Journal of Management Research

Vol. 10, No. 2, August 2010, pp. 103-115

Innovation and Competitiveness in Construction Companies

A Case Study
Eugenio Pellicer, Victor Yepes and Ronald J. Rojas
Abstract Todays global economy demands that every organization invest in R&D. This is especially true in the construction industry given the current gap in R&D compared to other sectors, which in turn affects the competitiveness of the industry. In this study, innovation and competitiveness of a typical Spanish company are analyzed from two perspectives: internal and external. The internal analysis is based on direct observation over a twelve-month period, and includes interviews with the managerial personnel. The external analysis focuses on the construction market and its influence on the company. From this study, conclusions are drawn to strategically improve competitiveness in construction companies through R&D. A change in the business culture of construction companies is essential, namely one initiated by leaders in the sector. Systemization of innovation should be pursued not only through tangible projects, but also through process management. Keywords: Competitiveness, construction companies, organizational strategy, R&D, Spain

INTRODUCTION
Innovation is now considered a strategic mainstay for organizational competitiveness worldwide. Current economic globalization, accelerated by the removal of tariff barriers, the reduction in transport costs, the boom in information and communication technologies, and the
Eugenio Pellicer (Corresponding Author) School of Civil Engineering Universidad Politcnica de Valencia Camino de Vera, s/n, 46022 Valencia, Spain Victor Yepes ICITECH Universidad Politcnica de Valencia Camino de Vera, s/n, 46022 Valencia, Spain Ronald J. Rojas Department of Business Management Universidad Politcnica de Valencia Camino de Vera, s/n, 46022 Valencia, Spain

internationalization of investments, is drastically changing the scenario in which the worlds socioeconomic players perform. Enterprises, universities, research centers, regions and nations are all challenged to remain competitive and, moreover, to adapt to the new regulations that are constantly being enacted. There seems to be a unanimous agreement among authors that innovation is vital for a nations economic growth (Rosenberg, 2000) and or for its competitiveness (Porter, 1990). A countrys innovative capacity depends on a number of key factors: public policies that facilitate the creation of enterprises as well as scientific and technological research projects; political and economic stability; private investment; laws protecting intellectual property; the public awareness of the advantages of technology; ongoing collaboration between enterprises and universities; and a good quality higher education system (Hu, Mei-Chih and Mathews, 2005).

Different international (European Commission, 2005; World Economic Forum, 2005; OECD, 2005) and national (COTEC, 2007) reports on innovation offer insight into the main weaknesses in the Spanish innovation system in the national economy. Although the government has made a commendable effort, these reports indicate that the situation is still alarming. For example, domestic spending on R&D totalled 10,197 million Euros in 2005 (COTEC, 2007), which represents 1.13% of the GDP a 14% increase since 2004. This percentage is, however, far from the target figure for R&D spending specified in the Lisbon Strategy (CICYT, 2003), which is around 3% of the GDP of the EU-25 by the year 2010. Porter (1998) suggests that it is up to enterprises to develop and maintain competitive advantages. Consequently, management must be aware of the fundamental role played by innovation in achieving competitive success. Nonetheless, in the Spanish case, enterprises spend only 0.57% of the GDP on R&D, compared to 2.45% and 2.93% invested by companies in Finland and Sweden, respectively (European Commission, 2005). According to SEOPAN (2007), the Spanish construction sector accounts for 17.8% of the GDP and generates 12.7% of the total employment in the domestic economy. Nevertheless, this sector allotted only 0.48% of its business turnover to innovation efforts in 2004 (INE, 2005). A recent survey of the structure of the construction industry also revealed the potential for innovation in this sector (Ministerio de Fomento, 2006). Of the 377,070 construction companies surveyed (for 2004), only 822 carried out R&D activities, which means that only 0.2% of all these enterprises invested in such undertakings. Of these 822 companies, 616 (74.9%) do not carry out R&D within the enterprise itself but instead entrust these actions to technology centers, specialized laboratories or universities. Finally, it should also be emphasized that the total spending on R&D by enterprises with a thousand or more employees accounts for 42.9% of the total figure for construction companies. Furthermore, these enterprises are characterized by the fact that 72%
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of their resources is assigned to fund internal R&D projects, which shows they have considerable physical and financial resources to set up specialized laboratories for these purposes as well as to create specific posts within this area. Innovation is generally defined in terms of its success once introduced in the market (Gee, 1981; Pavn and Goodman, 1981; Grant, 1998). This highlights the close relationship between innovation and competitiveness, on the one hand, and between novelty and satisfaction of a social need, on the other. Analogously, and specifically for the construction sector, innovation could be defined as activities that result in new products or processes, or introduce substantial improvements in existing ones (AENOR, 2006a). Innovation, however, cannot be viewed solely from a technological perspective. In fact, Hamel (2006) argued that brand management and the divisionalised organization structure generated more sustained competitive advantages than traditional research. Similarly, Kim and Mauborgne (1999) claimed that value innovations can not only create new markets, but also produce tangible and intangible profits. In this regard, the third edition of the OECD Oslo Manual (2005) extended the concept of innovation to include non-technological innovation in business activities, that of processes, organization, or commercialization. Innovative intensity does not depend exclusively on companies. The policies adopted by the government and the institutions within a particular country are highly relevant in the creation of a favorable environment that facilitates innovation. Within this context, governments, as principal customers, legislators and sources of funding, play a prominent role in promoting R&D in the construction sector (Hippel, 1988; Gann, 1997; Mitropoulos and Tatum, 2000; Seaden and Manseau, 2001). Thus, the State should make every effort to foster close relationships among enterprisesuniversitiesresearch centers, not only nationally but also on an international scale. The efforts made by the Spanish government to promote R&D are centered around two main axes:

