Significant Factors Influencing Entry Decisions (SEFIED) into International Market

Abstract

Construction firms look for opportunities to operate overseas to earn high returns. Firm's competitiveness is very important in determining the entry location to the host country. Thus, there is a need for the firms to consider factors that influence their strategic decisions to operate in the international markets. In this regard, this study elaborates on the significant factors that play an important role during the decision-making process for potential market selection or named as SIFIED (Significant Factors Influencing Entry Decisions). Data were obtained from a survey study through 74 construction firms with international operations in six (6) continents such as Asia, ASEAN, Africa, Europe, United States; and Australia and Oceania. Data was analysed using the Structural Equation Modelling (SEM)-Smart PLS software. The results revealed six (6) significant factors based on the ß values in the SEM model indicate that top significant factors considered by the firms are the target country (ß= 2.078), followed by home country (ß=1.117), market (ß= 0.856), firm-resources (ß= 0.425), projects (ß= 0.340), firm-specific factor (ß= 0.002) before entering the international market. In addition, various strategies related to decisions to enter the international markets that need to be considered by the firms' top management with intention to enter the international markets are factor differences in language, culture, rules and policies in the host country. The inexperienced firms in handling projects in foreign countries can choose to collaborate with other local firms that have experience handling projects in the host country to reduce risks. This study contributes to the knowledge related to construction in international markets on entry location decision to assist firms in their ventures. © 2021 IEEE.

Keywords Entry decision, International markets, Location, Significant factors