Trust and strong ties in the selection and evaluation of business advisors by small firms

Principal Topic A small firm is unlikely to possess internally the full range of knowledge and skills that it requires or could benefit from for the development of its business. The ability to acquire suitable external expertise - defined as knowledge or competence that is rare in the firm and acquired from the outside - when needed thus becomes a competitive factor in itself. Access to external expertise enables the firm to focus on its core competencies and removes the necessity to internalize every skill and competence. However, research on how small firms access external expertise is still scarce. The present study contributes to this under-developed discussion by analysing the role of trust and strong ties in the small firm's selection and evaluation of sources of external expertise (henceforth referred to as the 'business advisor' or 'advisor'). Granovetter (1973, 1361) defines the strength of a network tie as 'a (probably linear) combination of the amount of time, the emotional intensity, the intimacy (mutual confiding) and the reciprocal services which characterize the tie'. Strong ties in the context of the present investigation refer to sources of external expertise who are well known to the owner-manager, and who may be either informal (e.g., family, friends) or professional advisors (e.g., consultants, enterprise support officers, accountants or solicitors). Previous research has suggested that strong and weak ties have different fortes and the choice of business advisors could thus be critical to business performance) While previous research results suggest that small businesses favour previously well known business advisors, prior studies have also pointed out that an excessive reliance on a network of well known actors might hamper business development, as the range of expertise available through strong ties is limited. But are owner-managers of small businesses aware of this limitation and does it matter to them? Or does working with a well-known advisor compensate for it? Hence, our research model first examines the impact of the strength of tie on the business advisor's perceived performance. Next, we ask what encourages a small business owner-manager to seek advice from a strong tie. A recent exploratory study by Welter and Kautonen (2005) drew attention to the central role of trust in this context. However, while their study found support for the general proposition that trust plays an important role in the choice of advisors, how trust and its different dimensions actually affect this choice remained ambiguous. The present paper develops this discussion by considering the impact of the different dimensions of perceived trustworthiness, defined as benevolence, integrity and ability, on the strength of tie. Further, we suggest that the dimensions of perceived trustworthiness relevant in the choice of a strong tie vary between professional and informal advisors. Methodology/Key Propositions Our propositions are examined empirically based on survey data comprising 153 Finnish small businesses. The data are analysed utilizing the partial least squares (PLS) approach to structural equation modelling with SmartPLS 2.0. Being non-parametric, the PLS algorithm is particularly well-suited to analysing small datasets with non-normally distributed variables. Results and Implications The path model shows that the stronger the tie, the more positively the advisor's performance is perceived. Hypothesis 1, that strong ties will be associated with higher perceptions of performance is clearly supported. Benevolence is clearly the most significant predictor of the choice of a strong tie for external expertise. While ability also reaches a moderate level of statistical significance, integrity does not have a statistically significant impact on the choice of a strong tie. Hence, we found support for two out of three independent variables included in Hypothesis 2. Path coefficients differed between the professional and informal advisor subsamples. The results of the exploratory group comparison show that Hypothesis 3a regarding ability being associated with strong ties more pronouncedly when choosing a professional advisor was not supported. Hypothesis 3b arguing that benevolence is more strongly associated with strong ties in the context of choosing an informal advisor received some support because the path coefficient in the informal advisor subsample was much larger than in the professional advisor subsample. Hypothesis 3c postulating that integrity would be more strongly associated with strong ties in the choice of a professional advisor was supported. Integrity is the most important dimension of trustworthiness in this context. However, integrity is of no concern, or even negative, when using strong ties to choose an informal advisor. The findings of this study have practical relevance to the enterprise support community. First of all, given that the strength of tie has a significant positive impact on the advisor's perceived performance, this implies that small business owners appreciate working with advisors in long-term relationships. Therefore, advisors are well advised to invest into relationship building and maintenance in their work with small firms. Secondly, the results show that, especially in the context of professional advisors, the advisor's perceived integrity and benevolence weigh more than ability. This again emphasizes the need to invest time and effort into building a personal relationship with the owner-manager, rather than merely maintaining a professional image and credentials. Finally, this study demonstrates that the dimensions of perceived trustworthiness are orthogonal with different effects on the strength of tie and ultimately perceived performance. This means that entrepreneurs and advisors should consider the specific dimensions of ability, benevolence and integrity, rather than rely on general perceptions of trustworthiness in their advice relationships.

