Enhancing construction contracting firm performance through external knowledge sourcing: is innovation the “black box”?

Purpose The purpose of this study was to explore the influence of two bundles of external knowledge on the business performance of construction contracting firms and the role of innovation as a mediator in the association between external knowledge and business performance. Design/methodology/approach Data were collected from a sample of construction contracting firms in Hong Kong using a quantitative questionnaire survey. The hypotheses of the study were tested using partial least squares structural equation modelling. Findings The results show that knowledge from market sources directly affects business performance, but knowledge from institutional sources does not have a significant direct effect. Innovation in construction contracting firms mediates the interlinkage between institutional sources and business performance. Originality/value This study contributes to the extant literature by being among the first to explore the relevance of two bundles of external knowledge for innovation and business performance in construction contracting firms. It shows which bundle of knowledge firms must focus on to achieve their innovation and business performance objectives and, therefore, has implications for their knowledge search strategy in their attempt to enhance performance outcomes through innovation.