Antecedents of construction project coalitions: a study of the Spanish construction industry

Abstract

Research into the formation of alliances, relevant in the field of strategic management and especially, in the construction industry, is often explained in terms of interdependency and complementarities (exogenous factors). In contrast, the influence of a firm’s social relations networks (endogenous factors) has hardly been studied at all. Thus, a model is needed that includes both exogenous and endogenous factors as antecedents to the formation of strategic alliances in the construction industry. Cooperation in the construction sector is especially frequent, above all in public works programmes, as their scale requires coalitions of different‐sized firms. Accordingly, to explore how both exogenous and endogenous factors influence the formation of alliances, a social network analytical method—Multiple Regression Quadratic Assignment Procedure (MRQAP)—was applied to cooperative project coalitions in the Spanish public works construction sector from 2001–2007. Empirical findings confirm that construction companies form coalitions, principally on the basis of past alliances. Membership of business associations and groups is also a key factor, though the influence of geographic proximity is the most debatable result. In the construction industry, the formation of alliances is conditioned, among other factors, by previous social and economic relations that can generate the necessary information and trust for the selection of whichever partner is considered the most suitable for the development of the joint project.

Keywords:

• Social ties
• alliances
• inter‐organizational relations
• cooperation

Acknowledgements

This research was financially supported by the Ministerio de Ciencia y Tecnología (Ministry of Science and Technology), Spain (grant no. SEJ 2006–14369). Authors are grateful to the editor, Professor Will Hughes, and the four reviewers for their comments. Thanks also to SEOPAN export group by its collaboration.

Notes

1. Multiple Regression Quadratic Assignment Procedure.

2. Michael Porter (1990) defines a fragmented industry as that in which no firm holds a sufficiently important market share to influence the results of the industry and normally fragmented industries are made up of a great number of small and medium‐sized firms.

3. Ley de Contratos de Administraciones Públicas [Law on Contracts of Public Administrations] (Ley 13/1995) modified by Real Decreto Legislativo [Royal Legislative Decree] 2/2000.

4. In 2004, works to a value of 31 777 952 (thousands of [euro]) were put out to tender by public authorities, of which 10 648 119 were tendered by the Autonomous Regions and 10 386 280 by Local Authorities (in thousands of [euro]), which means that the territorial area of the Autonomous Regions may be considered satisfactory for the analysis of the strategic interdependence of the construction firms in this study.

5. The client services department of Dun & Bradstreet states that the order in which the SIC codes appeared in the report on the firm was not random but responded to the importance accorded to each one of the activities within the organization.

6. ANCOP: a national group of public works contractors. SEOPAN: an association of national construction firms. SEOPAN: Exporters of construction services. ANCI: a national association of independent construction firms. AERCO: a national association of construction firms involved in public works.

7. Spain is made up of a total of 17 Autonomous Regions, as well as the Autonomous Cities of Ceuta and Melilla and other territories in Northern Africa, which have a great degree of autonomy to manage certain affairs, including tendering for public works in those areas that have been transferred to them.

8. The analysis was performed for two periods in order to confirm the consistency of the obtained results. Also the analysis was carried out for other periods of adjudications and the results were practically the same.