BIM – implications for government

As ‘The Architect’s Handbook of Professional Practice’ (cited by Riskus (2007) suggests, Building Information Modelling, or BIM, is “the use of virtual building information models to develop building design solutions, design documentation, and to analyse construction processes”. We would suggest such a definition, while useful, should be extended to include the operational phases of built assets (such as maintenance and decommissioning), and also be applied to the whole area of infrastructure. As a set of technologies, BIM holds promise to deliver benefits for the property, construction, and infrastructure management industries – particularly improved efficiencies and effectiveness through enhanced collaboration at all stages of the construction cycle. There are several important qualifiers, barriers, enablers, and some disadvantages with this suite of technologies. This report outlines the costs and benefits enablers and barriers associated with BIM, and makes suggestions about how these issues may be addressed.

Modelling construction business performance

Searching academic databases for records on ‘business failure’, ‘business distress’ or ‘bankruptcy’ yields a large body of studies on qualitative, empirical, theoretical and simulation aspects. It is a central part of this research to distil from this large quantity of potentially relevant reports and methodologies those which can both flag and predict business failure in the construction industry. An additional search term, such as, ‘construction’, ‘construction industry’ or ‘contractor’ yields a much smaller number of hits, many of which emphasize the construction industry’s distinctive characteristics. We scientists need first to understand the subject of investigation and the environment in which it lives. To do so, an analysis of existing successful and failed approaches to particular research questions is helpful before embarking on new territory. This guides the structure of the following report for we first review papers that specifically report on aspects of business failure in the construction industry followed by, (a) an overview of promising candidates borrowed from other disciplines and industries, and (b) a possible novel approach. An Australian (Queensland) perspective on the topic will also drive this investigation as most of the published research has been applied to the US and UK construction industries.

Systematising knowledge management in projects

Purpose – The purpose of this paper is to provide a practicable systems-based approach to knowledge management (KM) in a project environment, to encourage organisations to unlock the value in their review processes. It relies on knowledge capture and storage at decision review points, to enrich individual, team and organisational learning during the project life cycle. The project's phases are typically represented horizontally with deliverables (objectives) or project "promises" as the desirable outcomes. The purpose of this paper is to give expression through introducing a vertical dimension to facilitate the KM process. A model is proposed that conceptualises project-specific knowledge drawing on and feeding into the organisation's knowledge management system (KMS) at tactical and strategic levels. Design/methodology/approach – This conceptual paper links concepts from systems theory with KM, to produce a model to identify, collate, and optimise project-based knowledge and integrate it into the management process. Findings – The application of the system theory approach enriches the knowledge generated by a project, and feeds it into the next phase of that project. At the same time, it contributes to the individual's and project team's KM, specifies possible courses of action, together with risks, costs and benefits and thus it expands the organisation's higher level KMS. Research limitations/implications – The concept suggests that the knowledge capture, storage and sharing process may best be undertaken holistically, in view of the systems relationships between the tasks. Systems theory structures this process. Research opportunities include studying the interfaces between levels of KM, in relation to the project's progress. Practical implications – Reconceptualisation of the project as a knowledge creation process may improve the project's progress as well as add to the individual's, project team's, and wider organisation's knowledge base. An example is given. Originality/value – This paper illuminates the broader potential of under-utilised opportunities in well-known management approaches to add dimension to the business project, of knowledge creation, storage and sharing.

Strategies for minimising the whole of life cycle cost of reinforced concrete bridge exposed to aggressive environments

n design of bridge structures, it is common to adopt a 100 year design life. However, analysis of a number of case study bridges in Australia has indicated that the actual design life can be significantly reduced due to premature deterioration resulting from exposure to aggressive environments. A closer analysis of the cost of rehabilitation of these structures has raised some interesting questions. What would be the real service life of a bridge exposed to certain aggressive environments? What is the strategy of conducting bridge rehabilitation? And what are the life cycle costs associated with rehabilitation? A research project funded by the CRC for Construction Innovation in Australia is aimed at addressing these issues. This paper presents a concept map for assisting decision makers to appropriately choose the best treatment for bridge rehabilitation affected by premature deterioration through exposure to aggressive environments in Australia. The decision analysis is referred to a whole of life cycle cost analysis by considering appropriate elements of bridge rehabilitation costs. In addition, the results of bridges inspections in Queensland are presented

