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The Evolution and Application of Strategic Management Theory in the Construction Sector
Introduction
Strategic management is a core discipline within business and management studies, concerned with how organisations plan, implement, and sustain long-term success. It involves setting objectives, analysing competitive environments, formulating and executing strategies, and evaluating outcomes. Over the decades, scholars have developed diverse frameworks to explain how strategy shapes organisational performance and adaptability. This essay critically reviews key contributions to strategic management theory, explores contemporary developments, and evaluates how strategic management principles have been applied in the construction industry.
Strategic Management Theory – Major Concepts and Contributions
The foundation of strategic management theory emerged from the mid-20th century. Early work by Alfred Chandler (1962) in Strategy and Structure established that “structure follows strategy,” arguing that firms must align organisational design with long-term plans. Chandler’s empirical research into major corporations like DuPont and General Motors highlighted the relationship between strategic planning and internal structure.
Igor Ansoff (1965) expanded this with the Product-Market Growth Matrix, offering a systematic approach to diversification and growth strategy. His analytical model formalised strategic decision-making and marked the beginning of corporate strategy as a distinct academic field.
Michael Porter (1980, 1985) made one of the most influential contributions through his Five Forces Model and Value Chain Analysis. Porter introduced the idea that a firm’s competitive advantage depends on industry structure and positioning. His Generic Strategies (cost leadership, differentiation, and focus) remain central to competitive strategy today.
In contrast, the Resource-Based View (RBV), developed by Wernerfelt (1984) and Barney (1991), shifted focus from external competition to internal capabilities. RBV posits that firms gain sustainable competitive advantage through valuable, rare, inimitable, and non-substitutable (VRIN) resources. This internal focus has influenced modern perspectives on dynamic capabilities and innovation.
Later, Mintzberg (1994) challenged the overly prescriptive nature of strategic planning, arguing that real-world strategy often “emerges” rather than being formally designed. His concept of emergent strategy introduced flexibility and learning as vital to navigating complex environments. Together, these scholars laid the groundwork for understanding how strategy is both planned and adaptive.
Latest Ideas on Strategic Management Theory
Recent developments in strategic management have incorporated digitalisation, sustainability, and agility. The Dynamic Capabilities Framework (Teece, Pisano, & Shuen, 1997) builds on RBV by emphasising a firm’s ability to integrate, build, and reconfigure internal and external competencies in rapidly changing environments. In today’s volatile markets, these capabilities are crucial for innovation and resilience.
The rise of strategic agility (Doz & Kosonen, 2008) also redefines how firms compete. Instead of long-term static plans, agile organisations continuously adjust their strategies to respond to technological and environmental changes. This aligns with strategic ambidexterity (O’Reilly & Tushman, 2013), which balances exploration of new opportunities and exploitation of existing capabilities.
Sustainability has become another major focus. The concept of shared value by Porter and Kramer (2011) integrates social responsibility with profitability, encouraging firms to address environmental and societal issues through strategic innovation. Additionally, the adoption of digital strategy (Bharadwaj et al., 2013) reflects how artificial intelligence, data analytics, and automation are reshaping decision-making and operational efficiency.
Overall, modern strategic management is characterised by adaptability, collaboration, and integration of social and technological factors rather than rigid, top-down planning.
