm New to the country New to the world Network importance
Network strategy Non-innovative outcomes: Increased competitive advantage in tendering Increased ability to adapt to its environment Increased project performance
Next, I incorporated the quantification strategy and transformed the descriptive patterns and variables into binary codes in a form of 1-0 matrix (see Appendix 3, present = 1 and absent = 0). This strategy allowed me to indicate systematically both innovative and non-innovative outcomes associated with a series of incidents which can be counted and analyzed statistically (Langley 1999).
Based on the binary data matrix, I identified 77 dyadic relations to search for patterns and compared with the predicted theoretical explanations across cases to enhance internal validity (Yin 2009).
3.4. Data constructs
3.4.1. Network structures: cohesive network and dynamic network
Following the concept of network capital suggested by Huggin (2010) and Kramer et al. (2011), this paper focuses on the inter-organizational relations of architectural firms to access knowledge in a form of calculative and strategic networks to facilitate innovation and reap economic returns. Two structural forms of inter-organizational network in project-based firms are concerned: cohesive network and dynamic network. According to the closed network hypothesis (Coleman 1988; Putnam 1993), I refer cohesive network to longer-term, more stable collaborations among organizations within an existing network across multiple projects. Concerning dynamic network, I follow the open network theory of Burt (1992) arguing that firms gain access to heterogeneous resources from diverse sources in a completely new network.
3.4.2. Project partnership and strategic partnership in construction
Two types of construction partnerships based on duration are identified in the literature: project partnership and strategic partnership. Following Stralkowski and Billon’s (1988) definition of project partnership, I propose that project partnership is a form of dynamic network whereas architectural firms concerning short-term mutual benefits collaborate with a temporary constellation of organizations in one-off projects to achieve separate but complimentary objectives. Following Bennet and Jayes (1995), I propose that strategic partnership is a form of cohesive network whereas architectural firms concerning longer-term mutual benefits are committed to partners on a serial basis to achieve common objectives across projects for joint performance.
3.4.3. Innovation
In line with Dosi’s (1988a), I propose that innovation is an evolutionary process that discovers, experiments, adapts, generates, diffuses and exploits new knowledge which is related to
organizational capabilities of facilitating innovations. I focus on three levels of innovation intensity defined by the third edition of the Oslo Manual (OECD 2005b): ‘new to the firm’, ‘new to the country’, and ‘new to the world’. ‘New to the world’ is of the greatest novelty as it concerns the best practices influencing construction innovations.
4. Findings
Analysis of the interview data led to three main findings. First, organizations within construction are shifting away from adversarial, arm’s length business relations towards longer-term, cohesive collaborations in multiple projects. The details of different inter-organizational relations and the underlying factors (i.e. recent changes in the Dutch construction industry) that account for the collaborating behavior are discussed later. Second, dynamic project partnerships play a slightly more significant role in stimulating innovation of greater novelty (i.e. new to the country and new to the world). Two factors emerged behind these relations: (1) innovation is the main incentive for project partnerships and (2) sustaining business operations is key for strategic partnerships. Third, organizations beyond the construction industry are the primary sources of innovation. The reasons behind this observed pattern (e.g. different perspectives across industries) are explained in this section.
4.1. Inter-organizational relations in the construction industry 4.1.1. Types of inter-organizational relations
Interviewees revealed various types of network relations in construction: project interaction, project partnership, strategic partnership and corporate alliance. The most cited relations are project partnership and strategic partnership, which are the dominant forms of partnering in the construction literature (Beach et al. 2005; Cheng, Li & Love 2000). The details of all the identified relations are elaborated in Tables 3 and 5a.
Numerous insights were found in the data. First, an unexpected relation, which I call project interaction, emerged in nearly all interviews. In some tenders, architectural firms are assigned by
Table 3
Inter-organizational relations in construction Network type /
Inter-organizational relation
Description and Representative quote
Dynamic networks
Project interaction Architectural firms are assigned by public clients to coordinate with pre-selected organizations in specific parts of projects whereas interactions are limited without sharing strategic goals.
‘It’s not that much about knowledge because we do our thing and he does his thing… so we don’t really collaborate… sometimes he just sits there.’
(Architect, PR & Tender Manager, Delta) Project partnership Architectural firms, who concern short-term mutual benefits, cooperate with external
organizations in one-off projects to achieve separate but complimentary goals.
‘For a long time we have some relationships. This was the first time that we really got together and we won the competition.’
(Architect, PR & Tender Manager, Delta)
Cohesive networks
Strategic partnership Architectural firms, who concern longer-term mutual benefits, cooperate with external entities in multiple projects on a serial basis to achieve common objectives and joint performance with substantial degrees of adaptation, while remain apart without creating a new entity.
