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Good and bad innovations in the housing sector - General background and a policy proposal

Author

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  • Borg, Lena

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

Abstract

Purpose – The purpose is to propose a classification system for techniques to increase awareness of the uncertainties and risk connected to new techniques and materials, especially when the buyer is a non-professional client. The new classification system should increase information flow and decrease the problem occurring in principal-agent relationships in terms of moral hazard. The aim is also to shift the focus of the discussion from the quantity of innovations to how incentives can be created to further "good" innovations and to reduce the risk of "bad" innovations. The paper explores how housing firms in Sweden, municipal and private firms, are positioning themselves to implement new techniques and contracts in the construction sector. Design/methodology/approach – The paper combines a literature review with an on-line questionnaire in combination with three face-to-face semi-structured interviews. The key data were collected from actors that build for their own management. Findings – The paper reports two main findings. First, actors that build for their own management are risk-averse. Second, it seems that a classification system could be a good way to handle the uncertainties and risk connected to innovations in the housing construction sector. The study also underlines the need for an active public sector which takes responsibility for helping the sector to open up for more firms that will invest in the right kind of innovations. Originality/value – The paper is one of the few that focus on discussing the potential of shifting the focus from the quantity of innovations to how incentives can be created to further "good" innovations and to reduce the risk of "bad" innovations. Also, it proposes a two-step classification system for new technical innovation to achieve increased transparency and reduced information asymmetry in the construction sector.

Suggested Citation

  • Borg, Lena, 2015. "Good and bad innovations in the housing sector - General background and a policy proposal," Working Paper Series 15/10, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    • Handle: RePEc:hhs:kthrec:2015_010
    as

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    References listed on IDEAS

    as
    1. Nathan Rosenberg, 2009. "Uncertainty and Technological Change," World Scientific Book Chapters, in: Nathan Rosenberg (ed.), Studies On Science And The Innovation Process Selected Works of Nathan Rosenberg, chapter 8, pages 153-172, World Scientific Publishing Co. Pte. Ltd..
    2. Roine Leiringer & Stuart Green & Jawwad Raja, 2009. "Living up to the value agenda: the empirical realities of through-life value creation in construction," Construction Management and Economics, Taylor & Francis Journals, vol. 27(3), pages 271-285.
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    5. Hans Lind & Lena Borg, 2010. "Service-led construction: is it really the future?," Construction Management and Economics, Taylor & Francis Journals, vol. 28(11), pages 1145-1153.
    6. Nyström, Johan & Lind , Hans & Nilsson , Jan-Eric, 2014. "Degrees of freedom in road construction," Working papers in Transport Economics 2014:20, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    7. Martimort, David & Pouyet, Jerome, 2008. "To build or not to build: Normative and positive theories of public-private partnerships," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 393-411, March.
    8. Eriksson, Per-Erik & Lind, Hans, 2015. "Moral hazard and construction procurement: A conceptual framework," Working Paper Series 15/2, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    9. Lampel, Joseph & Miller, Roger & Floricel, Serghei, 1996. "Impact of owner involvement on innovation in large projects: Lessons from power plants construction," International Business Review, Elsevier, vol. 5(6), pages 561-578, December.
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    Keywords

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    JEL classification:

    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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