Industry structure influences production and productivity of a sector because industry structure
determines the number of asset production such as number of equipment, human resources, and labor as
well as technology employed within the sector. Industry structure are determined by investment program
of the industry player which is determined by their strategy based on their perception of market size
opportunity, easiness of doing business, transaction cost economy, time horizon considered within the
_frame work of business sustainability and competitiveness. Strategy choice .available are based on the two
basic business strategy which are resources base strategy or market base strategy. Consequences of the
choice will a_/_'feet the investment direction within the industry and in turn the asset production will be
accumulated accordingly then to form industry structure. In research Cause and Eject between variable
will be determined a-priori wise _first to check whether this a-priori assumption is correct and accurate
enough then followed by confirmatory analysis using Structural Equation Modeling will be performed.
Relation parameters are estimated using factor scores regression. Casuall relation are developed based
on Fisman & Sarria - Alende pervious research. Investment are determined by industry players strategy
which is based on transaction cost economy, entry regulation easyness for the industry and by analogy of
Simon Theory is also determined by long term vision, availability of resources, capacity of the company,
and market size. Specialization strategy trends is driven by long term vision, low transaction cost
economy. Generalization strategy trends is driven by smaller market size, and entry regulation easiness
to enter for the industry. Casual relation as found by Sarria - Alende, and theory postulated by Simon did
not materialize in the construction industry case.