‘We asked the client to take this architectural firm… That goes along for about 15 years. It is not continuous but in some of our works they work closely.’
(COO, Alpha) Corporate alliance Architectural firms, who concern long-term mutual benefits, are formally committed in
contractual alliances such as joint ventures over a specified timeframe with high degree of integration through purchase of equity or acquisitions for joint performance.
‘We sold half of that company to our competitor in the Netherlands. We work together in the identity outside Europe.’
(Partner, Director & Project Manager, Theta)
public clients to coordinate, rather than cooperate with other actors in specific parts of projects whereas interactions are limited. The architect of Beta explained: ‘You have to make an appointment
to discuss how we do it together, but that does not mean that people in that firm really work together with us.’ Apparently, these contractual arrangements do not allow architectural firms to establish
direct partnerships with preferred actors, thus hampering learning and knowledge transfer. Second, two interviewees explained an exceptional relation in the Dutch construction industry, that is: corporate alliance in a form of joint venture between Theta and its competitor to gain competitive advantages outside Europe. Such a permanent commitment with full integration of resources to create a new business entity is rarely pursued by construction firms to avoid ‘lock-in’ effect and
interdependences. The architect of Beta commented that: ‘I think that’s a very special cooperation
which you don’t see this happen in many architectural firms in the Netherlands… because they are really committed to them that they work together for long-term.’ This comment was reiterated by all
the interviewees who underlined that partnerships in construction were mostly initiated based on project needs. From their point of views, the core objective of inter-organizational relation is to access diverse solutions to fulfill the unique requirements across construction projects:
‘It’s a project strategy, but it’s not a company strategy. We are always in the context of project. It’s driven by practice. Each time we team up with different companies because the chances of winning a project go up.’
(Partner, Director & Project Manager, Theta)
4.1.2. Inter-organizational relations for external knowledge and the underlying factors
Inter-organizational relation is an important instrument for accessing external knowledge and resources for further development and facilitating innovation. All interviewees expressed this viewpoint:
‘If we team up, we have twice [the number of] references [proven performance and experiences]. Then we have a better chance of getting through to the next round [of assessments in competitions]… And we did it again and again. We were chosen.’
(Architect, PR & Tender Manager, Delta)
‘It’s always putting other parties to the limits to meet the requirements… and look for solutions of how the other questions like technical, construction, financial can be met.’
(Architect, Beta) Architectural firms no longer see competitors solely as rivals, but also as collaborators in some cases. Table 4 illustrates that architectural firms established the largest numbers of partnerships with other architectural companies. Nearly all the respondents indicated that their firms had collaborated or were exploring opportunities to cooperate with architects overseas to understand building regulations,
Table 4
The influence of inter-organizational relations to different actors on innovation, (n=77 relations) ͨ Total number of relations Total number of relations that
led to innovative outcomes Inter-organizational
relations/ Actor typeᵃ partnership Project partnership Strategic partnership Project partnership Strategic innovation %ᵇ Impact on
Competitors 14 9 4 1 22 Main contractors 2 10 1 4 42 Clients (non-contractors) 2 4 2 1 50 Suppliers 2 6 1 4 63 Specialist consultants 2 15 2 11 76 Professional associations 1 0 1 0 100
ᵃ Educational institutes are not included. The inter-organizational relations between educational institutes and architectural firms are measured separately since they are independent of construction projects.
ᵇ Impact on innovation = total number of relations that led to innovative outcomes divided by total number of relations ͨ n = 77relations in the 44 selected projects (excluding corporate alliance since no details were disclosed by the interviewees)
political issues, and to adapt to business environment in foreign markets. For instance, the director of Theta, who managed projects in international markets, strategically added a local architect to a project in France: ‘For the political aspect, we added an architectural company from Paris that has a huge
French network.’ Half of the interviewees disclosed that they had increasingly collaborated with
domestic architectural firms shared different focuses to increase chances of winning orders. For example, with limited resources and proven records in designing sustainable laboratories, the tender manager of Delta made clear that partnering with the right Dutch competitor, who shared common values and complementary resources in the same field, strengthened their competitive advantages in large-scale tender bids: ‘We won that competition in a joint collaboration with that architect… we try
to make one team that has all the best references that they ask for.’ Theta, another example, also
revealed that combining their hospital designing know-how with the world-class aesthetic design concepts of Beta got them into the top five in an international tender. Of all the interviewees, only one expressed caution about the risk of losing strategic knowledge to competitors, but when asked to elaborate on a recent partnership with an architect outside the Netherlands, even this project manager of Kappa admitted the above-mentioned benefits: ‘they want to acquire a job that is too big for them...
it’s good on our resume that we are cooperating with them… for mutual benefits… they have the way of designing things that we can’t do.’ Clearly, the positive consequences of collaboration outweigh the
these findings suggest that architectural firms are shifting away from the adversarial, arm’s length construction relations which were traditionally governed by intense price competition. As the architect of Beta put it: ‘It’s really to use each other’s ideas as a team, more than as a competitor.’
