Impact of External Environmental Factors on Construction Firms' Performance, Mediated By Institutional Pressures

Hassan Fehan, Osaro Aigbogun

Abstract


While the mainstream of construction management research has paid attention to the causes of poor performance in construction projects, there is a dearth of empirical research that considers the influence of external environment and institutional pressures in the debate. The objective of this research was to examine the impact of external environmental factors and institutional pressures on the performance outcomes of construction firms. The role of institutional pressures as a mediator in that relationship was also evaluated. Using a self-administered questionnaire, primary data was collected from 250 executives working in construction firms. This was then analysed using partial least squares structural equation modelling. The results demonstrated that both external environmental factors and institutional pressures have an impact on the performance of construction firms. In light of the institutional theory, the findings addressed a genuine research gap, as institutional pressures were discovered to mediate the relationship between external environmental factors and construction firm performance outcomes. This study contributes to the current debate about the causes of poor performance in construction firms by assisting managers in recognizing the impact of the aforementioned factors on a firm's performance.

 

Doi: 10.28991/CEJ-2022-08-05-09

Full Text: PDF


Keywords


Construction Firms; Performance Measures; External Environmental Factors; Institutional Pressures; Smart-PLS.

References


Balatbat, M. C. A., Lin, C. Y., & Carmichael, D. G. (2011). Management efficiency performance of construction businesses: Australian data. Engineering, Construction and Architectural Management, 18(2), 140–158. doi:10.1108/09699981111111120.

Yang, H., Yeung, J. F. Y., Chan, A. P. C., Chiang, Y. H., & Chan, D. W. M. (2010). A critical review of performance measurement in construction. Journal of Facilities Management, 8(4), 269–284. doi:10.1108/14725961011078981.

Lin, G., & Shen, Q. (2007). Measuring the Performance of Value Management Studies in Construction: Critical Review. Journal of Management in Engineering, 23(1), 2–9. doi:10.1061/(asce)0742-597x(2007)23:1(2).

Tan, Y., Shen, L., & Langston, C. (2012). Competition Environment, Strategy, and Performance in the Hong Kong Construction Industry. Journal of Construction Engineering and Management, 138(3), 352–360. doi:10.1061/(asce)co.1943-7862.0000407.

Dorsey, D., & Mueller-Hanson, R. (2017). Performance management that makes a difference: An evidence-based approach. SHRM science to practice series. Available online: https://www.shrm.org/hr-today/trends-and-forecasting/special-reports-and-expert-views/documents/performance%20management.pdf (accessed on February 2022).

Aragón-Correa, J. A., Marcus, A. A., & Vogel, D. (2020). The effects of mandatory and voluntary regulatory pressures on firms’ environmental strategies: A review and recommendations for future research. Academy of Management Annals, 14(1), 339–365. doi:10.5465/annals.2018.0014.

Oyewobi, L. O., Windapo, A. O., & Rotimi, J. O. B. (2017). Determinants of construction organisational performance: A partial least square-path analytic method. Journal of Financial Management of Property and Construction, 22(1), 37–61. doi:10.1108/JFMPC-05-2016-0021.

Pati, R. K., Nandakumar, M. K., Ghobadian, A., Ireland, R. D., & O’Regan, N. (2018). Business model design–performance relationship under external and internal contingencies: Evidence from SMEs in an emerging economy. Long Range Planning, 51(5), 750–769. doi:10.1016/j.lrp.2018.01.001.

Oyewobi, L. O., Windapo, A., Rotimi, J. O. B., & Jimoh, R. (2020). Analysis of the South African construction industry business environment. Journal of Facilities Management, 18(4), 393–416. doi:10.1108/JFM-05-2020-0033.

DiMaggio, P. J., & Powell, W. W. (n.d.). The iron cage revisited institutional isomorphism and collective rationality in organizational fields. Economics Meets Sociology in Strategic Management, 143–166. doi:10.1016/s0742-3322(00)17011-1.

Asseburg, M. (2020). Reconstruction in Syria-Challenges and policy Option for the EU and its Member States. German Institute for International and Security Affairs, berlin, Germany. doi:10.18449/2020RP11.

Dacrema, E., & Talbot, V. (2019). Rebuilding Syria: The Middle East’s Next Power Game?. Ledizioni-LediPublishing, Milano, Italy. doi:10.14672/55260589.

