Absorptive capacity of Malaysian SME construction organisations

Abstract

Absorptive capacity has been acknowledged as a critical component for organisations to sustain, compete and excel in the marketplace. With the current volatile environment, there are increased demand for new knowledge, skills and implementation of new technologies. Every organisation must have the ability to be able to absorb and leverage from new technologies. This research aims to identify the absorptive capacity of Malaysian small and medium enterprise (SME) construction organisations. The research design adapted was based on qualitative approach. 12 semi-structured interviews were conducted with SMEs operating in six different states in Malaysia. Data was analysed using NVivo 12 Pro software and thematic approach was used to categorize the data. This research found 29 main indicators of how construction SMEs develop their absorptive capacity and 10 factors influenced their absorptive capacity. Owners and employees with higher education background and with more industry experience tend to be more receptive to absorb new knowledge. In addition, human resource departments and formal office communications were found to have positive impacts on SMEs absorptive capacity. Suppliers and manufacturers were also identified as important external factors. This research provides clear indicators of how SME construction organisations can develop their absorptive capacity and further improve their productivity. It also provides indication for Construction Industry Development Board on how they can assist the SME construction organisations to absorb and apply new technology in construction processes.

Conceptualising a Framework for Construction Sector Capacity

“…The HRC also referred to the system of recruitment, training, team development, boarding program, benefits, health and safety and performance appraisal. Other research focused on technological capacity as it is a critical factor for innovation strategies in construction companies (Ercan, 2019;Kamal, et al, 2021). Different indicators for measuring the technological capacity of the contractors were found such as staff technological skills, on-job training scheme, investment in R&D, and top management's support (Ercan, 2019).…”

“…Different indicators for measuring the technological capacity of the contractors were found such as staff technological skills, on-job training scheme, investment in R&D, and top management's support (Ercan, 2019). In conjunction with technological capacity, absorptive capacity was discussed in the literature in terms of the main indicators of how construction companies develop their absorptive capacity and factors that influence their absorptive capacity (Waalkens, 2006;Kamal, et al, 2021). Regarding an overall view of capacity building, Kululanga (2012) developed a framework for capacity building of the construction industry in four levels: individual, organisational, industry and state levels.…”

“…An organisation with O2 capacity has 'supply and equipment capacity', 'infrastructure capacity', and 'set of procedures capacity' that enable their staff to carry out critical functions and produce acceptable outcomes (UNDP, 2005;Baser, et al, 2008;Brinkerhoff and Morgan, 2010;Bennett, et al, 2012;Levine, et al, 2013;Hambrick, Svensson and Kang, 2019;Dymnicki, et al, 2021). Previous work in the construction management field usually centred on specific components of O2 such as financial capacity, human resource capacity, and technology capacity (Tucker, Windapo and Cattell, 2015;Offei, 2016;Okoye, 2016;Arneson, 2018;Asante, Kissi and Badu, 2018;Mishra, 2018;Ercan, 2019;Kamal, et al, 2021). Other aspects of organisational capacity in the construction sector have not yet been explored.…”

Derivation of Risk Factors to Quantify the Risk of Safety Accidents for Small and Medium-Sized Enterprises in Construction Industry

“…Such the fact that many small construction companies tend to be negligent in safety management compared to large construction companies stems from poor financial structure and insufficient safety management capabilities and conditions [7][8][9][10][11]. Mid-to long-term construction disaster prevention plans and strategies have been continuously established and implemented by many countries and agencies, but a significant decrease in the safety accident rate has not been seen because they tend not to reflect and overlook the characteristics of small construction sites, which are usually composed of day workers with frequent relocations and changes [12][13][14]. Recently, as part of the construction safety reinforcement policies aimed at preventing industrial accidents and improving safety management at small construction sites, the Korean Ministry of Land, Infrastructure, and Transport and the Ministry of Employment and Labor have proposed measures for (1) ensuring substantiality of risk assessment on sites and (2) developing effective safety training materials and safety and health training inspection.…”