Innovation in project-based, service-enhanced firms: the construction of complex products and systems

This paper explores the management of innovation within firms producing complex products and systems. It is based on a study of how design, engineering and construction firms develop and produce buildings and structures. We contend that these project-based, service-enhanced forms of enterprise are not adequately addressed in the innovation literature. Project-based firms rely upon combining technical expertise from other organisations in order to deliver their own technical capabilities, usually in one-off processes. The paper argues that these firms are only able to effectively harness and reproduce their technological capabilities by integrating project and business processes within the firm. Our results show the need for a better conceptual understanding and new management practices to link project and business processes. The paper offers a framework for achieving this, explaining the dynamics of project-based firms and how they can improve performance across portfolios of projects.