How public client’s control systems affect contractors’ innovation possibilities

Abstract

Purpose This paper aims to identify how a public client’s use of control systems (process, output and social control) affect innovation possibilities in construction projects. Design/methodology/approach Semi-structured interviews about six infrastructure projects were conducted to identify respondents’ views on innovation possibilities. These possibilities were then analyzed from an organizational control perspective within principal–agent relationships between the Swedish Transport Administration (STA) and their contractors. Findings How the client uses control systems affects innovation possibilities. Relying on process control could negatively affect innovation opportunities, whereas output control could have a positive influence. In addition, social control seems to have a weak effect, as the STA appears not to use social control to facilitate joint innovation. Public clients must comply with the Public Procurement Act and, therefore, retain the requirements specified in the tendering documents. Much of the steering of the execution is connected to the ex ante phase (before signing the contract), which affects innovation possibilities in the design and execution phases for the contractor. Research limitations/implications This study was conducted with only one client, thus limiting its generalizability. However, the findings provide an important stepping stone to further investigation into balancing control systems and creating innovation possibilities in a principal–agent relationship. Originality/value Although public procurement has increasingly been emphasized as a major potential source of innovation, studying how a public client’s use of organizational control systems affects innovation possibilities in the construction sector has received scant attention.