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Strategic Management
Practices in Construction
Industry: A Study of
Indonesian Enterprises
FINAL SEMINAR
MUHAMMAD SAPRI PAMULU
BEng (Hons.), MEng (PM)
Presentation Outline
1. Introduction
2. Literature Review
3. Conceptual Model & Hypothesis
4. Research Methodology
5. Analysis and Results
6. Conclusions & Recommendations
Introduction - Background
• The promising
prospects but, many
local construction
firms have poor
performance and
low
competitiveness.
Introduction - Background
• Strategic management research related to
the Indonesian construction industry
remain scarce. This has potentially
become one of the factors hampering
efforts to guide Indonesian construction
enterprises.
Research Objectives
• Major aims is to construct a conceptual
model to enable Indonesian construction
enterprises to develop sound long-term
corporate strategy that generates
competitive advantage and superior
performance.
Research Objectives
Specific objectives:
• Explore a number of strategic factors and their
characteristics and inter-relationships that may
potentially affect the competitive advantage and
the performance of a firm.
• Construct a conceptual model that captures the
linkages with specific factors, competitive
advantage and performance
• Verify the characteristics and inter-relationships
of the factors and setting within the conceptual
model based on survey feedback.
Research Scope
• Specific focus on exploring the “Dynamic
Capabilities Framework” (Teece et al.
1997; Teece 2007).
Literature Review
Strategy Paradigms
Strategy
StrategyParadigms
Paradigms(Teece
(Teeceet
etal.
al.1997)
1997)
Literature Review
Processes
New Paths
and
Positions
Positions Dynamic
(assets) Capabilities
Competitive
Prior Paths
Advantage
Dynamic
DynamicCapabilities
CapabilitiesFramework
Framework(Teece
(Teeceet
etal.
al.1997,
1997,Teece
Teece2007)
2007)
Research Gap
Strategy Research in Construction:
• Static vs. Dynamic Approach
• Single vs. Integrated Approach
• The standard vs. Multi-stage models
• Specific vs. All asset/capabilities
• Competitive advantage = Organisational
Performance
• Construction Industry in Developing
countries
Conceptual Model
Combination
+ +
Competitive Performance
of Asset- Advantage
capabilities
Conceptual
ConceptualModel
Model
Research Hypothesis
H1
Value of
Asset-
capabilities
combination
H3
Competitive
Advantage Performance
H2
Rareness of
Asset-
capabilities
combination
Research Hypothesis
Competitive
A Advantage B
Asset- C’
Capabilities
Combination Performance
/ Dynamic
Capabilities
Research Methodology
Review of the
Provision of theoretical
mainstream
Stage 1 foundation and skeleton of the
Strategic
Literature model
Management
Review Theories
Provision of theoretical
foundation in the context of
Construction Industry
Dynamic Identify Critical
Capabilities variables in the Conceptual
Stage 2
Model Framework model
Development (Assets & Model
Capabilities)
Identify Critical variables and
interrelationships among
variables
Questionnaire
Survey Hypotheses
Stage 3 Test
Model (Sampling, Design,
Verification & Construct)
Conceptual Model Verification
Research Methodology
Why Survey?
• The type of research question (Yin 2003).
• 70% of empirical studies on dynamic capabilities
used surveys and case-based data sources
(Arend and Bromiley, 2009)
• Data Access to private firms
• Limited time resources (Cross Section)
Research Methodology
Sample Required
1. More than 84 cases (Kish, 1965)
2. More than 106 cases (Tabachnick and
Fidell, 2007)
Respondents
1. Contractors (AKI, GAPENSI, AKLI)
2. Consulting/Eng. Firms (INKINDO)
Research Methodology
Questionnaire
Questionnaire Survey
Survey Construct
Construct *)
*)
*)
*)English,
English,Bahasa
Bahasa&&Japanese
Japaneseversion
version
Response Analysis
• Response Rate
Number of Replies 120
Returned Undelivered 75
Total Number of Forms 503
Sent
Response Rate (%) 28,04 %
(delivered)
23,86 % (of total)
Response Analysis
Research Survey Author (year) Response Rate
Strategic management in Chinowsky, P.S., & 26.5% (106/400)
construction Meredith, J.E (2000)
Strategic analysis of large local Cheah, C.Y.J, Kang, J. & 28.3% (85/300)
construction firms in China Chew, D.A.S (2007)
Response Analysis
• Non-response Bias
Table
Table ANOVA
ANOVA Result:
Result: Significant
Significant Group
Group Response
Response
Item Group Mean F-statistic
Performance Early 11.66 0.069+
Respondents
Late 11.77
Respondents
Employees Early 3.15 2.861+
Respondents
Late 3.70
Respondents
++p>0.05
p>0.05
Construct Analysis
The item scales are suitably reliable and
valid.