Various rationales behind the collaborating practices emerged from the data. Three key changes in the Dutch construction industry were highlighted by the respondents when explaining their partnering behaviors. First, networks help acquiring jobs especially when public tenders are on the rise. The tender manager of Delta explained that the percentage of public tenders in Europe, compared to commercial projects, had increased from about 10% to 50% in the past decades. He stressed the importance of cooperation, particularly with construction companies who were often leading tenders, helps architectural firms get new projects via referrals. Two respondents supported this view by highlighting their early influence on team selection before the start of tendering. The director of Theta argued that: ‘The key is… to make sure that your name is well known… then you can start influencing
before the tender process starts for our own work.’ The COO of Alpha further acknowledged that: ‘our clients found us via… other architects. We also have so-called agents aboard who… inform other clients… and we are invited to join the tenders.’
Second, joint efforts seem to be an invaluable way to drive the industry forward amid the present economic crisis. Innovation has become an important tendering criteria of construction projects in the Netherlands1. However, half of the respondents emphasized that the economic recession had caused major losses of talents and it is necessary to be united to retain the knowledge in the Dutch construction industry. The owner of Sigma put this as an on-going innovation problem in the Netherlands: ‘every building company has been cutting budgets on the R&D’. The COO of Alpha called for inter-firm collaborations: ‘Crisis drives us to cut our staff… we ask other architectural
firms… to work together and to be a kind of architectural community… we open up part of our
1 Innovation is one of the non-financial considerations in public-private partnership (PPP) projects. Compared to
traditional procurement, the Dutch government provides companies the freedom to introduce new technologies and innovative solutions (Ministry of Finance 2013).
knowledge to other companies… In this way, we keep the knowledge within the architectural firms so it doesn’t get lost.’
Third, the recent BIM process innovation enabled all entities within the Dutch construction industry to work together in a single integrated computer system that encourages collaborating practices. Half of the respondents confirmed this view. The tender manager of Delta recognized the increasing importance of collaboration in BIM whereas all entities use the same standards and measurements: ‘The BIM model is about how to work together. Now it’s more and more important to
work together, so the whole industry is moving towards something that works together.’ Above all,
these insights into how changes in the Dutch construction industry help to inform the industry of the potential reasons for why collaboration exists.
4.1.3. Towards longer-term strategic partnerships across projects
Architectural firms lean towards favoring longer-term strategic relations across multiple projects because teaming up with previous partners that share common values, good track records and references to meet project requirements helps increase their competitive advantages in tendering and ensure quality of project performance. Among the identified 77 dyadic relations across projects in Table 5a, nearly 60% are strategic partnerships (i.e. cohesive network) while 30% are project partnerships (i.e. dynamic network). Project partnerships are often considered as a first step to explore potential partners for establishing closer strategic partnerships in future projects. As the tender manager of Delta noted: ‘They’re really the partner that fit well for most of our jobs… if there are
other design-and-build projects and we see that that’s the best fit, most of the time we try to team up with them [otherwise, we switch to other construction firms].’
All the interviewees were asked whether they have any intentions to change existing networks. Five respondents reported that they were not actively looking for new partners. One comment from the director of Theta substantiates the common practice of cohesive relations in construction: ‘The
before, within our company and other companies… maybe 20% are new.’ The same view is reiterated
by nearly all the respondents. The architect of Beta explained: ‘You will select the parties which you
have worked together before with good experiences… Good partners are also quite hard to select.’
The tender manager of Delta added that there is a limited pool of main contractors with track records in the Netherlands: ‘For very good structural engineers, you don’t have twenty… and for good
building physics, you only have about five that are top in the Netherland.’
Taken together, these findings suggest that collaborating with former partners with good partnering experiences and references that fit certain project requirements in longer-term, cohesive inter-organizational relations across multiple projects is a common behavior in the Dutch construction industry.
