Building renovation business: the effects of specialization on profitability

IF 3 Q2 BUSINESS Construction Management and Economics Pub Date : 2023-03-26 DOI:10.1080/01446193.2023.2192040

Pekka Rajala, Antti Ylä-Kujala, Tiina Sinkkonen, Timo Kärri

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Abstract

Abstract The importance of renovations is widely recognized, for example, due to renovation backlogs in the developed countries. The urbanization megatrend, among many other factors, is still increasing the need for renovations in the long run. One approach to review the renovation issue is the profitability of the companies that will tackle the increasing demand in the sector. By applying mainly quantitative methods, using the 15-year timeframe (2005–2019) and earnings before interest, taxes, depreciation, and amortization (EBITDA) and return on assets (ROA) as measures, this study reviewed the profitability of the building renovation (BR) companies from two perspectives: how does focusing on certain special services (specialized BR) fare compared to focusing on a wide range of services (wide BR) and what are the profitability differences among specialized BR companies? The results show that, when reviewing the research timeframe in total, there are no differences in profitability between wide BR and specialized BR companies. However, an annual review reveals that specialized BR companies are profitability-wise more vulnerable to economic cycles. Among the specialized BR companies, there are several differences in profitability; classically, specialization in a niche market with a deliberate customer base and low competition level is gainful. The research provides new information about an unresearched area encouraging companies to re-think their strategic choices considering service specialization and performance.

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建筑翻新业务：专业化对盈利能力的影响

摘要翻修的重要性得到了广泛认可，例如，由于发达国家的翻修积压。从长远来看，城市化的大趋势以及许多其他因素仍在增加翻修的需求。审查翻新问题的一种方法是，将解决该行业日益增长的需求的公司的盈利能力。通过主要应用定量方法，使用15年时间框架（2005-2019）和息税折旧摊销前利润（EBITDA）和资产回报率（ROA）作为衡量标准，本研究从两个角度回顾了建筑翻新（BR）公司的盈利能力：专注于特定的特殊服务（专业BR）与专注于广泛的服务（广泛BR）相比如何？专业BR公司之间的盈利能力差异是什么？结果表明，在总体回顾研究时间框架时，大型BR公司和专业BR公司的盈利能力没有差异。然而，一项年度审查显示，专业BR公司在盈利方面更容易受到经济周期的影响。在专业BR公司中，盈利能力存在几个差异；从传统意义上讲，在一个有着深思熟虑的客户群和低竞争水平的利基市场中进行专业化是有收益的。这项研究提供了关于一个未搜索领域的新信息，鼓励公司重新考虑其战略选择，考虑服务专业化和绩效。

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来源期刊

Construction Management and Economics BUSINESS-

CiteScore

7.50

自引率

14.70%

发文量

期刊介绍： Construction Management and Economics publishes high-quality original research concerning the management and economics of activity in the construction industry. Our concern is the production of the built environment. We seek to extend the concept of construction beyond on-site production to include a wide range of value-adding activities and involving coalitions of multiple actors, including clients and users, that evolve over time. We embrace the entire range of construction services provided by the architecture/engineering/construction sector, including design, procurement and through-life management. We welcome papers that demonstrate how the range of diverse academic and professional disciplines enable robust and novel theoretical, methodological and/or empirical insights into the world of construction. Ultimately, our aim is to inform and advance academic debates in the various disciplines that converge on the construction sector as a topic of research. While we expect papers to have strong theoretical positioning, we also seek contributions that offer critical, reflexive accounts on practice. Construction Management & Economics now publishes the following article types: -Research Papers -Notes - offering a comment on a previously published paper or report a new idea, empirical finding or approach. -Book Reviews -Letters - terse, scholarly comments on any aspect of interest to our readership. Commentaries -Obituaries - welcome in relation to significant figures in our field.