Journal of Management Research

the Spanish National R&D Plan, which chiefly targets the public sector (universities and the centers run by the Spanish National Research Council CSIC), and the Center for the Development of Industrial Technology, which targets the private sector (Escorsa, 2005). The National R&D Plan for 2004-2007 aims basically to contribute to the generation of knowledge, and to serve the general public by improving social welfare (CICYT, 2003). To this end, the government has offered a series of tax benefits to companies that spend on R&D, as provided by the Law 4/2004 on Income Tax (BOE, 2004). In a recent attempt to boost construction companies participation in projects of an innovative nature, the Spanish government published a new contract clause document that includes, when it comes to appraising technical bids, a fifth variable concerning technology and R&D that may total 10% or 25% of the overall score, depending on the technological relevance of the proposal (Pellicer, Yepes and Correa, 2008). This document grants merit to the documentary proof that can be showed to justify the on-site use of technologies developed within the framework of R&D projects that enhance the quality and technical value of the construction. This justification must be provided by means of accreditation in accordance with the series of standards UNE 166000. The UNE 166000 family of standards (AENOR, 2006b; AENOR, 2006c), which were recently recognized officially in Spain and also in Portugal (Teixeira, Pellicer and Yepes, 2009), represent a fundamental tool for systemizing R&D management, in general, and for certifying specific R&D projects, in particular (Pellicer et al., 2008).

analysis of the functioning of a representative construction company and its innovative potential. The latter allows for an examination of the construction sector as part of the national economy so as to identify the external conditions that affect the competitive success of the enterprises in the sector. The internal analysis of the selected company reveals an enterprise with a workforce of over 1500 direct employees in ten delegations; it has long proven its experience in the sector; its production includes both civil works and building; its annual turnover is around two hundred million Euros; and finally it has the capacity to acquire (either internally or externally) economic resources to finance R&D projects. Applying European Commission criteria (2006), it can be classified as a large company. Nevertheless, this company has not yet taken into consideration R&D as a business strategy, even though large enterprises are the investing leaders in Spains R&D, as stated previously. For the sake of confidentiality, complete details about this firm are not specified in this paper. In addition to the specific features of a Spanish company, the internal analysis shed light on the strengths and weaknesses that characterize this enterprise and the skills it has with respect to its competitors. This analysis was supported by four studies into the impact organizational factors have on the companys innovative capacity. In this context, then, authors such as Tatum (1987) examined the influence of organizational structure on innovative performance. Further, Nam and Tatum (1997) highlighted leadership as a key element in this performance while Betts, Clark, Grilo and Miorzzo (1999) stressed the role played by information technologies in the innovative performance of enterprises. Lastly, Egbu, Botterill and Bates (2001) focused on the importance of knowledge and intellectual capital management practices. For the internal analysis of this study, a qualitative research methodology was used (Miles and Huberman, 1994; Berg, 1998). Project

