The Impact of Competitive Capability on Innovation Ability: A Study of Contractors in Indonesia

The construction industry in Indonesia has significant contribution to the country’s economy, however it has several challenges in seizing post-pandemic economic opportunities. This condition creates an urgency for contractors to improve their innovation abilites to win the competition in complex markets. However, the competitive capability of the contractors would create their ability to innovate. This study aims to examine the importance and implementation levels of contractors’ competitive capability that influence contractors’ innovation ability, and then these importance levels and implementation levels will be compared. Furthermore, this research will find the impact of competitive capability of the contractors on their innovation ability. One hundred twenty-five representatives of big contractors in Indonesia were used as samples of this study. Data were analyzed using descriptive statistics to find the implementation and importance levels of each competitive ability factor. Then, an independent t-test was implemented to compare those importance and implementation levels and a multiple regression method was used to analyze the impact of contractors’ competitive capability and their innovation ability. This research found that the importance of managerial, marketing, and operational capability is higher than the implementation of those capabilities and all factors of contractors’ competitive capability (operational, financial, marketing, human resource, and managerial capability) positively influence innovation ability.