Influence of organization environment on contractor’s inter-regional market entry practice in China: an industry-level approach based on Bayesian logistic regression model

Abstract

Inter-regional market entry poses a complex challenge for contractors, particularly in the construction industry with its unique characteristics. Existing research predominantly focuses on an international scale and target markets, often overlooking the influence of the organizational environment, especially the home market. This study aims to fill this gap by analyzing how the construction organizational environment affects contractors’ inter-regional market practices. Grounded in theories of organizational management, we developed a theoretical model with seven hypotheses examining the impact of organizational environment. We tested hypotheses with Bayesian logistic regression model based on data from 426 construction organizations in China. Our findings reveal that a contractor’s size significantly impacts the practice compared to other attributes like ownership and experience. Additionally, a thriving local economy strongly supports contractors in exploring other geographical markets. Interestingly, while local competition intensity and protectionism create barriers for external firms, they do not significantly affect the diversification activities of local contractors. These insights contribute to understanding the dynamics of inter-regional market entry in the construction industry and can guide practitioners in strategizing for sustainable growth. Future research could explore more detailed strategies such as market selection and entry mode, enhancing the depth of understanding in this area.