Classifying the Business Model Types of International Construction Contractors

Abstract

As the construction business environment becomes increasingly complex and competitive, business model innovation is being accepted as an essential factor in sustaining competitive advantage in the international construction market. Understanding existing business model types is a crucial part of business model innovation since business model types represent the status of current business models and hint toward business model innovation. However, the classification of business model types has rarely been addressed in the construction industry, and existing studies have conceptually classified them using subjective decisions that have limitations on their use in business model innovation. We quantified the business models of 72 international construction contractors from 2009 to 2014 using measurable variables for business model components, including international diversification, regional diversification, industry diversification, product diversification, human resources, physical resources, financial resources, project types, and geographical regions. Then the quantified business models were classified into business model types using two-step cluster analysis, and the performance differences between them were examined in terms of profitability, growth, and market competitiveness. We also examined how the classified business model types can be used in the business model innovation process. The results suggest the existence of three business model types used by international construction contractors and indicate significant performance differences among them. Our findings provide useful references for senior-level managers of international construction contractors to understand their current business model positions and find effective ways to innovate their business models.