The adoption of innovative wood processing technologies in the building products industry

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Virginia Polytechnic Institute and State University


The strategic importance of the adoption of innovative processing technologies was analyzed for building products businesses. This study examined the two components of wood building products businesses: the structural panel industry and the softwood Iumber industry. To ensure that the relevance of adopting of innovative processing technologies was examined within an accurate contextual environment, additional important strategies and performance were also measured.

A mail survey of the seventy-five largest North American producers of these two products provided the primary data necessary to investigate the strategic importance of process technology adoption, forward vertical integration, relative market share, grade sector focus, and investment intensity on firm performance as measured by profitability surrogates and changes in relative market share. This survey collected direct measures of the proportion of 1987 production produced by respondent firms that used controlled distribution channels and each of twentythree processes indicative of innovative technologies in the manufacture of building products. Information concerning the other strategic and performance factors was collected from secondary data sources.

Results indicate that the adoption of innovative processing technologies has a positive impact on firm profitability. Investment intensity and grade sector focus also contributed to superior profitability. Forward vertical integration, and relative market share had no impact in differences between performance levels for the firms studied.

Technologies were examined for underlying dimensions that group different process technologies together. Firms were clustered according to their level of adoption of innovative processing technologies and these clusters were then described according to a variety of firm-dependent characteristics, strategies, and performance measures. A strategy-performance model was developed for standardized, industrial product-markets and empirically tested using the data collected for the building products industry as an industry representative of this type of competitive environment.