Maya, R., & Ahmad, L. (2014). Determining the Most Appropriate Performance Indicators for Improving the Performance of Construction in Syria. Tishreen University Journal for Research and Scientific Studies - Engineering Sciences, 36(2), 321–338.

Devarajan, S., & Mottaghi, L. (2017). The economics of post-conflict reconstruction in MENA. World Bank Middle East and North Africa Region, Mena Economic Monitor, World Bank, Washington, United States. doi:10.1596/978-1-4648-1085-5.

Collier, P. (2003). Breaking the conflict trap: Civil war and development policy. Co-publication of World Bank and Oxford University Press, United States, United Kingdom. doi:10.1596/0-8213-5481-7.

Keats, B. W., & Hitt, M. A. (1988). A Causal Model of Linkages among Environmental Dimensions, Macro Organizational Characteristics, and Performance. Academy of Management Journal, 31(3), 570–598. doi:10.5465/256460.

Wu, D. (2009). Measuring performance in small and medium enterprises in the information and communication technology industries, Ph.D. Thesis, RMIT University, Melbourne, Australia.

Enshassi, A., Mohamed, S., & Abushaban, S. (2009). Factors affecting the performance of Construction projects in the Gaza Strip. Journal of Civil Engineering and Management, 15(3), 269–280. doi:10.3846/1392-3730.2009.15.269-280.

Vogl, B., & Abdel-Wahab, M. (2015). Measuring the Construction Industry’s Productivity Performance: Critique of International Productivity Comparisons at Industry Level. Journal of Construction Engineering and Management, 141(4), 04014085. doi:10.1061/(asce)co.1943-7862.0000944.

Tariq, H., & Rehman, M. (2020). An Empirical Analysis of Organizational Performance of Construction Companies in Pakistan through Mediating Role of Conflict Management Effectiveness. Review of Economics and Development Studies, 6(2), 571–584. doi:10.47067/reads.v6i2.224.

Gunasekara, K., Perera, S., Hardie, M., & Jin, X. (2021). A contractor-centric construction performance model using non-price measures. Buildings, 11(8). doi:10.3390/buildings11080375.

Otali, M., Idoro, G., & Udo, G. (2020). Modelling the Relationship between the Level of Adoption of Sustainability Practices and Performance of Construction Firms Using Structural Equation Modelling. Baltic Journal of Real Estate Economics and Construction Management, 8(1), 129–151. doi:10.2478/bjreecm-2020-0010.

Mojumder, A., & Singh, A. (2021). An exploratory study of the adaptation of green supply chain management in construction industry: The case of Indian Construction Companies. Journal of Cleaner Production, 295, 126400. doi:10.1016/j.jclepro.2021.126400

.Maya, R. A. (2016). Performance management for Syrian construction projects. International Journal of Construction Engineering and Management, 5(3), 65-78. doi:10.5923/J.ijcem.20160503.1.

Black, J. S., Bright, D. S., Gardner, D. G., Hartmann, E. H., Lambert, J., Leduc, L. M., Leopold, J., O’Rourke, J. S., Pierce, J. L., Steers, R. M., Terjesen, S., & Weiss, J. (2019). Organizational Behavior. Openstax, Houston, United States. Available online: https://openstax.org/details/books/organizational-behavior (accessed on February 2022).

Almansoori, M. T. S., Rahman, I. A., Memon, A. H., & Nasaruddin, N. A. N. (2021). Structural Relationship of Factors Affecting PMO Implementation in the Construction Industry. Civil Engineering Journal, 7(12), 2109–2118. doi:10.28991/cej-2021-03091781

Marcus, J., & Van Dam, N. (2019). Handbook Organisation and Management: A Practical Approach (1st Ed.). Routledge, Oxforshire, United Kingdom. doi: 10.4324/9781003022435

Zainal, R., Hamza, G., Manap, N., & Shahifah Syahrom, N. (2019). Significant Ways to Improve the Performance of Medium and Large Local Contractors in the Jigawa State, Nigeria. MATEC Web of Conferences, 266, 03018. doi:10.1051/matecconf/201926603018

Ezenekwe, C. I. (2020). Effect of Environmental Factors On Firm Productivity In Manufacturing Firms In Anambra State, Nigeria. International Journal of Innovative Social Sciences & Humanities Research, 8(1), 133–143.

