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PARTLY DIGITAL - ONLY FOR INVITEES (1,5 m) : PhD Defence John van Oorschot | On the adoption of innovation in the housing sector

On the adoption of innovation in the housing sector

Due to the COVID-19 crisis measures the PhD defence of John van Oorschot will take place (partly) online in the presence of an invited audience. 

The PhD defence can be followed by a live stream.

John van Oorschot is a PhD student in the research group Construction Management and Engineering (CME). His supervisor is prof.dr.ir. J.I.M. Halman from the Faculty of Engineering Technology (ET).

Background - Industrialization, digitalization and innovation in housing are essential if one is to address problems such as an increasing demand for affordable housing, labour shortages, the sector’s significant environmental impact and fast-changing market needs. This requires substantial innovations ranging from new building materials and components to completely new housing systems. Ideally, these innovations will not only contribute to shorter building times, lower failure costs, a higher build quality, but also result in more sustainable and circular building concepts. However, to benefit from such innovations, they have to be adopted on a large scale.

Knowledge gap - The adoption of a housing innovation can be defined as the decision to apply a product, process or system innovation in a housing project. Despite efforts to develop and introduce innovation in housing, the market has proved reluctant to adopt many of these innovations on a significant scale. When innovations have been successfully applied, they tend to be adopted only on a small scale, and fail to diffuse in the market beyond the initial demonstration status. As a result, the industry appears severely locked in to traditional construction practices. This is problematic since housing projects continue to be plagued by cost and time overruns, low productivity and inefficiency, housing quality issues and a high environmental impact.

The Dutch Science, Technology and Innovation Council (Adviesraad voor Wetenschap, Technologie en Innovation), an advisory council of the government, stated that the adoption and diffusion of innovations had not been sufficiently addressed by researchers and policymakers in the Dutch economy. In this respect, the Dutch construction sector was explicitly mentioned by the advisory council. A more in-depth understanding of the adoption of an innovation within a specific housing project, and subsequently in other housing projects, could have a substantial impact on the adoption rate of innovations in the housing sector. Previous research has observed that it is difficult to get innovations adopted on a wide scale in the housing sector, and that general innovation adoption theories insufficiently explain the poor uptake of innovation in this sector. In this respect, it has been hypothesised that innovation cannot be understood beyond the context of its development, adoption and subsequent diffusion. That is, if one wants to understand the adoption of an innovation by stakeholders involved in housing projects, the structural characteristics of the housing sector must be taken into account. What is particularly missing is context-specific empirical data on the mechanisms that affect the adoption of various types of innovation, and across different levels of adoption (individual, firm, project and/or sector), during the successive stages of diffusion from market formation towards saturation.

Aim of this research - The research reported in this thesis aims to enhance current understanding of the adoption of innovations in the housing sector. The emphasis is on the determinants and mechanisms that affect the decisions of construction stakeholders regarding the adoption of innovations in housing projects. The associated finding can deepen the limited understanding of the variables and mechanisms that affect the adoption of various types of innovation at different points in time. These insights can help managers and innovators to improve the adoption potential of their technological innovations across multiple projects. The central aim of this dissertation can be summarized in the following main research question:

“Which variables and mechanisms affect the adoption of innovation in the housing sector?”  

Four studies, referred to as Studies I, II, III and IV, were conducted to answer this main research question.

 Study I: A bibliometric review of innovation adoption

Study I includes a bibliometric review of the scientific literature on innovation adoption. In this initial study, two sub-questions are addressed:

 a) What are the key theoretical cornerstones of innovation adoption research?

b) What are the current research trends within the field of innovation adoption?

Bibliographic mapping techniques were used to organize a large number of scientific journal papers (involving 1260 scientific articles). This resulted in the recognition that adoption research builds upon four theoretical cornerstones: a) Institutional Theory and the legitimization of innovative behaviour; b) Theory of Reasoned Action and the Technology Acceptance Model; c) The determinants of innovation adoption through an econometric perspective; and d) Diffusion Theory. Further, the bibliometric review revealed five dominant research trends: 1) drivers and impediments of information technology adoption; 2) the adoption of technology standards; 3) organizational rationales associated with innovation adoption; 4) modelling the diffusion process; and 5) adoption of agricultural innovations. Study I complements existing reviews on innovation adoption in various ways. First, based on a co-citation analysis, it was possible to illustrate that innovation adoption research is built on four theoretical cornerstones (or, in terms of bibliographic clustering, on four clusters of prior publications). Second, bibliographic coupling was used to assess the current research trends in the innovation adoption literature. This review is the first to exhaustively identify thematic areas. The bibliographic coupling technique revealed five clusters of thematic publications or “research trends”. Third, a coherent framework was constructed to assess the relevance of innovation adoption research by integrating the theoretical cornerstones and the current research trends. As a parallel contribution, this study found that previously conducted overview studies had contributed to a coherent understanding of innovation adoption in specific research fields. Fourth, as a key output, Study I raised several future research orientations.