THE CASE STUDY

This research aims to identify the key determining factors inhibiting or reinforcing the innovative capacity of Spanish construction companies in a competitive environment on a national level. Since companies operate within a productive system, this study is structured from two perspectives: internal and external. The former involves an in-depth
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management, in general, and its application to the construction sector in particular, is currently seen as a social behavior (Engwall, 2003; Cicmil, Williams, Thomas and Hodgson, 2006), so the qualitative methodology is suitable for its study. Within the wide range of possibilities, a case study approach to the research was chosen (Yin, 1984; Mintzberg and McHugh, 1985; Eisenhart, 1989). The general method of working was to use direct observation, together with interviews, work groups and analyses of internal reports and technical documents over a twelve-month period in the different delegations the company has scattered around the country. The method proposed by Bartunek and Louis (1996) was adapted for this research. The field work was carried out by three individuals: the first was totally involved in the company and committed to the research; the second dealt with the formal relationships and coordinated the activities to be performed by the first; finally, the third acted as an adviser and guide for the whole process. For this particular case study, these roles were assumed by the authors of this paper and weekly meetings were held to discuss methodological issues, examine results and draw initial conclusions that allowed the study to progress. The external perspective, by contrast, essentially focused on determining exogenous factors affecting the competitiveness of the company. This perspective brought to light the opportunities and threats in the construction sector, thus defining the competitive environment with all its risks and potential benefits. Other authors have also examined external influences. Pries and Janszen (1995) reported that the environment is a factor determining the innovative performance of construction companies, while Seaden and Manseau (2001) underscored the effectiveness of public policies as key factors in the innovative capacity of the enterprises within this sector. The external perspective of our study took into account the analysis of different sources of information, such as official documents, technical and scientific journals, the registry of companies, technical reports, congress proceedings, websites, and many

others. The whole team participated in this work. These two perspectives allow companies to examine their innovative potential in the economy. Dikmen, Birgonul and Artuk (2005) pointed out that a companys resources and market forces were key factors determining the innovative capacity of an enterprise, and that they should be evaluated from a multidimensional perspective. Consequently, analyzing the results from these two perspectives, a suitable strategy for R&D activities could be proposed.

THE ROLE OF LEADERSHIP IN INNOVATION

Business leaders are directly responsible for the competitive success of companies and, therefore, for inspiring, fostering and protecting the creative initiatives of their employees. As a result, it is essential to know how these leaders perceive organizational innovation for the competitive success. It is essential as well to ascertain their sense of responsibility and commitment in the innovative process of the company, their organizational culture and other factors that, on the whole, are required for an organization to be able to innovate and therefore to be in a position to respond to the challenges offered by todays competitive environment. In order to gather firsthand information and opinions on the subject of innovation held by the directors of the company under study, twenty executives were interviewed to find out more about their business perception. These executives were the general manager of the company, managers of the different departments of the firm (purchasing, personnel, finance, town planning, environment, materials, quality and legal), and the directors of the companys ten regional delegations. Moyser (1988), on the other hand, classified this type of interview as elite, underlining the importance of talking to those who are in positions of leadership with the idea of generating information and then comparing reality and theory. Moreover, the flexible structure of the interviews allowed for a broader understanding of the organizational
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Table 1: Summarized Results of Direct Interviews with Executives

Factors Conceptual framework General Results Innovation is associated almost exclusively to research and, moreover, no distinction is drawn between exploitation and innovation activities. The company does not have an innovation system; furthermore, its competitive strategy does not seem to incorporate policies that foster innovation. The organisational structure is rigid and controlling. The company culture is not innovative; although it is acknowledged as being important, in relation to the size of the firm, no physical or financial resources are allocated to such purposes. Changes take place only in the basic processes and only when major problems are detected. Innovation is not a priority for the company. The whole of the companys efforts are focused on its day-to-day activities. Nevertheless, the company does keep track of its main competencies (albeit in an unorganised way) and monitoring is carried out by several different individuals. The companys current situation of urgency does not favour reflection and knowledge generation. Fostering creativity and generating innovative concepts are not priorities.

