The logic of innovation in construction

The paper investigates the logic of innovation in construction by addressing four questions: What is actually being renewed in construction? How is it being done? Who is involved? and Why do or do not the companies innovate? The paper draws on a combination of an industrial network perspective and the exploration–exploitation dichotomy to analyze data from a study of innovation in the Norwegian and Swedish construction industries. The findings show that construction companies are increasingly working more systematically to turn project-level ideas into company-wide knowledge. This indicates an innovation logic that is oriented towards exploitation of new combinations through the internal network. The companies are also increasingly concerned with establishing closer connections to customers and users, which have traditionally been weak. This has led to an orientation towards exploitation through the external network, at least on the customer side. In turn, this may lead to more innovative behavior and renewal in the industry as a whole. However, it requires that not only the customer relationships, but also the relationships on the supply side must change. Companies in the construction industry should be conscious about their innovation logic, in terms of whether they base their innovation behavior on a biased orientation towards exploitation or exploration or towards the internal or external network. A balance is needed. •The paper investigates the logic of innovation in the construction industry.•Insights from the industrial network perspective are used in combination with the exploration and exploitation dichotomy.•Findings from research in the Norwegian and Swedish construction industries are presented and analysed.•The characteristics of the couplings on different network levels may explain the logic of innovation in construction.•Appropriate relations must be established in the internal and external construction networks to achieve innovation.