Business Strategy of Small and Medium-Sized Enterprise Construction Companies in Adopting Industrialised Building System in Malaysia

Abstract

This exploratory study outlines the business strategy that are being applied by small and medium-size enterprises (SME) construction companies in adopting Industrialised Building System (IBS) in Malaysia. Case study was employed as the research method in order to achieve the research objective as it can be used to explore and give further understanding of the research issues. Cross-case synthesis and pattern matching technique were applied for the analysis of the case study. Through the study, it was found that the SME construction companies could participate in the IBS business. The companies need to have capital and knowledge in IBS, position themselves as a total IBS solution provider to clients, target projects with large volumes of building components, employ a small number of fulltime employees as well as to have in-house capability and to outsource some facilities in the business operation. In conclusion, the involvement of SME construction companies in the IBS market is important to avoid the monopoly of IBS components supplies among the large companies and to potentially reduce the price of IBS so that it becomes more affordable to be used in the construction projects.

Stable relationality and dynamic innovation: two models of collaboration in SME-driven offsite manufacturing supply chains in housing construction

“…Our selection of these two cases was strategic because they are what Flyvbjerg (2006) refers to as exception cases. They carve out space for interrogating, or at least nuancing, empirical work that argues that SMEs face constraints in collaboration (Hoffman and Schlosser, 2001; Hagedoorn and Schaknraad, 1994) and that SMEs find OSM challenging (Mohamed, 2018). Our study does not set out to provide quantifiable propositions that will suit “all” SMEs, but to provide detailed narratives and models with key elements that are nevertheless transferable to other domains (Gioia et al , 2012), under interpretivism's tempered notion of generalisability.…”

“…Empirical work suggests that SMEs struggle with both OSM and collaboration. Research shows that SMEs struggle to adopt OSM due to a number of factors, including lack of knowledge and lack of financial resources (Mohamed, 2018). These are issues that could be addressed by inter-organisational alliances; however, empirical research also shows that that small firms have less propensity to form collaborations and alliances than large firms, which have higher strategic partnering rates (Hagedoorn and Schakenraad, 1994; Hoffman and Schlosser, 2001).…”

Business Model Elements for Industrialised Building System

“…In 2008, all government projects were made compulsory to use IBS where a minimum of 70 IBS score must be achieved for projects worth RM10 million and above as indicated in the Treasury Circular SPP 07/2008 and construction players are encouraged to use IBS for private projects where contractors who have achieved 50 IBS score for residential are exempted from the Malaysian construction levy (Hamid et al 2008). Even though the initiative of promoting the adoption of IBS in the construction industry has been long implemented the participation of contractors in IBS business is still low especially among the Small and Medium-sized (SME) contractors (CIDB, 2015;Mohamed et al, 2018). The main reason for the low participation is due to the fact that many contractors are unlikely to accept the IBS construction and prefer to continue to use the conventional method of construction.…”

“…A study conducted by Zairul (2020) found that in the Malaysian context, there is limited research on proposing ground-breaking business models for IBS. In order to survive and sustain their business in the construction industry SME contractors is suggested to become IBS contractors and adopt IBS in their construction business (CIDB, 2015;Mohamed et al, 2019;Theong et al, 2018). With the move to industrialize the construction sector, SME contractors will have to establish more innovative business models and plans for turnover growth (Goh & Loosemore, 2017).…”

“…With the move to industrialize the construction sector, SME contractors will have to establish more innovative business models and plans for turnover growth (Goh & Loosemore, 2017). SME contractors will require a specific business model to guide them in adopting the IBS construction (Mohamed et al 2018). This is due to IBS being considered a specialised trade (CIDB, 2015) and its construction approach is different from conventional construction method (Nawi et al, 2014).…”