Working Paper Series, Department of Real Estate and Construction Management & Centre for Banking and Finance (cefin), Royal Institute of Technology
Good and bad innovations in the housing sector - General background and a policy proposal
Abstract: Purpose – The purpose is to propose a classification
system for techniques to increase awareness of the uncertainties and risk
connected to new techniques and materials, especially when the buyer is a
non-professional client. The new classification system should increase
information flow and decrease the problem occurring in principal-agent
relationships in terms of moral hazard. The aim is also to shift the focus
of the discussion from the quantity of innovations to how incentives can be
created to further "good" innovations and to reduce the risk of "bad"
innovations. The paper explores how housing firms in Sweden, municipal and
private firms, are positioning themselves to implement new techniques and
contracts in the construction sector.
Design/methodology/approach – The
paper combines a literature review with an on-line questionnaire in
combination with three face-to-face semi-structured interviews. The key
data were collected from actors that build for their own management.
Findings – The paper reports two main findings. First, actors that build
for their own management are risk-averse. Second, it seems that a
classification system could be a good way to handle the uncertainties and
risk connected to innovations in the housing construction sector. The study
also underlines the need for an active public sector which takes
responsibility for helping the sector to open up for more firms that will
invest in the right kind of innovations.
Originality/value – The paper
is one of the few that focus on discussing the potential of shifting the
focus from the quantity of innovations to how incentives can be created to
further "good" innovations and to reduce the risk of "bad" innovations.
Also, it proposes a two-step classification system for new technical
innovation to achieve increased transparency and reduced information
asymmetry in the construction sector.
Keywords: Innovations; Housing construction; Procurement; Incentives; (follow links to similar papers)
JEL-Codes: L74; O31; R33; (follow links to similar papers)
18 pages, November 5, 2015
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