Bui, T. N. (2020). How do financial leverage and supply chain finance influence firm performance? Evidence from construction sector. Uncertain Supply Chain Management, 8(2), 285–290. doi:10.5267/j.uscm.2019.12.003.

Sun, M., & Meng, X. (2009). Taxonomy for change causes and effects in construction projects. International Journal of Project Management, 27(6), 560–572. doi:10.1016/j.ijproman.2008.10.005.

Sepasgozar, S. M. E., & Davis, S. (2018). Construction technology adoption cube: An investigation on process, factors, barriers, drivers and decision makers using NVivo and AHP analysis. Buildings, 8(6), 12–15. doi:10.3390/buildings8060074.

Uusitalo, P., & Lavikka, R. (2021). Technology transfer in the construction industry. Journal of Technology Transfer, 46(5), 1291–1320. doi:10.1007/s10961-020-09820-7.

Mak, A. K. Y., Chaidaroon, S. (Sean), Poroli, A., & Pang, A. (2021). Understanding organizational and socio-cultural contexts: A communicative constitutive approach to social license to operate among top Hong Kong companies. Public Relations Review, 47(3), 102055. doi:10.1016/j.pubrev.2021.102055.

Daineko, L. V., Goncharova, N. V., Larionova, V. A., Karavaeva, N. M., & Sheveleva, A. E. (2021). Socio-Cultural Impact of Church Building in Russia (the Case of the Cathedral of Saint Martyr Catherine in Ekaterinburg). IOP Conference Series: Earth and Environmental Science, 666(6). doi:10.1088/1755-1315/666/6/062082.

Hsu, P. F., Hu, P. J. H., Wei, C. P., & Huang, J. W. (2014). Green Purchasing by MNC Subsidiaries: The Role of Local Tailoring in the Presence of Institutional Duality. Decision Sciences, 45(4), 647–682. doi:10.1111/deci.12088.

Kondra, A. Z., & Hinings, C. R. (1998). Organizational diversity and change in institutional theory. Organization Studies, 19(5), 743–767. doi:10.1177/017084069801900502.

Dacin, M. T. (1997). Isomorphism in context: The power and prescription of institutional norms. Academy of Management Journal, 40(1), 46–81. doi:10.2307/257020.

Fuenfschilling, L., & Truffer, B. (2014). The structuration of socio-technical regimes - Conceptual foundations from institutional theory. Research Policy, 43(4), 772–791. doi:10.1016/j.respol.2013.10.010.

Powell, W. W., & DiMaggio, P. J. (1991). The New Institutionalism in Organizational Analysis. University of Chicago Press, Chicago, United States. doi:10.7208/chicago/9780226185941.001.0001.

Barrena Martínez, J., López Fernández, M., & Romero Fernández, P. M. (2016). Corporate social responsibility: Evolution through institutional and stakeholder perspectives. European Journal of Management and Business Economics, 25(1), 8–14. doi:10.1016/j.redee.2015.11.002.

Sowa, J. E. (2009). The collaboration decision in nonprofit organizations: Views from the front line. Nonprofit and Voluntary Sector Quarterly, 38(6), 1003–1025. doi:10.1177/0899764008325247.

Heugens, P. P. M. A. R., & Lander, M. W. (2009). Structure! Agency! (and other quarrels): A meta-analysis of institutional theories of organization. Academy of Management Journal, 52(1), 61–85. doi:10.5465/AMJ.2009.36461835.

Zorn, T. E., Flanagin, A. J., & Shoham, M. D. (2011). Institutional and noninstitutional influences on information and communication technology adoption and use among nonprofit organizations. Human Communication Research, 37(1), 1–33. doi:10.1111/j.1468-2958.2010.01387.x.

Meyer, J. W., & Rowan, B. (1977). Institutionalized Organizations: Formal Structure as Myth and Ceremony. American Journal of Sociology, 83(2), 340–363. doi:10.1086/226550.

Greenwood, R., Oliver, C., Lawrence, T. B., & Meyer, R. E. (2004). The SAGE handbook of organizational discourse. SAGE Publications Ltd, Newbury Park, United States. doi:10.4135/9781848608122.