A model for the uptake of E-business by building small and medium enterprises

The adoption of e-business by Small and Medium Enterprises (SMEs) in construction lags from other service and product businesses within the building sector. This paper develops a model to facilitate the uptake of electronic business, especially in relation to SMEs within the Australian construction sector. Ebusiness is defined here as “the undertaking of business-related transactions, communications and information exchanges utilising electronic medium and environment”, the elicited model highlights significant changes needed including skills development, social, economic and cultural issues. The model highlights barriers for SMEs to migrate towards e-transactions, e-bidding, e-tendering and ecollaboration and provides learning and skills development components. The model is derived from case study fieldwork and is to inform diffusion and awareness models for best practice. Empirical techniques included ‘focus group’ interviews and one to one ‘interviews’. Data was transcribed and analysed using cluster analyses. Preliminary results reveal that current models for e-business adoption are not effective within the construction context as they have emerged from other service and product industries - such as retail or tourism. These generic models have largely ignored the nature of the construction industry, and some modifications appears to be required. This paper proposes an alternative adoption model which is more sensitive to the nature of the industry – particularly for e-business uptake in building SME’s.

Barriers to e-business adoption in construction: international literature review

The adoption of e-business by the Australian construction industry lags other service and product industries. It is assumed that slow adoption rate does not reflect the maturity of the technology but is due to adoption barriers peculiar to the nature of construction. This paper examines impediments to the uptake of e-business nationally and internationally. A systematic and extensive literature search of barriers (also referred to as obstacles, impediments or hindrances) to adoption has been undertaken and the findings discussed in this paper. This review included more that 200 documents and these have been published in a searchable database as part of a larger research initiative funded by the Cooperative Research Centre for Construction Innovation. The influence of levels of e-business maturity seen in other sectors such as retail, tourism and manufacturing was also captured and a number of major barriers were identified some including: privacy, trust, uncertainty of financial returns, lack of reliable measurement, fraud, lack of support and system maintenance. A total of 23 barriers were assessed in terms of impact to organisational type and size across reviewed documents. With this information it was possible to develop a reference framework for measuring maturity levels and readiness to uptake e-business in construction. Results have also shown that barriers to e-business adoption work differently according to organisational type and culture. Areas of training and people development need to be addressed. This would include a more sensitive approach to the nature of construction organisations, especially to those small and medium enterprises. Raising levels of awareness and creating trust for on-line collaboration are other aspects that need attention, which current studies confirm as lacking. An empirical study within construction, to validate these findings, forms the subsequent phase of this research.

A45 ICT curriculum design to bridge the gap between industry and academia

Building Information Model (BIM) software, collaboration platforms and 5D Construction Management software is now commercially available and presents the opportunity for construction project teams to design more cost effectively, plan construction earlier, manage costs throughout the life cycle of a building project and provide a central asset management register for facilities managers. This paper outlines the merits of taking a holistic view of ICT in curriculum design. The educational barriers to implementation of these models and planning tools are highlighted. Careful choice of computer software can make a significant difference to how quickly students can master skills; how easy it is to study and how much they enjoy learning and be prepared for employment. An argument for BIM and 5D planning tools to be introduced into the curriculum to assist industry increase productivity and efficiencies are outlined by the authors.

Teaching business process modelling : experiences and recommendations

A curriculum for a university-level course called Business Process Modeling is presented in order to provide guidance for the increasing number of institutions who are currently developing such contents. The course caters to undergraduate and post graduate students. Its content is drawn from recent research, industry practice, and established teaching material, and teaches ways of specifying business processes for the analysis and design of process-aware information systems. The teaching approach is a blend of lectures and classroom exercises with innovative case studies, as well as reviews of research material. Students are asked to conceptualize, analyze, and articulate real life process scenarios. Tutorials and cheat sheets assist with the learning experience. Course evaluations from 40 students suggest the adequacy of the teaching approach. Specifically, evaluations show a high degree of satisfaction with course relevance, content presentation, and teaching approach.

Forecasting trends in the Brisbane central business district office market

The Queensland Department of Public Works (DPW) holds a significant interest in the Brisbane Central Business District (CBD) in controlling approximately 20 percent of the office space within its confines. This comprises a total of 333,903 square metres of space, of which 170,111 square metres is owned and 163,792 square metres is leased from the private sector. The department’s nominal ownership extends to several enduring, landmark buildings as well as several modern office towers. The portfolio includes the oldest building in the CBD, being the former Commissariat Stores building and one of the newest, a 15,000 square metre office tower under construction at 33 Charlotte Street.

