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The dilemma of scope and scale for construction professional service firms

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Jewell, C., Flanagan, R. and Lu, W. (2014) The dilemma of scope and scale for construction professional service firms. Construction Management and Economics, 32 (5). pp. 473-486. ISSN 1466-433X

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To link to this item DOI: 10.1080/01446193.2013.879194

Abstract/Summary

Construction professional service (CPS) firms sell expertise and provide innovative solutions for projects founded on their knowledge, experience, and technical competences. Large CPS firms seeking to grow will often seek new opportunities in their domestic market and overseas by organic or inorganic growth through mergers, alliances, and acquisitions. Growth can also come from increasing market penetration through vertical, horizontal, and lateral diversification. Such growth, hopefully, leads to economies of scope and scale in the long term, but it can also lead to diseconomies, when the added cost of integration and the increased complexity of diversification no longer create tangible and intangible benefits. The aim of this research is to investigate the key influences impacting on the growth in scope and scale for large CPS firms. Qualitative data from the interviews were underpinned by secondary data from CPS firms’ annual reports and analysts’ findings. The findings showed five key influences on the scope and scale of a CPS firm: the importance of growth as a driver; the influence of the ownership of the firm on the decision for growth in scope and scale; the optimization of resources and capabilities; the need to serve changing clients’ needs; and the importance of localization. The research provides valuable insights into the growth strategies of international CPS firms. A major finding of the research is the influence of ownership on CPS firms’ growth strategies which has not been highlighted in previous research.

Item Type:Article
Refereed:Yes
Divisions:Science > School of the Built Environment > Organisation, People and Technology group
ID Code:36194
Uncontrolled Keywords:Economies of scale, economies of scope, growth, professional services
Publisher:Taylor & Francis
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