Study II: a literature review on innovation adoption in the housing sector

In contrast to the first study, Study II involves a narrative, systematic literature review. Study II provides an answer to the following research question:

Given previous research on the adoption of innovation in the housing sector, which specific variables affect the adoption of innovation in the context of housing projects?

A systematic narrative review was conducted to develop a theoretical framework that could be used to assess adoption mechanisms that are specific to innovations in the housing sector. The conceptual framework includes four categories of innovation adoption determinants with their underlying variables. The four categories are:

1) The influence of the external environment;

2) A product’s characteristics and innovation attributes;

3) Industry characteristics;

4) Adopter characteristics.

These four categories of adoption determinants include 21 underlying variables that led to the development of 21 corresponding propositions. A secondary outcome of this study is a taxonomy of technological housing innovations that characterizes the innovations adopted in housing projects. Based on this taxonomy, it was concluded that while incremental, modular and systemic innovations could be identified, radical innovations could not be found.

Study III: the adoption of modular innovations in housing projects

Modular innovation is generally considered a promising strategy to progress towards circular and mass-customized housebuilding practices. Despite the potential advantages of modularity in housebuilding, the housing industry has not widely adopted modularity. Further, there is also little empirical research available on the potential adoption of modular innovations in the housing sector. Given this gap in the literature, Study III addresses the following sub-questions:

a) Which mechanisms affect the adoption of modular innovation when introduced in the housing sector?

b) To what extent can the theory on modularity help to explain the adoption of modular innovation in the housing sector?

The multiple-case study conducted in Study III aimed to reveal the determining mechanisms and variables that influence the adoption of modular innovations in the Dutch housing sector.

In this study, the adoption of three modular innovations (i.e. a modular renewable energy system, a modular prefabricated bathroom pod and an integrated photovoltaic modular roof) were analysed. In addition to an extensive literature review on modularity and the study of several relevant company documents, in-depth interviews with stakeholders and the input from focus groups helped to identify mechanisms that affect the adoption of these three modular innovations.

The multiple-case study revealed 10 variables that affect the adoption of modular innovations in housing projects. After analysing the possible relationships between these 10 variables for each of the three case studies, four causal mechanisms could be deduced that determine the potential adoption of these modular innovations in housing projects. Finally, Study III also showed that, for the successful adoption of a modular innovative product, the product design must be well aligned with the supply chain and must also fit within the intended realization process for the house as a whole.

Study IV: the continued adoption of building systems in housing projects

Study II had shown that a large number of scientific publications have been published concerning the adoption of innovations in housing construction. Unfortunately, these innovations are often only applied on a small scale and often fail to spread beyond their demonstration status in the market. The W&R housing system is a rare example of an innovative housing system that has been used repeatedly since it was first introduced onto the Dutch housing market. Therefore, insight into the factors that have been decisive in such a large-scale adoption, and repeated application over time, could prove immensely valuable in boosting the likelihood of future innovations achieving market success. Study IV contributes to the development of this insight by answering the following two sub-questions:

a) What differentiates the W&R housing system from housing systems, which did not experience a continued adoption?

b) Which mechanisms contribute to a continued adoption over time and across housing projects?

Study IV includes a longitudinal, in-depth case study into the W&R housing system that has been applied in housing projects since 1992. Based on an extensive document study and in-depth structured interviews with stakeholders, how the W&R housing system has developed over time was mapped, and which mechanisms had influenced its adoption identified.

As a robustness check, the findings were compared with three less successful industrial housing systems that had been launched on the market.

The conducted research shows that the W&R system distinguishes itself from the three other innovative building systems by coherently organizing the acquisition, design, purchasing, production, on-site assembly and professional management of the successive phases in the housing construction process. The study highlighted the importance of maintaining a leading market position through low construction costs and keeping pace with changing market demands by further improving and developing the existing housing system. The W&R housing system has evolved over the past thirty years from a focus primarily on standardization, to standardized variety, to product differentiation, and now also with additional services included as part of the W&R system.

Study IV also showed that the possible adoption of an industrial building system takes place through a stage-gate selection process and that the likelihood of adoption is increased if:

1) The provider is regionally active;

2) A high-quality standard at a low cost (price-quality ratio) is offered;

3) The proposed technology is in line with what is customary in existing housing construction;

4) In addition to a low-cost guarantee, additional and distinctive functionalities are offered;

5) The housing system design is flexible and relatively easy to adapt when changing market needs arise.

Conclusions - The research started with the observation that to overcome the significant shortage of affordable, sustainable and circular houses in the Netherlands requires the adoption of innovative solutions to realize a far-reaching professionalization and industrialization of the housing sector. However, the innovation roadmap in the housing sector is paved with countless innovations that failed to be taken up by the market. From this, it was concluded that a much better insight into factors that may stimulate or hinder innovation adoption was needed. The insights that have been developed and described in this thesis may hopefully contribute to increasing the adoption rate of effective innovative solutions and through this, to boost the availability of affordable, sustainable and circular housing in the Netherlands.