Niche width, competitive positioning and performance of international construction contractors (1992-2009)

Abstract

Over the past few decades, the international construction industry has proven a dramatic development. However, the unstable international circumstance has enhanced the risks of this industry, where proper strategies are critical for the survival of international contractors. Based on organizational ecology theories, which initially stemmed from ecology and then introduced to business management and economics field, proper competitive positioning for international construction companies are investigated in this study. Niche width has been introduced as an indicator to reflect the resource utilization of international construction companies while location is defined as the contractors' distance from the market center. Using Engineering News-Record data on top 225 international contractors from 1992 to 2009, the U-shaped relationship between niche width and performance of contractor is proven in both product and geography dimensions, indicating the performance of contractors enhance with the expansion of niche width initially, and then subside. In addition, location shows significant effect on performance of international contractors. The proper location for contractors with narrow niche width is close to the geographic market center and far from the product market center; while the appropriate positions for contractors with wide niche width are opposite to those with narrow niche width. Although this research focuses mainly on top international contractors, the results may reflect the profile of the whole industry. Furthermore, the research method of this study could be replicated in other studies to enhance the understanding of the organizational competitive positioning in a complicated environment.