The purpose of this investigation is to explore the fundamental mechanisms of innovation within construction firms. The main objectives of this research are to: identify and understand key processes of innovation in construction, develop a model of these processes and a framework for analysis of construction firms, contrast innovative and static firms, define actions for firms to increase their rates of innovation, and assist future researchers. The research methods involve background literature research; development of models; collection and analysis of empirical data regarding the process of innovation in progressive construction firms; and development of action recommendations.