Strategic framework

Organizational factors

Process innovation Technological innovation (product/service)

Knowledge and learning management

culture of the company as far as innovation is concerned. In this regard, Valls (1997) pointed out the following advantages to using this type of interview: richness of contextualiszed information; flexibility, diligence and economy; a qualitative counterpoint to quantitative results, accessibility to information that is difficult to observe; and feasibility of exploitation. Table 1 shows a summary of the main conclusions drawn from the direct interviews with executives. Most of the executives surveyed (70%) think that innovation is something related to research, an endeavour into which money must be spent in order to generate ideas. Indeed, innovation can be conceived after a formalized research process in which the company has to invest human and financial resources. However, innovation can also come from new combinations of already-existing knowledge and, in some cases, from the successful implementation of a new or improved organizational technique. Likewise, the same percentage of respondents were unable to clearly
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distinguish between exploitation and innovation activities. In this regard, it should be noted that a proper understanding of innovation (especially by management staff) is essential to enhance the competitiveness of the company. Most respondents (60%) consider that the manner in which the company performs its activities is similar to that of other construction companies. Consequently, it can be said that the enterprise is not significantly different from its competitors, which means that it has no advantage over them when it comes to winning bids. It should be remembered that if a company is to create and maintain a competitive advantage within a particular national or international sector, essentially it must offer goods or services that are valuable to its clients, that is, they must satisfy the needs and expectations customers have and which are not yet satisfied. Alternatively, a company can offer a value which is similar to that of its competitors but at a lower cost through the efficient use of its resources. What is more, these
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two strategies may be followed at the same time (Porter, 1998). These respondents also consider innovation to be an irregular process that is the fruit of an unexpected idea that appears in a moment of inspiration or mental perceptiveness, and it cannot therefore be systematized. Although many companies undoubtedly innovate in a discontinuous way, in the wake of a new product launched in the market by a competitor or after exposure to a good idea at a trade fair. However, it must be stressed that the best enterprises systematize their innovation processes. A clear majority (70%) of the respondents feel that the culture in the enterprise is not innovative. An innovative business culture also plays an important role in achieving a sustainable competitive advantage. Indeed, it is essential to encourage an innovative spirit within the company, as this will allow products and services to be created and renewed, all of which will result in enhanced competitiveness. Tatum (1989) stated that the innovative culture in construction companies included a constant search, an unremitting inquiring, and a pride in beating competitors in order to wholly improve the enterprise. In our study, the interviewed managers underlined the fact that the company has a rigid structure which focuses on control. In this sense, it is crucial that the ideas be generated and projects set within a flexible organizational structure that fosters the creativity of its human resources and that, at the same time, allows work teams to be trained in the field of innovation. As far as the innovation of productive processes is concerned, most executives (80%) consider that the enterprise is familiar with its core processes and that it concentrates all its efforts on ordinary operating activities, occasionally offering incremental improvements. They also add that changes only take place in such processes when serious problems are detected. Yet practically all the respondents (90%) indicate that the company uses several different people to carry out some kind of unorganized monitoring of the companys main competencies (talking to clients and suppliers, attending trade fairs, conducting detailed analyses
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of competitors products, reading technical journals, and so forth). It must also be pointed out that technological surveillance is an important task for the enterprise because if it is not watchful, it may be surprised at any time by the appearance of new products, new technologies, new competitors or changes in clients preferences, all of which may threaten its survival (Davidson, 2001). Finally, 60% of those interviewed state that the company is not really interested in generating knowledge and learning. They also add that people talk about creativity without having a clear idea of what it involves or what conditions foster it. Additionally, they argue that the situation of urgency the company usually finds itself in does not favor strategic reflection or the generation of knowledge.

STRATEGIC ANALYSIS OF THE COMPANY

Conceptualization
There are five main areas to be improved based on the present analysis: Conceptualization, strengths, weaknesses, opportunities and threats. Previous research has identified factors that determine a companys potential to innovate: size, age, capacity to absorb technology, strategies for developing new products, and capacity to deploy complementary assets (Cohen, 1995; Dodgson, 2000). Other factors that also determine a companys innovative potential are the nature of the technological opportunities, protection systems, industrial competitiveness and the position of the industry in the product life cycle (Pavitt, 1984; Dosi, 1988; Lundvall, 1992; Nelson, 1993; Utterback, 1994; Klevorick, Levin, Nelson and Winter, 1995; Eaton, 2001). Based on these two types of factors (internal and external), companies develop certain aspects that are essential to enhance their innovative capacity; nevertheless, this capacity in turn is determined by the industrial context in which they operate. In this section, the strategic outlook of the company from an internal and external perspective

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is explored. The internal analysis includes the companys strengths and weaknesses, aspects that determine its resource profile and its abilities with regard to its competitors. On the other hand, the external point of view highlights the opportunities and threats inherent to the sector within which the company must compete. The results of the research were used to draw up a strategic analysis of the company under study using the SWOT (Strengths, Weaknesses, Opportunities and Threats) model.

