Building competitive advantage: Innovation and corporate governance in European construction

This paper explores the relationship between corporate governance and innovation. This is examined through detailed interviews with the largest contractors in five European countries. The ability to undertake research and development in production technologies by contractors differs widely across different countries. This may be explained by the extent to which strategic control is in the hands of those who have the incentives and abilities to allocate resources to uncertain and irreversible investments in innovation. This is influenced by particular features of firm ownership, organisational and management structure, internal mechanisms to diffuse knowledge and links to external sources of knowledge. © 2002 Elsevier Science B.V. All rights reserved.