Business strategies supporting effective implementation of innovation by project-based firms

This empirical paper focuses on the need to provide practical guidance to project-based firms wishing to improve their innovation performance. The relationship between different types of business strategies and innovation outcomes was explored in the Australian construction industry, as an example of a project-based industry. A survey of 1,317 firms was conducted in 2004, which resulted in 383 useable responses, giving a response rate of 29%. The relative importance of five types of business strategies was assessed, concerning: (1) employees, (2) marketing, (3) technology, (4) knowledge and (5) relationships. Innovation outcomes were measured by an index that comprised three indicators: 1.the degree of novelty of each firm’s most important technological and organizational innovation, 2.the impact of each firm’s most successful innovation on profitability, and 3.the adoption of prescribed technological and organizational advances by each firm. The index was used to score and rank the innovativeness of each survey respondent, and to assign each to one of three groups – high innovators, middle innovators and low innovators. Analysis focused on comparing strategy usage by firms in the high and low innovator groups. The findings revealed that marketing strategies are least important to innovation outcomes, across the five types of business strategies reviewed. The individual business strategies having the greatest impact on innovation were (1) ‘investing in R&D’ (2) ‘participating in partnering and alliances on projects’ (3) ‘ensuring project learnings are transferred into continuous business processes’ (4) ‘monitoring international best practice’ and (5) ‘recruiting new graduates’.