• All Alpha coefficients are above the 0.7 threshold
(Nunnaly, 1978).
• All loading coefficients are above the 0.5 cut-off
(Tosi et al. 1973).
Construct Analysis
Table
Table Reliability
Reliability &
& Validity
Validity Analysis
Analysis
*)
*)Alpha
Alpha;;N=120
N=120
**)
**)Min.
Min.Loading
Loading;;N=120
N=120
Results of Statistical Analysis
Table
Table Regression
Regression Results
Results for
for Hypothesis
Hypothesis 11 and
and 22
nsNot
Notsig.,
sig., +p<0.1,
p<0.1, *p<0.05,
p<0.05, **p<0.01,
p<0.01, ***p<0.001
ns + * ** ***
p<0.001
Table
Table Regression
Regression Results
Results for
for Hypothesis
Hypothesis 11 and
and 22 (Cont.)
(Cont.)
nsNot
Notsig.,
sig., +p<0.1,
p<0.1, *p<0.05,
p<0.05, **p<0.01,
p<0.01, ***p<0.001
ns + * ** ***
p<0.001
Results of Statistical Analysis
Table
Table Regression
Regression Results
Results for
for Hypothesis
Hypothesis 33
nsNot
Notsig.,
sig., +p<0.1,
p<0.1, *p<0.05,
p<0.05, **p<0.01,
p<0.01, ***p<0.001
ns + * ** ***
p<0.001
Table
Table Regression
Regression Results
Results for
for Hypothesis
Hypothesis 33 (Cont.)
(Cont.)
Environment (β) -.26** -.20* -.19* -.18* -.30*** -.23** -.30*** -.24**
nsNot
Notsig.,
sig., +p<0.1,
p<0.1, *p<0.05,
p<0.05, **p<0.01,
p<0.01, ***p<0.001
ns + * ** ***
p<0.001
Results of Statistical Analysis
Table
Table Regression
Regression Results
Results for
for Hypothesis
Hypothesis 44
nsNot
Notsig.,
sig., +p<0.1,
p<0.1, *p<0.05,
p<0.05, **p<0.01
ns + * **
p<0.01
Summary of Results
Hypotheses Findings
1. The value of asset-capability combinations Supported
that an enterprise exploits will have positive
relations to its competitive advantage
2. The rarity of asset-capability combinations Supported
that an enterprise exploits will have positive
relations to its competitive advantage
3. An enterprise’s competitive advantage will Supported
have a positive correlation to its
performance.
Discussion of Results
Model Evaluation – H3
Conclusions
1. This study provides empirical evidence in
support of the notion that a competitive
advantage via the implementation of
dynamic capability framework is an
important way by the construction
enterprise in improving its organisational
performance.
Conclusions
2. The value and rarity characteristics of
asset-capability combinations contribute
to the competitive advantage of the
Indonesian construction enterprises, and
that such an advantage, sequentially
contribute to its organisational
performance (Hypotheses 1,2,3).
Conclusions
3. This study offers practical evidence of
positively direct relationship between
characteristics of the enterprises’ asset-
capability, dynamic capability,
competitive advantage, and its mediating
effect on organisational performance
(Hypothesis 4 & 5).
Contributions & Implications
• For academics, this study fills an
important gap in the empirical literature.
Publication
• Publication
– Book Part (Published)
• Pamulu, M. S, S. Kajewski and M. Betts (2007) Management
of Information Technology. In Indonesian Construction
Firms, in Construction: Industry, Management and
Engineering. Ed. M. Abduh, 73-83. Bandung: ITB Press.
ISBN 979-3507-98-5
– Journal Paper (in progress)
• Pamulu, M. S, S. Kajewski and M. Betts (2010) Dynamic
capabilities framework in construction: A Study of
Indonesian Enterprises.
• Pamulu, M. S, S. Kajewski and M. Betts (2011) Micro-
foundations of dynamic capabilities: A Study of
Indonesian Construction Firms.
Acknowledgements
• Supervisory Team
– Professor Stephen Kajewski
– Professor Martin Betts
• Scholarships providers
– QUT
– BEE
Questions?