Project-oriented strategic management of UK construction firms – towards corporate diversification: critical literature review

Purpose The paper analyses the strategic management strategies of UK Construction Contracting Firms (CCFs) and their impact on the industry, highlighting their fragmentation, high-risk, low-profit nature and low profit returns. It suggests proactive strategies for sustainable growth and explores the potential of corporate diversification. Design/methodology/approach Utilising a thematic critical literature review, specific inclusion/exclusion criteria are used to select relevant literature together with a thematic qualitative synthesis data analysis approach to identify trends and challenges. Findings UK CCFs primarily use reactive and project-based strategic management, which may not align with long-term success due to market volatility, reactive supply, fragmentation, high competition and lack of differentiation. The short-term business cycle makes medium- to long-term strategy development difficult. It is recommended that CCFs adopt proactive strategic management and consider corporate diversification for enhanced competitiveness, stability and performance. Although there are conflicting findings on the impact of diversification on firm performance, this research suggests that it is a viable strategy for achieving enhanced firm performance and competitive advantage. Research limitations/implications The importance of proactive corporate strategies for CCFs is emphasised to overcome industry challenges, promote sustainable growth and enhance competitiveness. Corporate diversification, cultural transformation, management qualifications promotion and talent development collaboration are advocated, providing valuable insights for practitioners, policymakers and researchers. Practical implications The practical implications of this research involve fostering a shift towards proactive and dynamic strategic management in the UK construction industry, addressing the historical neglect of broader strategic perspectives and empowering practitioners and academics to drive positive change and innovation within the sector. Social implications The social implications of this research encompass the potential to enhance the overall efficiency, sustainability and collaborative dynamics within the UK construction industry, which can ultimately contribute to improved infrastructure development and the well-being of communities. Originality/value Project-driven strategic management in the UK construction industry is explored, questioning the reactive approach used by CCFs. It provides insights, best practices and improvement areas, emphasising diversification, proactive corporate strategies, cultural shifts and industry improvement, spanning theory, practice and theory.