Che Maznah Mat Isa

Factors influencing Malaysian construction firms in venturing into international market

A tremendous demand of development worldwide has gained interest of Malaysian construction firms to venture into international construction domain. Identifying and analyzing major determinants of the firms internal and external factors are crucial in order to ease the complexity in global market expansion. This paper identifies the relative importance of the strengths, weaknesses, opportunities and threats (SWOTs) related to the internationalization of Malaysian contractors. Responses were received from thirty one (31) Class A and Grade 7 Malaysian construction firms registered with CIDB Malaysia in 2010. The findings reveal that “good track record”, “specialist expertise” and “international network” were the most influential strength factors for the firms to effectively compete in international market. However, “shortage of financial resources” as well as “material and labor resources” contributed to the weaknesses in exploring international market. The study also reveals that “opening up new market”, “technological advancement” and “beneficiary international agreements” offered huge opportunities in overseas market. Nevertheless, factors such as “bribery in the host country”, “increase of interest rate” and “lack of awareness” were perceived as the threats due to difficulties in dealing with moral problems, financial risks and unfamiliar environment within the host country. Finally, this study is of relevance to Malaysian construction firms as it systematically highlights the internal and external factors those may affect their performance in international market. These findings may assist them to make necessary preparatory works by enhancing the strengths, reducing the weaknesses, seizing the opportunities and facing the threats in international market, as these elements are consistently changing.

Factors Influencing Internationalization of Malaysian Construction Firms

Construction industry plays a vital role in the economic sector at both domestic and international levels. The international construction operations keep growing, and many construction firms are found continuously seeking opportunities in the new markets. However, in recent years, domestic prospects have not been good due to many unknown factors. In the last twenty years, Malaysian construction firms have delivered projects successfully in various regions around the world. The objective of this study is to determine the significant factors influencing internationalization of Malaysian construction firms. This study adopts a mixed method using questionnaire survey and semi-structured interviews. Thirty-five (35) out of 112 firms used as a sampling frame have participated with a response rate of 31%. The quantitative findings were further validated through in-depth interviews with six (6) firms currently venturing abroad. The findings indicate that to find opportunities abroad was the main predictor on Malaysian construction firms’ internationalization. The firms chose to go abroad for a long-term opportunity for survival and longevity offered in international markets. Other important factors are because of the economic crisis, depreciation of ringgit, global drops in oil and gas prices and stagnant and saturated domestic market. The quantitative findings are supported by the interviews where one of the major factors on internationalization of Malaysian construction firms was due to limited projects offered in the domestic market. During the early stage of internationalization, firms will be exposed to various factors that impede their plans to expand. Thus, this study may assist promising local construction firms to understand important factors to internationalize in seizing the opportunities abroad.

Linking Entry Timing (ET) and Entry Mode (EM) Decisions in International Market Expansion by Malaysian Construction Firm: Toward the Development of ETEM Model

Neglecting to properly choose the right combination of entry mode and entry timing strategies can lead to poor performance in international business ventures. The paper focuses on the linking of entry timing (ET) and entry mode (EM) decisions and the factors influencing both decisions. By consolidating the findings for both entry decisions, an ETEM model to guide the construction firms to access the targeted markets will be developed. The questionnaire surveys were sent to 115 Malaysian construction firms listed under Construction Industry Development Board (CIDB) Malaysia with 39.1 % response rate. The logistic regression (LR) model revealed that the majority of construction firms have chosen to be the late movers (LMs). Factor analysis carried out shows that the factors significantly influenced the firms’ entry timing decision as LMs are the firm’s international experience, level of knowledge, research and development intensity, competencies in project management, specialist expertise and technology, and financing capacity. The multinomial logistic regression (MLR) model has shown that majority of the construction firms preferred both equity (EQ) and non-equity (NEQ) entry modes. The factor analysis revealed that the factors that significantly influenced the firms’ entry mode decisions to choose both types of entry mode are the firm’s management of quality and risk attitudes, strong resources, experience in similar works, ability to assess market signals and opportunities, superior management and organizational dynamic capabilities, availability of partner/alliance, and existence of strict time limitations. The consolidation of findings shows that the majority of the Malaysian construction firms were the late movers, and they preferred both EQ and NEQ entry modes. Hence, this study contributes to an improved understanding of particular relationships that exist between the entry timing and entry mode decisions made by firms into international market.