Strengths
The firm under study has a considerable wealth of tangible and intangible resources, which enable it to enhance both its capacity for innovation and its operating efficiency, and therefore its competitiveness. The tangible resources the company has available are common to other large and medium-sized firms and include elements such as delegations in the main towns and cities around the country, vehicles and equipment, coating and concrete mixing plants, mobile plants and financial capital, among others. In comparison to smaller firms, a company such as this has a greater financial capacity to cover the expenditure involved in R&D and to take on the risks inherent in such activities. This observation coincides with the results of other studies (OECD, 1982; Seaden, Guolla, Doutriaux and Nash, 2003), which indicate that smaller companies may have a greater risk aversion and lower intensity in the use of innovative practices than larger enterprises. The most important of the firms intangible resources are: 1) its select group of skilled staff who are well-suited for reaching the companys objectives; 2) its know how or years of experience in the public works and building sector; 3) its good will or its being recognized throughout the country for its capacity to successfully carry out the jobs it is contracted to do, as well as those it decides to undertake on its own behalf. Enjoying the reputation of being one of the companys suppliers in the national market means the firm will receive offers of a wider (and more
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up-to-date) range of goods and services. Several studies (Van de Ven, 1986; Tatum, 1989; Thomas and Bone, 2000; Reichstein, Salter and Gann, 2005) highlight the fact that the nature of the supply chain largely determines the quality and rate of innovation in that sector. These studies also indicate that this factor deserves special attention because the construction sector involves organizations that are responsible for the production, assembly and installation of systems, as well as a broad range of suppliers, consultants and users. Another point that should be underlined here is its close relationship with other areas of the holding (real-estate agents, town planning, etc.), which allows it to manage the sale and maintenance of its products in a quicker, more cost-effective manner; likewise, it also enables the firm to grasp the tastes and trends of the market. Indeed, intra- and extra-organizational relationships exert a considerable influence on the innovative performance of an organization. Finally, the companys interest in improving its productive processes as well as its commitment to the environment are reflected in its being awarded quality-assurance and environmental management standards certificates, respectively.

Weaknesses
Although the companys chief managers are aware of the competitive advantages of engaging in R&D, they have not undertaken any actions in that direction. Consequently, investment in research and development activities is found to be scarce with respect to other large national construction companies. More specifically, there is no R&D department for the research and development of new products or processes, nor to focus efforts on benchmarking from the technological point of view. The absence of an R&D department also limits the likelihood of designing and implementing a system which enables the company to identify and transfer the possible innovations that arise in response to some kind of problem or from the need to meet the requirements of sophisticated clients. Such a system would also provide its human resources with incentives to
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search for new ways of developing its activities (i.e, more economical, more environmentally-friendly materials, and so on). Another indicator of the companys deficient innovative culture is reflected in the few actions taken to participate in national or international organizations that promote R&D in the construction sector, such as the Spanish Construction Technology Platform (www.construction2030.org/ptec.php). The company does not seem willing to take risks, and that defies innovation (Tatum, 1989). Moreover, although investments are made in training, especially for the managerial staff, the strategic impact of such instruction is not taken into account when it comes to planning it. It may be advisable to follow training programs related to the new market trends. As a result, the company has little or no experience in highly promising areas such as home systems, solar and thermal power, and the like. The lack of experience in these areas, in turn, hinders the companys chances of participating in large-scale projects mainly offered in tenders by public organizations and with which it could undertake construction work with a greater added value. Due to the singularity of most of the work carried out in the construction sector, the company does not possess any detailed studies of the procedures used to do the building work; such studies could provide them with the chance to standardize (at least to a certain extent) some of the processes that are conducted on a more or less regular basis. Yet, in this regard, authors like Davies and Brady (2000) claimed that the episodic nature of the activities limits the opportunity to develop repeatable economies. Furthermore, they argued that there is a tendency to reinvent processes in each new project, and it can be difficult or impossible to transfer some of the detailed technical activities undertaken in one project to another.

