Preferred Entry Mode Choices and Transformation of Indonesian Contractors' Strategy in International Markets

Wahyudi P Utama,Ran Gao,Zulherman Zulherman,Hafız Zahoor ,Albert P.c Chan ,Beijing Economics

doi:10.21315/jcdc2019.24.2.8

Abstract

The selection of an appropriate entry strategy is an essential stage to expand business to overseas markets. Few studies have been undertaken to investigate this issue in the context of construction industry from the developing economies. This study aims to empirically investigate the entry strategy adopted by Indonesian contractors and observe the transformation of strategy to enter overseas construction markets (OCMs). Combination quantitative and qualitative research approaches was adopted to achieve the objectives. Data were obtained from survey of 103 Indonesian large contractors from 317 samples. Descriptive statistic and relative importance index (RII) were employed to analyse the data in which the results were then triangulated with interview findings. The results indicated those joint venture projects (JVP), branch office (BO) and representative office (RO) are the preferred entry mode choice adopted by Indonesian contractors. Four types of entry strategy transformation were identified. Each types of transformation showed that JVP or sole venture project (SVP) is directly used to pursue projects while BO or RO is set after operating for several projects. This study may provide a profound insight based on developing industries' experiences. For future research direction, the selection of entry mode by investigating the considerations influencing entry mode choice is encouraged. Keywords: International expansion, Construction project, Market entry strategy, Entry mode, Indonesian contractor

Highlights

In the history of the global development economics, the international construction has been thought of as a crucial component
The objective of this study is, to empirically investigate the entry strategy adopted by Indonesian contractors and to observe the transformation of strategy to enter overseas construction markets (OCMs)
This study aims to empirically investigate the entry strategy adopted by Indonesian contractors and to observe the transformation of strategy to enter overseas construction markets (OCMs)

Summary

Introduction

In the history of the global development economics, the international construction has been thought of as a crucial component. It is a key instrument for triggering the increase in other economic sectors. One of the important current discussions in this context is the strategy to enter overseas markets from developing construction economies. Chen and Messner (2011) defined this term as an institutional arrangement that makes possible entry of a company's products, Study by Utama et al (2016) witnesses that statistically, most of international construction research has been monopolised by developed construction industries, while research activities have overlooked the participation of developing economies. Of interest in the growth involvement of developing economies in this business is the strategy to enter foreign markets by Indonesian contractors

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