Development of entry location, entry timing and entry mode decision model for construction firms in international markets

The international market expansion process involves a combination of many strategic entry decisions. Most previous studies have dealt with entry location, entry timing and entry mode (ELETEM) decisions in an isolated way by considering one dimension or a combination of dimensions in particular. Although there have been various models relating to international market entry decisions, there is currently no model that attempts to integrate the factors linking the ELETEM decisions for construction firms. The purpose is to determine a linkage between the ELETEM decisions by incorporating the factors that are mutually inclusive and have significant influence on these decisions. Forty-five (45) Malaysian contractors undertaking projects in international markets responded to the survey. The findings suggested that the mutually inclusive and significant factors (MISFs) influencing the ELETEM decisions were: the firm’s ability to assess market signals and opportunities, the firm’s resources and the firm’s experience in similar works. It was observed that the firms had adopted long-term strategies, repositioned their knowledge from research and development activities and readapted their resources and experience in their global operations. The findings led to the development of the ELETEM decision model to guide interested firms in making better decisions for their future international ventures.

Using PLS-SEM Path Modeling to Determine Factors Influencing Performance of Malaysian Construction Firms in International Markets

International market expansion into foreign markets has become increasingly important for construction firms. In this borderless world, no market is safe from foreign competition. This situation is also evident for the construction firms, as international construction is not a new phenomenon. Hence, firms have to be prepared and adopt effective strategies to face various challenges in unfamiliar environments and most importantly be able to sustain and perform in new business ventures. The main aim of this research is to determine the factors influencing the performance of the Malaysian construction firms in international markets. Questionnaire surveys were sent to 115 construction companies registered with CIDB Malaysia. A structural equation modeling (SEM) using partial least square (SMART PLS 2.0) was used to determine significant factors influencing performance of the firms. The confirmatory factor analysis carried out through SEM-PLS analysis has revealed that firm factors have significantly influenced the firm’s performance. The findings based on loadings generated by the PLS-SEM model revealed the eleven significant factors influencing the firm’s performance are the firm’s ability to assess market signals and opportunities, long-term and strong management strategic orientation and objectives, superior management and organizational dynamic capabilities, firm’s financing capacity and competencies, strong resources related to level of knowledge and Research and Development, profit targets, level of knowledge and international experience, product differentiation (strong brand name), reputation, good track record and competitive advantage. The five significant performance factors are based on the acquirements of competitive advantages, return of investment, prestige, stability, business expansion and security of the firm.

Identification of Malaysian Contractors with Sustained International Operations (CSIO)

Competitive positioning and sustaining the gained international operations are difficult challenges that international construction firms commonly face. The aim of this study is to assess the level of Malaysian contractors’ sustained international operations (CSIO). The measurement scales for the CSIO were developed from secondary data provided by Construction Industry Development Board (CDIB) Malaysia on seventeen construction firms that have been operating in international market until 2013 together with the awarded project values, completed projects, countries of operation and diversity of projects. In this paper, a set of dimensions of CSIO were identified and the measures for each dimension were also established using a five-point scale. The findings reveal that the elements in the order of importance to determine the level of CSIO are the consecutive year sustained international operation, value of projects awarded, number of countries, diversity of projects undertaken, international experience and number of projects completed. The measurement tool developed in this study has enabled the identification and ranking of the most experienced and sustained international contractors in Malaysia. Further, the CSIO dimensions will be considered as independent variables as part of future research.

Strength, Weakness, Opportunity and Threat Attributes of Malaysian Construction Firms in International Market

Competitive and saturated construction markets has led many domestic firms to expand internationally. Hence, the firms must adopt a superior and an effective strategy in order to endure the increasing dynamics and uncertainties in the foreign markets. In the early stage of strategic planning, one of the basic but important steps is to identify the strength, weakness, opportunity and threat (SWOT) attributes of the firms before they expand internationally. This process is very crucial to help the firms to manage and ease the inherent complexities and difficulties within international market domain. In this study, survey questionnaires were sent to 109 Malaysian construction firms listed under Construction Industry Development Board Malaysia (CIDB) with 21 % response rate. Relative importance index (RII) was used to rank the SWOT attributes. The findings revealed the following ranked attributes: Strengths—project management skill, financial strength and specialist expertise; Weaknesses—shortage of financial resources, shortage of labor and material resources and lack of research and development; Opportunities—increased in profitability, opening up new market and accessibility to new service areas; Threats—inflation and currency fluctuations, policy, law and regulations of host country and increase of interest rate. This study illustrates the identification of the most important SWOTs that exist in international construction operations. Hence, the findings would offer valuable information and practical guidance to construction firms in their preparatory works to internationalize.

Application of Automation Technology in Malaysian Construction Industry

Automation Technology has been widely used in the construction by developed country such as Japan and South Korea because of its good performance and beyond satisfactory in project workmanship. However, in Malaysian construction industry, Automation Technology is poorly accepted by the construction players. