An industrial organization economic supply chain approach for the construction industry: a review

Understanding industries in terms of the concepts of chains, clusters and networks is becoming increasingly important in economies around the world. Supply chain management for an individual organization is an emerging field of research in the construction management discipline, but less attention has been devoted to investigating the nature of the construction supply chains and their industrial organizational economic environment. This selected review of construction and mainstream management supply chain literature is organized around four themes; distribution, production, strategic procurement management and industrial organization economics, and highlights the need to develop an industrial organization economic supply chain framework for construction. The merging of the supply chain concept with the industrial organization model as a methodology for understanding firm conduct and industry structure and performance is an important contribution to both construction supply chain and construction economic theory. Much of the industrial organization supply chain literature has tended to focus upon manufacturing industries, where typically firms are permanent organizations. This raises issues as to the differences between industries founded upon temporary compared with permanent organizations. There is potential for the development of an industrial organization methodology applicable to the project based industry. Ultimately industrial organization research seeks to have direct implications for industry performance and government policies.