Risk assessment in life-cycle costing for road asset management

Queensland Department of Main Roads, Australia, spends approximately A$ 1 billion annually for road infrastructure asset management. To effectively manage road infrastructure, firstly road agencies not only need to optimise the expenditure for data collection, but at the same time, not jeopardise the reliability in using the optimised data to predict maintenance and rehabilitation costs. Secondly, road agencies need to accurately predict the deterioration rates of infrastructures to reflect local conditions so that the budget estimates could be accurately estimated. And finally, the prediction of budgets for maintenance and rehabilitation must provide a certain degree of reliability. This paper presents the results of case studies in using the probability-based method for an integrated approach (i.e. assessing optimal costs of pavement strength data collection; calibrating deterioration prediction models that suit local condition and assessing risk-adjusted budget estimates for road maintenance and rehabilitation for assessing life-cycle budget estimates). The probability concept is opening the path to having the means to predict life-cycle maintenance and rehabilitation budget estimates that have a known probability of success (e.g. produce budget estimates for a project life-cycle cost with 5% probability of exceeding). The paper also presents a conceptual decision-making framework in the form of risk mapping in which the life-cycle budget/cost investment could be considered in conjunction with social, environmental and political issues.

Life cycle inventory for Australian building materials

This paper discusses challenges to developers of a national Life Cycle Inventory (LCI) database on which to base assessment of building environmental impacts and a key to development of a fully integrated eco-design tool created for automated eco-efficiency assessment of commercial building design direct from 3D CAD. The scope of this database includes Australian and overseas processing burdens involved in acquiring, processing, transporting, fabricating, finishing and using metals, masonry, timber, glazing, ceramics, plastics, fittings, composites and coatings. Burdens are classified, calculated and reported for all flows of raw materials, fuels, energy and emissions to and from the air, soil and water associated with typical products and services in building construction, fitout and operation. The aggregated life cycle inventory data provides the capacity to generate environmental impact assessment reports based on accepted performance indicators. Practitioners can identify hot spots showing high environmental burdens of a proposed design and drill down to report on specific building components. They can compare assessments with case studies and operational estimates to assist in eco-efficient design of a building, fitout and operation.

Redefining life cycle for a building sustainability assessment framework

Understanding the differences between the temporal and physical aspects of the building life cycle is an essential ingredient in the development of Building Environmental Assessment (BEA) tools. This paper illustrates a theoretical Life Cycle Assessment (LCA) framework aligning temporal decision-making with that of material flows over building development phases. It was derived during development of a prototype commercial building design tool that was based on a 3-D CAD information and communications technology (ICT) platform and LCA software. The framework aligns stakeholder BEA needs and the decision-making process against characteristics of leading green building tools. The paper explores related integration of BEA tool development applications on such ICT platforms. Key framework modules are depicted and practical examples for BEA are provided for: • Definition of investment and service goals at project initiation; • Design integrated to avoid overlaps/confusion over the project life cycle; • Detailing the supply chain considering building life cycle impacts; • Delivery of quality metrics for occupancy post-construction/handover; • Deconstruction profiling at end of life to facilitate recovery.

A soft approach to solving hard problems in construction project management

Construction projects are faced with a challenge that must not be underestimated. These projects are increasingly becoming highly competitive, more complex, and difficult to manage. They become ‘wicked problems’, which are difficult to solve using traditional approaches. Soft Systems Methodology (SSM) is a systems approach that is used for analysis and problem solving in such complex and messy situations. SSM uses “systems thinking” in a cycle of action research, learning and reflection to help understand the various perceptions that exist in the minds of the different people involved in the situation. This paper examines the benefits of applying SSM to wicked problems in construction project management, especially those situations that are challenging to understand and difficult to act upon. It includes relevant examples of its use in dealing with the confusing situations that incorporate human, organizational and technical aspects.

Five case studies applying soft systems methodology to knowledge management

Construction projects are faced with a challenge that must not be underestimated. These projects are increasingly becoming highly competitive, more complex, and difficult to manage. They become problems that are difficult to solve using traditional approaches. Soft Systems Methodology (SSM) is a systems approach that is used for analysis and problem solving in such complex and messy situations. SSM uses “systems thinking” in a cycle of action research, learning and reflection to help understand the various perceptions that exist in the minds of the different people involved in the situation. This paper examines the benefits of applying SSM to problems of knowledge management in construction project management, especially those situations that are challenging to understand and difficult to act upon. It includes five case studies of its use in dealing with the confusing situations that incorporate human, organizational and technical aspects.