Specific-factors Influencing Market Selection Decision by Malaysian Construction Firms into International Market

Abstract

Market entry strategy is used to make the firm's entering new foreign market possible to expand their businesses in terms of services, products, technology, human and other resources. It requires the firm to decide which market to enter (market selection decision), how to enter (entry mode decision), and when to enter (entry timing decision). Hence, focusing on the market selection decision is one of the important dimensions in the process of internationalization and is crucial in order to ease the complexity and difficulty of global market expansion. The main objective of this study is to investigate the factors that are of critical significance influencing market selection decisions by Malaysian construction firms into international market. Questionnaires were sent to one hundred nine (109) firms listed under Construction Industry Development Board (CIDB) Malaysia giving twenty one percent response rate. Factor analysis was used to group the twenty-seven factors into four specific-factors namely; firm, country, industry and project. The findings from regression analysis carried out revealed that the project-specific factors have contributed significantly to the firms’ market selection decision to penetrate international market. These factors which are loaded highest in order of significance were the “intensity of competition”, “existence of strict quality requirements”, “proximity to competitors”, “proximity to host country” and “firm international competitiveness”. This study illustrates the determination of the specific-factors influencing the firms’ decision related to market selection into international domain. It is hope that the findings would offer valuable information to Malaysian construction firms with intention to internationalize their businesses.