Strategic management of the financial potential of construction enterprises: conceptual principles and practical aspects

Abstract

Abstract. Purpose. This paper aims to assess the financial capacity of Ukrainian construction enterprises during 2018-2023, accounting for the role of macroeconomic variables, industry special features and external shocks, including COVID-19 pandemic and ongoing war with Russia. The focus of the research was to determine key financial indicators and resilience factors that will impact construction firms’ growth and stability over time of economic disruption. Methods. The econometric analysis of financial performance for 20 leading Ukrainian construction companies by means of non-linear modelling is used in this study. The macroeconomic and industry specific factors including GDP growth, inflation GDP growth, inflation, exchange rates, construction permits and technological innovation has been incorporated in the analysis to identify their impact on financial potential. The study then assesses the implications of external crises on the financial sustainability and the financial resilience of the companies. Results. The results of study show that macroeconomic factors have a very powerful effect on financial stability of construction companies, in particular the effect of GDP growth, inflation and foreign exchange rate fluctuations is proved to be more significant than the effect of other macroeconomic factors. However, the COVID-19 pandemic and the ongoing war with Russia brought about severe effects further highlighting the vulnerability of the sector to such outsiders' shocks. Key resilience factors of technological innovation, adaptive management practices and sector specific regulatory changes are also identified as critical drivers of long-term growth and financial stability of the construction industry. Conclusions. Finally, research concludes that developing responses in the Ukrainian construction sector requires sound understanding of its financial dynamics during times of crisis, and that this will increase the sector's resilience and sustainability. The findings also reveal the value of adaptive strategies, technology specials, and macroeconomic stability for the industry’s sustainable growth. The recommendation for further research is to investigate the long-term impact of these external crises on the sector, and to examine comparative strategies that construction firms use in other countries facing similar challenges.