Impact of owner involvement on innovation: lessons from power plant projects

Abstract

Information asymmetry between suppliers and buyers constitutes a major barrier to innovations. Incorporating novel solutions into engineering projects increases the problems of calculating long-term costs and benefits. Industrial marketing suggests that overcoming these barriers is easier when owners are knowledgeable and involved in the design process. Our study examines whether the same proposition holds for innovation in complex engineering projects by focussing on the relationships between innovativeness and owner internal capabilities. Hypotheses derived from agency and organization theories of innovation are tested. Results indicate that projects where owners have internal capabilities are generally less innovative than projects where owners lack internal capabilities.