Construction business failure: conceptual synthesis of causal agents

Abstract

Purpose – Business failure has evolved a major research domain, both of corporate finance generally and of construction management, equally. Much of this attention has focused on assessing business “health” to predict longevity, but less so, on causal agents of failure. The aim of this study is to synthesise published knowledge in the subject domain to explore construction failure agents.

Design/methodology/approach – Extant literature drawn from both corporate finance and construction management disciplines are synthesised. Subjective, textual analysis is undertaken and causal agents thematically grouped. A failure relationship model is derived that conceptualises construction business failure in relation to its operating universe.

Findings – Generic failure agents (GFA) (ordered, based on percentage frequency among the literature observed) are shown to be: managerial, financial, company characteristics, and macroeconomic. The first three are proffered to reciprocally interact within a “universe” defined by the latter. Numerous sub-causal agents (SCA) are attributed to each generic agent. The role of innovation is suggested to hold potential negative (as well as positive) impacts on mitigating GFA and SCA.

Research limitations/implications – Limitations relate to synthesis of contemporary published evidence, so a progressive iteration would be empirical study of identified agents within live construction environments. An implication is the call for research realignment; from emphasis on business health assessment, to that of root causal agents.

Practical implications – Advancement of theory relating to business failure has significant implications for construction management research.

Originality/value – The failure relationship model and its linkage to innovation is novel.