4.2. Impacts of inter-organizational relations in construction on innovation
The data provided strong evidence that, in the context of project-based organizations, cohesive networks have the same chance of stimulating innovation in comparison to dynamic networks. Table 5a shows that half of the strategic partnerships (i.e. cohesive network) and half of the project partnerships (i.e. dynamic network) led to innovative outcomes. It seems that continuously partnering with previous partners across several projects enables effective communications in a mutually reinforcing approach that elevate the intensity of knowledge exchange and innovation. The architect of Beta explained: ‘you can work more efficiently by working together continuously… For
the first time, it’s always hard to understand each other. And it’ll get easier every time… if you understand each other from the beginning.’ The tender manager of Delta elaborated: ‘if you work together and already shared the same view, you will end up further in the same direction and will drive more innovations.’ Nearly all the respondents reiterated the importance of communicating with
shared understandings for partnering. The project manager of Kappa stressed: ‘We think in the same
to think with us about the design… then we can work together.’ These suggested that cohesive
relations across multiple projects facilitates effective communications that foster innovation.
Looking at the impacts of the two partnerships on innovation intensity demonstrated that project partnerships have a slightly higher tendency of stimulating innovation of greater novelty. In either approach, architectural firms learn from external organizations through knowledge exchange that engendered innovations of different levels of novelty. This suggests that dynamic networks play a partially significant role in fostering more novel ideas in the context of project-based firms.
Innovation intensity was determined for each project by the pattern of interviewee responses to outcomes of inter-organizational relations (see Appendix 2). Three examples illustrated how the data were coded to reflect the novelty of innovation: ‘new to the world’, ‘new to the country’ and ‘new to the firm’. First, collaborating with an architect and a construction firm in Taiwan, Alpha received the ‘world’s only award’ that recognized their art center as one of the international best practices that demonstrated sustainability. Second, both Theta and a Finnish architectural firm operated in the same sector but exchanged different healthcare perspectives that facilitated innovations which were new to both countries that increased operational efficiency of hospitals. Third, taking advice from a technical consultant, Kappa had, for the first time, implemented an innovative glass roof which was ‘new to the firm’ that improved the heating and cooling system in a hospital.
The coding labels attributed to each project’s innovation intensity and the respective relations were compared quantitatively (see Appendix 3) to determine whether dynamic networks are more significant in stimulating novel solutions. Table 5b demonstrates that 35% of the project partnerships resulted in innovations ‘new to the country’ or ‘new to the world’, while only 20% of the strategic partnerships led to innovations of the same novelty levels. Four respondents agreed that the ultimate benefit of forming project partnerships in new networks is to gain new insights that sharpen their minds. For example, the owner of Sigma preferred using project partnerships to promote innovations of high novelty: ‘I want to see if people are innovating, and I want to perhaps lose a partner after a
Table 5a
Types of inter-organizational relations and their impact on innovation (n=77 relations) ͨ Inter-organizational
relationsᵃ Total number of relations (%)
Total number of relations that led to innovative outcomes
(%)
Impact on innovation %ᵇ
Project Interaction 10 (12) 0 (0) 0
Project Partnership 23 (30) 11 (48) 48
Strategic Partnership 44 (58) 21 (48) 48
Corporate alliance 1 ͨ n/a n/a
Table 5b
The influence of inter-organizational relations on innovation intensity (n=77 relations) ͨ
Total number
of relations that led to innovative outcomesTotal number of relations Impact on innovation %ᵇ Inter-organizational
relationsᵃ New the firm to New to the country New to the world the firm New to country & New New to the to the world
Project Interaction 10 0 0 0 0 0
Project Partnership 23 3 4 4 13 35
Strategic Partnership 44 12 6 3 27 20
Corporate alliance 1 ͨ n/a n/a n/a n/a n/a
ᵃ Educational institutes are not included. The inter-organizational relations between educational institutes and architectural firms are measured separately since they are independent of construction projects.
ᵇ Impact on innovation = total number of relations that led to innovative outcomes divided by total number of relations ͨ n = 77relations in the 44 selected projects (excluding corporate alliance since no details were disclosed by the interviewees); Percentages refer to percentages of the identified relations.
year and get another one.’ The director of Theta echoed the same view: ‘…you are looking at your daily business in a different way, and you are able to initiate innovations.’ Some indicated that
short-term projects with new partners are more beneficial for fostering novelty. The tender manager of Delta expressed: ‘because you see a lot of different projects, you learn a lot.’ Only two interviewees emphasized the importance of job referral in new networks. It is likely that the key benefit of dynamic relations, especially short-term contracts, is to acquire fresh ideas to increase firm competitiveness that creates job opportunities in the changing market.
Conversely, cohesive networks have a lower tendency in facilitating high innovation intensity. Table 5b shows that 27% of the strategic partnerships, compared to 13% of the project partnerships, contributed to innovations ‘new to the firm’ which were of lower novelty. The COO of Alpha underlined that cohesive networks are less important for novelty: ‘It doesn’t help you to think new
ways and find new roles.’ Two interviewees highlighted that strategic partnerships with existing