of investment in R&D that offers it the chance to participate in a series of large-scale research projects, which will, in the long term, enable it to maintain a competitive advantage in both the national and international markets. Technological surveillance (either internal or external) can be used to identify the new technology requirements essential for the future. Similarly, it can take the leading lines of research in construction as a reference; these are contemplated in several (national and international) strategic research agendas. Once this agenda has been drawn up, the company could undertake research projects on two basic paths: internal or external. The former sets up a research laboratory that focuses its efforts on achieving three primary aims (Betz, 1987), i.e. lending support to current businesses, innovations in new business directions, and exploring new technologies. The second path involves externalizing R&D through specialized institutions, such as technology centers, research institutions, universities and knowledge-intensive business services. Exchanging knowledge through these institutions facilitates the development of new knowledge that can be used to innovate (Goverse, Hekkert, Groenewegen, Worrell and Smits, 2001). The most significant research institutions within the construction sector (with a national scope) are non-profit private institutions, public research centers, and private technology centers. The company under study could also take part in public tenders for joint R&D projects. Besides the potential advantages of their outcomes, these research projects may allow the firm to take advantage of the research experience of the other companies involved. Such strategic alliances may be seen as a means to leverage scientific and technical capabilities as well as to share financial risks (Kangari and Miyatake, 1997). Additionally, the firm may participate in projects on an international level, such as the framework programs funded by the European Union. It should be stressed that innovation is also conceived as being the incorporation of basic or

Opportunities
The enterprise studied is able to define a strategy

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existing technologies, available on the market, into the development of a new product or process (AENOR, 2006a). Consequently, the company can take advantage of the latest technological advances in the construction industry on the national or international market; such advances will allow the firm to considerably enhance its operations and reach optimal levels of safety and health in all its productive processes. Moreover, companies may benefit from the tax incentives the government offers to businesses that carry out R&D activities or for other technological innovation activities. In this context, it should be noted that the OECD periodically analyses the tax regulation of R&D investment in the main industrialized nations. In 2004, its report showed Spain to be the country that offers the greatest tax incentives on R&D spending in large enterprises, followed by Mexico, Portugal and Norway (OECD, 2006). As far as small and medium enterprises are concerned, Italy, Spain and Mexico are the countries that offer the highest tax incentives on R&D (WTO, 2006). Finally, it must be noted that the globalization of the economy and the companys capacities allow it to venture into (more sophisticated) external markets so as to learn better operating and management practices in the field of construction.

competitive performance from the technological point of view. Authors such as Kangari and Miyatake (1997) supported this idea and argued that a well-known status was developed with innovation leadership. The image of being a noninnovative company may also result in highly skilled professionals seeking positions in other enterprises that do have an innovative spirit and greater projection.

CONCLUSIONS AND PROPOSALS

There are numerous factors that affect the innovation process in construction companies. Among the most notable are the demand for new types of infrastructures, the globalization of markets, the strong competitive pressure, the standards concerning environmentally-friendly productive processes and occupational safety, stakeholders (consultancy firms, research institutions, business associations, etc.), communications, the quality of suppliers of goods and services, tax and innovation protection laws, the capacity to access loans, the availability of skilled workers, and the business culture, among others. The innovative performance of firms is enhanced by the synergic interaction among all these factors while the quality of life of the citizens within a given economy is determined by these companies as a whole. As a result, innovative performance is essential for companies that wish to reach and maintain a successful competitive position to develop scientific and technological capacities in a wide range of technical fields. On the other hand, although the company under study, like most construction groups, has other related areas (e.g. real estate), a close relationship among areas was not observed. More specifically, new technologies and market needs (demand pull) are not taken into account in the firms strategic plan. Nevertheless, the scant innovation management that does take place in the company is carried out in an informal manner (for example, some managers attend training sessions, perform benchmarking by attending trade fairs and congresses on the sector, and so forth).