Dolnicar, S., Irvine, H., & Lazarevski, K. (2008). Mission or money? Competitive challenges facing public sector nonprofit organisations in an institutionalised environment. International Journal of Nonprofit and Voluntary Sector Marketing, 13(2), 107–117. doi:10.1002/nvsm.311.

Fehan, H., & Aigbogun, O. (2021). Influence of internal organizational factors and institutional pressures on construction firms' performance. Construction Economics and Building, 21(2), 81-99. doi:10.5130/ajceb.v21i2.7593.

Faul, F., Erdfelder, E., Lang, A. G., & Buchner, A. (2007). G*Power 3: A flexible statistical power analysis program for the social, behavioral, and biomedical sciences. Behavior Research Methods, 39(2), 175–191. doi:10.3758/BF03193146.

Duarte, P. A. O., & Raposo, M. L. B. (2010). A PLS model to study brand preference: An application to the mobile phone market. Handbook of partial least squares, 449-485. Springer, Berlin, Germany. doi:10.1007/978-3-540-32827-8_21.

Hair, J. F., Sarstedt, M., Pieper, T. M., & Ringle, C. M. (2012). The Use of Partial Least Squares Structural Equation Modeling in Strategic Management Research: A Review of Past Practices and Recommendations for Future Applications. Long Range Planning, 45(5–6), 320–340. doi:10.1016/j.lrp.2012.09.008.

Leguina, A. (2015). A primer on partial least squares structural equation modeling (PLS-SEM). International Journal of Research & Method in Education, 38(2), 220–221. doi:10.1080/1743727x.2015.1005806.

Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing Theory and Practice, 19(2), 139–152. doi:10.2753/MTP1069-6679190202.

Hair, J. F., Hult, G. T. M., Ringle, C. M., Sarstedt, M., Danks, N. P., & Ray, S. (2021). Partial Least Squares Structural Equation Modeling (PLS-SEM) Using R. Classroom Companion: Business, Springer, Cham, Switzerland. doi:10.1007/978-3-030-80519-7.

Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135. doi:10.1007/s11747-014-0403-8.

Chin, W. W. (1998). The partial least squares approach to structural equation modeling. Modern methods for business research, 295(2), 295-336.

Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares path modeling in international marketing. Advances in International Marketing, 20(January), 277–319. doi:10.1108/S1474-7979(2009)0000020014.

Tenenhaus, M., Vinzi, V. E., Chatelin, Y. M., & Lauro, C. (2005). PLS path modeling. Computational Statistics and Data Analysis, 48(1), 159–205. doi:10.1016/j.csda.2004.03.005.

Preacher, K. J., & Hayes, A. F. (2004). SPSS and SAS procedures for estimating indirect effects in simple mediation models. Behavior Research Methods, Instruments, & Computers, 36(4), 717–731. doi:10.3758/bf03206553.

Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40(3), 879–891. doi:10.3758/BRM.40.3.879.

Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182. doi:10.1037/0022-3514.51.6.1173.

Nitzl, C., Roldan, J. L., & Cepeda, G. (2016). Mediation analysis in partial least squares path modelling, Helping researchers discuss more sophisticated models. Industrial Management and Data Systems, 116(9), 1849–1864. doi:10.1108/IMDS-07-2015-0302.

Akanni, P. O., Oke, A. E., & Akpomiemie, O. A. (2015). Impact of environmental factors on building project performance in Delta State, Nigeria. HBRC Journal, 11(1), 91–97. doi:10.1016/j.hbrcj.2014.02.010.

Asamoah, R. O., Baiden, B. K., Nani, G., & Kissi, E. (2019). Review of exogenous economic indicators influencing construction industry. Advances in Civil Engineering, 2019, 1–8. doi:10.1155/2019/6073289.

Atuahene, B. T., & Baiden, B. K. (2018). Organizational culture of Ghanaian construction firms. International Journal of Construction Management, 18(2), 177–188. doi:10.1080/15623599.2017.1301043.

Sait, S. S., Muharam, F. M., Chin, T. A., Sulaiman, Z., Zakuan, N., & Choon, T. L. (2018). Impacts of technology assessments on firm performance. AIP Conference Proceedings. doi:10.1063/1.5080062.


Full Text: PDF

DOI: 10.28991/CEJ-2022-08-05-09

Refbacks

  • There are currently no refbacks.




Copyright (c) 2022 Hassan Fehan, Osaro Aigbogun

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
x
Message