Influences of client focus and company type on innovation and financial performance in the construction industry

Abstract

Purpose As innovation has been recognised as important in improving construction company performances, this study aims to determine the effects of client focus and company type on innovation and company financial performances. Design/methodology/approach A self-administered questionnaire was sent to 300 architectural and contractor companies and 163 (54.3%) were returned. The questionnaire data were analysed using a partial least squares structural equation modelling. Findings Client focus was found to have a complementary partial mediation effect on the relationships between innovation and company financial performance and that innovation independently affected company financial performance with the influence being stronger in the architecture companies than in the contractor companies. Research limitations/implications The study adopted a broad definition for innovation without considering the innovation types. As different types of innovation require distinct knowledge, skills, capabilities and management practices, future studies could investigate the various types of innovation and their effects on financial performance. Practical implications The findings provide valuable suggestions for principals, top management and policymakers on the importance of client focus when developing and disseminating innovation within the company. Also, architecture companies should focus on implementing innovation to stay competitive. Originality/value The mediating effects of client focus and the moderating effects of company type were simultaneously analysed on the relationship between innovation and financial performance.