Asymmetrical partnerships in conceptual housing

Abstract

In the Netherlands there is currently a high demand for affordable housing (Volkshuisvesting en Ruimtelijke Ordening, 2022). Earlier research indicated modular integrated housing can serve as a repercussion against this problem (Khan et al, 2022). The Dutch government wants to promote innovation in the construction industry to help solve the housing shortage, but this industry has been described as traditional instead of being innovative (Abbot et al., 2006). Startups, though, are often linked with innovation (Colombo & Piva, 2008, De Groote & Backmann, 2020; Spender et al, 2017). However, when analyzing the Dutch housing construction industry and it’s challenges through the scope of Porter’s five forces (2008), which are the threat of new entrants, power of buyers, power of suppliers, threat of substitute products and rivalry between firms in the industry, it becomes clear that it is a difficult industry for startups to enter and become competitive. This is due to the barriers of entry (e.g. high fixed costs, volatility and access to clients), powerful buyers, and possible retaliation from competitors. Furthermore, innovation and partnerships play a significant role for startups to become competitive in this industry, as partnering with incumbent firms can help the startups overcoming the previously stated challenges linked with the house building industry. These type of partnerships between startups and incumbent firms are initiated because of a startup’s innovative capabilities and are a way for the larger firm to gain access to new business models, which is beneficial for the continuity of their own firm. However, due to their asymmetric nature, these partnerships could cause different types of challenges for managers of involved companies. In this research, the innovation strategies employed by the concept housing startups and their partners are analyzed to see how they plan to become competitive. This research is meant to help (future) startups of this industry, and to provide them with guiding principles on collaborating with incumbent firms. These principals are developed after an exploratory literature review and interviews with managers of concept housing startups and their partners already operating in the Dutch house building industry.