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Abstract
Business definition (either explicitly or implicitly defined) matters in the construction sector in Belgium. A business is a three‐dimensional ‘strategic space’ within an industry, defined by the buyer types targeted, product types sold and geographical reach. The research setting is one of family owned small non‐diversified firms in the construction industry. The sample consists of 61 firms. Data on these firms were gathered for the year 2006. Firms with a similar business definition within the construction sector were clustered. Three clusters could be delineated: residential, non‐residential and a civil engineering business. Performance differs between the three businesses. Performance was measured with perceptions on sales, sales growth, gross sales margin and return on invested capital. Perceived performance correlated with financial performance. Competitive forces differ according to the business. Firms in the civil engineering sector working for government agencies performed best.
Notes
1. Defining the business can be seen as an important element of a mission statement (Johnson et al., Citation2005, p. 13). The notion of business definition should not, however, be used interchangeably with the term ‘mission’. However, an elaboration on the issue of mission statements is beyond the scope of this paper.
2. In this paper the term ‘firm’ refers to the company itself for single business firms or to a strategic business unit (SBU) in multiple business firms. The paper is written mainly from the viewpoint of a single business firm.
3. Such subcontracting (between building firms) does not distort the measures used in this study (cf. infra). Whether or not a general contractor performs certain value activities by himself/herself or instead works with subcontractors, this has no influence on the percentage of sales in the residential sector, for instance, all else being equal.
4. The specific measurement of business definition is industry dependent.
5. Asking a number of kilometres is also not an option.
6. This discussion is based on our insights in the sector and on publications such as Datamonitor, Construction & engineering in Belgium (Datamonitor, Citation2006, Citation2007). To our knowledge, Datamonitor does not distinguish competitive forces between non‐residential sector and the civil engineering sector.
7. An anonymous referee points to the fact that in the case of house developers, the developer becomes the ‘buyer’ (or ‘client’) facing the general contractor. Those developers are indeed even more powerful than ‘normal’ buyers. While housing developers do exist in Belgium, their impact on the construction sector is quite modest relative to the importance of ‘normal’ buyers.