How (do) internal capabilities and the geography of business networks shape the performance of contractors in public procurement tenders? Evidence from the construction industry

Abstract

Public procurement tenders (PPTs) represent one of the largest sources of income for construction companies; the identification of factors that could favour the winning of these projects becomes more and more interesting. Our work aims to explore how firm-specific capabilities (project management, project administration and innovation) and the geography of its business network shape the success of contractors in winning PPTs, measured as the average value of projects won by the firms. We propose an empirical study of contractors involved in public procurement projects in the construction industry in three Italian regions from 2008 to 2012 employing a fuzzy set qualitative comparative analysis. This methodology allows analysing how different combinations of causal conditions contribute to an outcome. Our research highlights that there are three successful strategies for firms attempting to obtain high-value PPT projects: (1) invest in high-level project management capabilities, engage in business networks with distant clients and intensify innovation capacity; (2) invest in high-level project administration capabilities, engage in business networks with local clients and suppliers (within 100 km), report a large number of certifications and show a high innovation capacity; and (3) invest in growth strategies to increase the size of the company.

Keywords:

• Construction industry
• fuzzy set
• project management
• public sector procurement

Notes

1. The IMP Group was originally formed in the mid-1970s as a research project on “Industrial Marketing and Purchasing” by a group of researchers representing five European countries and universities: the Universities of Uppsala, Bath, UMIST, ESC Lyon and the Ludwig Maximilians University (Munich). The result of this first IMP Group study was published in the books “Industrial Marketing and Purchasing of Goods”, Håkansson (1982) and “Strategies for International Industrial Marketing” Turnbull and Valla (1986).

2. Logical remainders are truth table rows that lack enough empirical evidence to be subjected to a test of sufficiency (Schneider and Wagemann 2012); that is, they are rows in a truth table without enough cases in them.