The construction industry is no longer focused on providing a single product ‐ i.e. a building or a physical infrastructure, but a variety of services and improvement to the human environment. Major trends such as Performance‐based Building as well as Sustainable Built Environment are calling for major changes. These changes mean additional roles for the industry as well as the need for new indicators to measure its performance and its economic impact. This paper proposes a new approach based on the development of a framework for the analysis of the entire construction and property sector ‐ the “built environment cluster”. It extends the analysis of an international study based on nine countries ‐Australia, Canada, Denmark, France, Germany, Lithuania, Portugal, Sweden, and the United Kingdom. The need for improving statistical data is stressed particularly in the context of enlarging the scope of the industry. This new approach provides an excellent starting point for developing new performance indicators that will take into account the changing nature of the industry, for an integrative perspective providing a basis for strategic management, for studying sustainable development in construction and for understanding innovation processes and changes. A comprehensive perspective of the industry performance is crucial for policy initiatives as well as for strategic analysis of firms.

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The implications for analysis of innovation in construction of theoretical developments in industrial organisation are considered in this research, as an attempt to outline a new approach to construction innovation incorporating the ideas found in knowledge based, technology centred models. The paper firstly summarises characteristics of the construction industry, focusing on their effects on innovation, before surveying some of the ideas about the sources of innovation and the expansion and application of knowledge. Construction can be seen as an industry with limited scope for knowledge externalities, where the procurement methods used by the industry"s clients do not pay for innovation. The following discussion uses recent developments in the research on the economics of innovation and industrial organization theory, such as research intensity and the endogenous sunk costs in competitive, fragmented, low research intensity industries. The effects on R&D of procurement methods and on industry structure are discussed, with a focus on the appropriability of innovations and the role of the client on the Heathrow Terminal 5 project. The paper concludes that the procurement methods used for building and construction projects appears to be a determining factor in the level of innovation in the construction industry.

This paper analyses the multimedia industry in Sydney. It seeks to understand whether the emergence of the industry has involved dense horizontal and vertical inter‐firm linkages characteristic of an industrial cluster, or whether the industry has grown because of general urbanisation economies related to such factors as skilled labour supply and market demand. The industry is highly concentrated in and around central Sydney. This provides the best access to firms’ main clients, notably advertising companies and other multimedia firms. It also reflects the centralised location of skilled labour such as web designers. While there is evidence of an emerging inner Sydney multimedia cluster which includes graphic design and advertising and related media, the main driver of the industry's development appears to have been general demand from advertising and related media companies, in association with the pool of computer graphics talent generated by these companies.