Niching in residential development

Kurt Psilander

Journal of Property Research, 2004, vol. 21, issue 2, 161-185

Abstract: The Schumpeterian process of creative destruction creates winners and destroys losers, but when it is only destructive, it loses winners. Knowledge‐based information technology brings new dimensions to this process. New technology makes possible the development of complex products that exhibit an almost infinite variety of forms. Consequently, actors confront each other in a non‐transparent, mostly unknown and fundamentally uncertain market. They are forced to respond to unpredictable conditions of competition. Entrepreneurs have to design and realize their projects as business experiments and test them in the market. I use the theory of the Experimentally Organized Economy and of Competence Blocs to study the presence or absence of a particular entrepreneur: the developer in the residential building industry. Based on that theory I show that to succeed the developer has to achieve a very precise niching of his product and an almost perfect matching with a selected consumer group. I then compare the vision of this entrepreneurial competence to achieve such a matching with the observable characteristics of the outsourced entrepreneur/developer in the USA. I have noted in particular that the developer uses extensive outsourcing combined with strict control of the entire realization process from early vision to final delivery to consumers. Efficient niching often means best consumer satisfaction and absence in the local market of standardized volume builders. Since this is essentially a new way of looking at things within residential development, I use mostly deductive analysis in my presentation.

Date: 2004
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DOI: 10.1080/0959991042000328838

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