A critical review of response strategies adopted by construction companies during an economic recession

During a recession, companies are forced to restructure and to move quickly to reduce employment, costs, and debt, in order to ensure their survival. In the construction industry, recessions have the effect of reducing resources available to companies as clients procure less, financiers reduce lending and competition increases. Despite an increase of research in the area of strategic management in the last decade, little has been documented on what response strategies construction companies adopt as a result of an economic recession. From a thorough review of previous studies, two key issues became apparent: (1) very few offered a comprehensive and systematic overview and (2) limited connections were made to theoretical typologies such as Porter's generic strategies, which are a widely accepted typology of strategic options for companies. The objective of the paper is to fill this knowledge gap by: (1) critically reviewing the literature on response strategies in the construction industry; (2) developing a taxonomy of response strategies relative to Porter's generic strategies of cost leadership, differentiation and focus; and (3) using the taxonomy framework to critically evaluate the response strategies of Irish and UK construction contractors by drawing on qualitative data from the pilot case studies of an on-going PhD study. The results from the critical review show that the majority of construction companies adopt differentiation strategies in order to survive an economic recession.