To read this content please select one of the options below:

Business failures in the construction industry

DAVID ARDITI (Illinois Institute of Technology, Department of Civil and Architectural Engineering, Chicago, IL 60616, USA)
ALMULA KOKSAL (Illinois Institute of Technology, Department of Civil and Architectural Engineering, Chicago, IL 60616, USA)
SERDAR KALE (Illinois Institute of Technology, Department of Civil and Architectural Engineering, Chicago, IL 60616, USA)

Engineering, Construction and Architectural Management

ISSN: 0969-9988

Article publication date: 1 February 2000

2989

Abstract

The objective of the research presented in this paper is to explore the factors associated with company failures in the context of the construction industry. To that end, the four quadrants of an ‘environment/response’ matrix developed by Boyle & Desai (1991. Journal of Small Business Management, 29, 33–42) are populated with Dun and Bradstreet's US business failure data for the construction industry. The study indicates that budgetary and macroeconomic issues represent 83% of the reasons for construction company failures. This implies that firms that take vigorous administrative measures to address budgeting issues and that react promptly to economic conditions by implementing appropriate strategic policies should be able to avoid failure. On the other hand, issues of adaptability to market conditions and business issues appear to have limited effects on company survivability (6% of the reasons for failure). This implies that administrative measures to fend off internal conflicts that originate for reasons beyond management's control and long‐term strategic decisions to regulate the firm's adaptation to market conditions can also help to prevent failure. An ‘input/output’ model appears to explain the business failure phenomenon better than the ‘environment/response’ one.

Keywords

Citation

ARDITI, D., KOKSAL, A. and KALE, S. (2000), "Business failures in the construction industry", Engineering, Construction and Architectural Management, Vol. 7 No. 2, pp. 120-132. https://doi.org/10.1108/eb021137

Publisher

:

MCB UP Ltd

Copyright © 2000, MCB UP Limited

Related articles