Entry mode selection for international construction markets: the influence of host country related factors

Abstract

The increasing necessity to establish a permanent presence in overseas markets challenges the tradition of tide‐like market entry mode of international contractors and confronts them with an important dichotomous selection between permanent entry mode and mobile entry mode. By borrowing theories and previous findings from the general international business area, the hypotheses regarding the influences of specific host country related factors upon the selection between the two generic entry modes, including cultural difference, trade link, host market potential, investment risk, institutional entry barrier and competition intensity are developed. Measures are proposed for these factors as well as some control variables and the dependent variable (entry mode). Data were collected from multiple sources for these variables. A binary logistic regression analysis was performed to test the hypotheses and develop a statistical model for entry mode selection. The model is statistically significant and not all the hypotheses are supported, confirming the uniqueness of the population of international contractors in market entry mode selection.

Keywords:

• International business
• marketing strategy
• international construction
• market entry strategy
• market entry model.

Acknowledgement

The author appreciates the help of Prof. John I. Messner, Architectural Engineering Department, the Pennsylvania State University, the United States in finishing this paper.