Competitiveness of Construction Organizations in South Africa

Abstract

The government patronizes and awards public sector construction projects to large construction companies in South Africa based on the premise that they are technically and financially capable of executing the projects. In spite of this assumption and important contributions made by the construction organisations in delivering high-profile construction projects, many clients report poor performance of contactors on public projects. This paper therefore investigates the competitive strategies being used by large construction companies, their financial performance and whether their knowledge of the business environment help in obtaining beneficial strategic fit and fiscal performance. This study intends to use the synthesis of industrial organisation, contingency and resource-based theories in developing measures of environmental factors and competitive strategies used by construction companies. Parametric and non-parametric statistics is used in analysing quantitative and qualitative data obtained from the questionnaire survey. It emerged that corruption and lack of transparency was perceived as the key exogenous environmental factor influencing the strategies adopted by construction companies, while manpower problems associated with trade unions was perceived as the key endogenous environmental factor. The results also indicate that the differentiation competitive strategies of achieving high quality and time which are negatively correlated to financial performance were viewed by the respondents as the best strategies to adopt. This research will contribute to the discourse on competitive strategies in the construction industry and best practices.