Risk-based entry decision into African construction markets: a proposed integrated model

Abstract

PurposeThe purpose of this paper is to propose a risk-based entry decision model to mitigate the impact of risk and ease the entry of multinational construction companies (MNCCs) into African construction market (ACM).Design/methodology/approachA review of extant literature helps identify risks in the international construction market (ICM) and entry modes used by MNCCs to enter into the ICM. A conceptual model is designed for a risk-based entry decision. Data for validating the proposed model are sourced from multiple sources – survey, interview and financial and annual report of companies surveyed.FindingsFindings reveal significant risks in the ICM and different modes of MNCCs entry to foreign market. Experience of MNCCs shows that the perceived impact of risk influence decisions made to enter into foreign markets, and interactive relationships between resources and entry decisions made to mitigate the perceived impact of risks.Originality/valueSignificant risks are expected in the ACM. However, adequate perception of risks based on resources levels of MNCCs and strategic entry decisions would assist in mitigating the potential impacts of risk.