While construction is often seen as a low‐technology sector, it has witnessed substantial changes in practices, processes, technology and performance over the past 20 years. Understanding the sources of these changes is important for innovation strategy and policy to improve performance within the sector, and because it produces the capital goods—buildings and structures—to enable other sectors to develop. Logistic regression is applied to data from the UK Innovation Survey to examine sources of product and process innovation among construction firms. Results show that working with customers, suppliers and having a broad market orientation can help construction firms break through the confines of their particular industrial context. The paper concludes by exploring implications of these findings for policy and theory and by considering questions for further research.