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How public client’s control systems affect contractors’ innovation possibilities
Luleå University of Technology, Department of Civil, Environmental and Natural Resources Engineering, Industrilized and sustainable construction.ORCID iD: 0000-0003-0661-2828
Luleå University of Technology, Department of Civil, Environmental and Natural Resources Engineering, Industrilized and sustainable construction.ORCID iD: 0000-0001-9524-4814
Luleå University of Technology, Department of Civil, Environmental and Natural Resources Engineering, Industrilized and sustainable construction.ORCID iD: 0000-0002-1746-2637
2022 (English)In: Construction Innovation, ISSN 1471-4175, E-ISSN 1477-0857Article in journal (Refereed) Epub ahead of print
Abstract [en]

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.

Place, publisher, year, edition, pages
Emerald Group Publishing Limited, 2022.
Keywords [en]
Organizational control, Inter-organizational relationships, Innovation, Public procurement
National Category
Construction Management
Research subject
Construction Management and Building Technology
Identifiers
URN: urn:nbn:se:ltu:diva-90336DOI: 10.1108/CI-03-2022-0054ISI: 000827536500001Scopus ID: 2-s2.0-85134222633OAI: oai:DiVA.org:ltu-90336DiVA, id: diva2:1653207
Funder
Swedish Research Council Formas, 942-2016-126Swedish Transport Administration, TRV/2016/63119Available from: 2022-04-21 Created: 2022-04-21 Last updated: 2023-09-05
In thesis
1. How to promote innovation from an organizational control perspective: A case study of a public infrastructure client
Open this publication in new window or tab >>How to promote innovation from an organizational control perspective: A case study of a public infrastructure client
2022 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Within the infrastructure sector, a public client can have various roles and responsibilities that extend beyond its own organization, such as stimulating and supporting innovation. As an infrastructure project is seldom standardized, the client needs to procure each contract based on the relevant uncertainties and complexities for that specific context. To encourage a contractor’s compliance with the client’so bjectives, the client employs some degree of organizational control. When a public client procures all its infrastructure from contractors, it also needs to find ways of eliciting innovative solutions from the suppliers. Therefore, a public client needs strategies to both promote innovation by the contractors and direct and oversee the contractors’ work to ensure the deliverables meet the project’s objectives. The demands for increased innovation in the construction sector in general needs to be handled concomitant with the client’s need to check that the contractor delivers accordingly to the client’s objectives and demands. The overall purpose of this thesis is to explore the relationship between organizational control and promoting innovation by a public infrastructure client. More specifically, it explores how a public client can promote innovation by its contractors from an organizational control perspective. The theoretical background is provided by an organizational control framework (Ouchi, 1979; Aulakh et al., 1996), i.e. a client can manage and steer an agent via three different control systems: process, output, and social. The empirical data is derived from 47 semi-structured interviews, complemented by observations, from10 different infrastructure projects. The client (The Swedish Transport Administration; STA) is the same for each project, but the contractors differ. Two types of contractor are represented: contractors that have not worked with the STA before (“unfamiliar contractors”), and contractors that have worked with the STA before (“familiar contractors”). A majority of the contract type is design-build. Four appended papers, each presenting a public client perspective, provide the basis of the thesis. Previous findings that the client’s role is important for promoting innovation is explored further in this thesis from an organizational control perspective, emphasizing the role of the public client. It is important that during the procurement phase the client tries to find the right balance between achieving the intended objectives and creating space for innovation. Ex-ante planning is important, because how the client writes the control mechanisms into the procurement documents, and later the contract, has a direct effect on the opportunities for innovation by the contractors.In addition, the client has to manage the project in a way that does not cause irritation of frustration for the contractor, or hinder their work, thus supporting the view that organizational control should be enabling instead of coercive, so that the client’s input encourages innovation rather than creating obstacles. In addition, when adding a relationship history perspective on organizational control, an unfamiliar contractor (i.e. a contractor that has not worked with the client before) can find process control unsuitable and social control confusing, which means output control is probably the most appropriate approach to take when working with unfamiliar contractors. However, just relying on procurement strategies such as a design-build (DB)contract in combination with strict functional demands is not enough to promote innovation. Furthermore, a collaborative setting only seems to lead to innovative solutions if the client regards innovation as a mutual task and utilizes the collaborative setting for innovative co-creation. From the client’s perspective, the practical and managerial implication of this thesisis the importance of finding a balance between giving the contractor space to be innovative in the execution of the contract, and at the same time making sure that the requisite end product is delivered. The results of this thesis suggest that the client does not hand over the “how” to the contractor when it comes to executing the project, as would be expected in a DB contract. From the contractor’s perspective, the responsibility for innovation within a DB contract can be confounded by the client’s use of social control, by which the client may encourage discussions and collaboration regarding innovative solutions but blur the line over responsibilities. This could explain why social control often fails to have a positive impact on innovative output.

Place, publisher, year, edition, pages
Luleå: Luleå University of Technology, 2022
Series
Doctoral thesis / Luleå University of Technology 1 jan 1997 → …, ISSN 1402-1544
Keywords
infrastructure, organizational control, promoting innovation, public client, Sweden, control systems, inter-organizational, principal-agent
National Category
Construction Management
Research subject
Construction Management and Building Technology
Identifiers
urn:nbn:se:ltu:diva-90338 (URN)978-91-8048-079-6 (ISBN)978-91-8048-080-2 (ISBN)
Public defence
2022-06-17, A 109, Luleå, 09:30 (English)
Opponent
Supervisors
Available from: 2022-04-21 Created: 2022-04-21 Last updated: 2023-09-05Bibliographically approved

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Järvenpää, Anna-TheréseLarsson, JohanEriksson, Per-Erik

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