The potential influence of institutional investors on construction organizations

A small number of investment companies seem to be on the verge of prescribing the future direction of management philosophy in the UK construction industry. Prominent industrial figures have called for the industry to embrace radical change. Egan in his "Rethinking Construction" Report personifies client power, however a more cogent force is the institutional shareholders who epitomise investor power. The strength of the major shareholders is perhaps far greater than any other stakeholder in the industry. This paper considers the inter-relationships of the major shareholders in the UK construction industry with particular reference to the leading 20 contractors and materials suppliers. Detailed analysis of significant cross-border holdings found within the construction organisations major shareholders indicates the impact of such holdings and the influence upon strategic management perspectives. The nature of shareholder investment patterns suggests that changes brought about will lead to a paradigm shift in construction management philosophy and practice. Shareholder tactics may surpass single organisational survival as the underlying strategic objective, i.e. shareholders maximising the return from their investment.