The role of exogenous factors in the strategic performance of construction companies

Purpose - The purpose of this paper is to investigate the role of exogenous factors in the strategic performance of construction companies. A conceptual model is proposed where strategic performance is influenced by a two-dimensional construct composed of market conditions and strategic alliances. Design/methodology/approach - A questionnaire survey was administered to 73 construction companies. Structural equation modeling was used to analyze the data and test the hypothesis that strategic performance is impacted by exogenous factors. The individual constructs used in the study passed the internal reliability test, all factor loadings were statistically significant at alpha = 0.05, all goodness of fit indices consistently indicated a good fit, and the hypothesized path coefficient was large and significant at alpha = 0.05. Findings - The hypothesis was supported by the data and analysis. Indeed, macro-economic, political, legal, socio-cultural conditions and the level of competition and demand are expected to impact differentiation strategies, and market/project/partner selection strategies. The quality of the relationships with government agencies and clients is expected to influence client/project/market selection strategies, while the quality of the relationships with labor unions may affect the ability to differentiate by using innovative construction methods, materials and equipment. Research limitations/implications - It is likely that endogenous factors such as company resources, capabilities and project management competencies also impact strategic performance. But the study is confined only to the exogenous factors of market conditions and strategic alliances. Practical implications - The findings of the study benefit construction company executives in that they make the executives more cognizant of the market environment and they draw the executives' attention to the importance of alliances with other parties. While market conditions are beyond the control of construction executives, relationships with other parties are somewhat within their sphere of influence. Originality/value - Only a few studies have ever investigated non-financial measures to assess the effectiveness of company strategies. Also, exogenous factors which are unavoidable in a project environment were also rarely discussed in the construction management literature. The originality of this study is that it uses non-financial measures to assess the effects of exogenous factors on strategic performance.