Threats
The companys loss of competitiveness is its greatest threat. Such a detrimental effect could render the company unable to bid for contracts with a higher added value, that is to say, works that involve more specialized human and technical resources. It therefore finds itself with a progressively competitive disadvantage in public tenders due to the scarce evaluation of the R&D variable in addition to the constant arrival of new companies on the domestic market. The companys lack of innovation could also make its product portfolio obsolete. The companys reputation and prestige as a versatile, pioneering enterprise may also be affected by its lagging

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Innovation is not usually a priority for this kind of company. Its structure is rigid and focused on control. As a result, employees concentrate on dayto-day activities without the time, motivation or other factors essential to creating a favorable environment, one that stimulates members of the organization to generate creative ideas which enhance the competitive performance of the firm. Despite all the foregoing, our stay in the company allowed us to see that the technical particularities of certain works have forced the company to design new construction techniques (some of which are really quite innovative). Yet these efforts have not been given the attention they require, i.e. rewarding the staff involved in such designs, recording the details of the procedure in a suitable way so that it can be used again in the future, and legal protection, among many other factors. The following recommendations were drawn up from the analysis of the sector and the enterprise under study. If the company is to achieve competitive success, it is essential that top management staff design and produce an innovation agenda that sets out the most appropriate lines of research, which will enable it to enhance and maintain its competitive capacity. To this end, it is necessary to consider both the strategic analysis of the company, addressed in section 4, and the strategic lines of research included in different strategic agendas (for example, the one developed by the aforementioned Spanish Construction Technology Platform). In this sense, it should be stressed that the innovation agenda must not be limited exclusively to product and process innovations, but rather it is necessary to take into account innovations of an organizational nature (human resources, commercialization, control, etc.) as well as other factors that are seen as essential for the company to achieve competitive success. Accordingly, a specific department must be set up with the sole responsibility of managing R&D and, therefore, reaching the strategic objectives stated in the innovation agenda. Although such a department must have a fixed structure as far as the subject of personnel is concerned, the number
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of technicians actually ascribed to specific research projects will depend on the type and size of the studies. On the other hand, this department must also carry out a viability analysis for each of the projects on the agenda, thus allowing top management to decide whether the company has (or can have) the resources necessary to go ahead with the project or, on the contrary, whether it is more feasible to subcontract part or all of the project. Likewise, this department must be responsible for performing strategic functions for the company, such as technological surveillance, risk assessment, cooperation with other companies, universities and technology centers for carrying out joint technological adoption projects, and the legal protection of innovations. Moreover, this department should follow the pre-established procedure for certifying R&D projects and for obtaining the R&D management system certificate, which are stipulated in the UNE 166001 and UNE 166002 standards, respectively. It should also be stressed that the firm needs to maintain permanent training policies for its employees, which must be focused (in the short, medium and long term) on the technologies required to cover its present and future necessities. Because the company does not have the knowledge required to do this, it must set up a network of contacts with institutions outside the firm (universities, technology centers and business associations) to provide this training. It is equally essential for the company to consolidate its knowledge and experience by applying the new technologies like Internet and documental databases, the latter, for example, being useful to classify decisions, problems and solutions for future applications. The leaders of medium sized firms in the construction industry do not consider innovation as one of the companys priorities. Furthermore, there are conceptual gaps in considering innovation as an enterprise management process that can be systemized. One of the reasons which justify this is that most construction companies are working

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in a similar scenario; thus, innovation is not considered as a contest factor. Nevertheless, the technological improvements of these companies arise as a result of the resolution of continuous problems that appear in the construction site. However, the actual status quo could be broken at any moment. In fact, public administrations are considering innovation as an added value in the public bids, so large construction companies are starting to systemize their innovative efforts. This situation may mean that medium enterprises have to modify their attitudes towards innovation in order to maintain their competitiveness. In order to make that possible, they must make a change in their business culture, which should start with their leaders. With the aim of overcoming this disadvantage, the construction company will have to reorganize its hierarchy and add a R&D department. Integration

in business structures of national or international scope may promote the innovation and enhance personnel skills. Finally, it will have to manage the acquired knowledge, avoiding the repetition of the processes and solving the recurrent problems. To achieve this, construction companies already have qualified personnel with much experience in the public and private sectors; moreover, the existing quality and environmental management systems can ease the introduction of innovation management processes. To reach these goals, these enterprises should systemize innovation in two ways: the development of innovation projects and the management of processes. To this end, an adequate technological surveillance and collaboration with other technological partners in innovative projects should be the base for the accomplishment of these objectives.

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