Globalisation entry decision-supporting tool for international construction risks

Abstract

Having made a globalisation decision, a contracting firm subsequently needs to make market selection decisions that are influenced by the level of uncertainty or the risks involved, the probability of winning the bid and the expected profitability, or based on generally expected utility. This paper aims to develop a globalisation entry decision-supporting tool integrating resource-based view (RBV), dynamic capabilities and Porter’s generic value chain for international project selection. Through the combination of a questionnaire survey and an interview survey analysed by partial least squares structural equation modelling, a globalisation entry decision-supporting tool for facilitating project selection decision for contractors venturing internationally was developed. This study attempts the usage of an anomaly-seeking method in combining theories from three streams of strategic management concepts – namely, RBV, dynamic capabilities and Porter’s generic value chain theories – into an integrated decision-supporting tool for risk forecasting and project selection in the international construction market. This study contributes to the knowledge of risk assessment by enhancing the current international entry decision tools with a firm’s capability component. The model developed enables a firm to be informed of the combination of the firm’s capabilities needed to lower the exposure to certain risks.