Purpose The purpose of this research is to identify the conditions under which the internal environment of small construction firms makes them either develop or adopt an innovation. Design/methodology/approach The research described in this paper adopted a qualitative case study approach. The data were obtained from multiple sources such as face-to-face semi-structured interviews with company representatives and from project reports. Findings The study identified that firms’ decision to either adopt or develop an innovation is determined by a complex interaction between their internal environment and 12 different conditions. Some of the findings contrast widespread perceptions in broader literature on innovation development and adoption in small construction firms. Research limitations/implications The study focused only on firms from two regions in Ghana. Additionally, adopting a purely qualitative approach meant that the quantitative impacts of the different factors were not presented. Practical implications The results can inform the decisions of agencies and persons wishing to invest their resources in innovation activities of small construction firms. It can also inform the policy debate and directions of government and industry associations looking to create innovation-friendly environments in the small business sector. Originality/value This research provides a better understanding of innovation development and adoption by small construction firms. Given that there is little previous research on innovation by small construction firms, especially in developing economies, the paper complements existing studies that generally focus on much larger firms and developed economies.

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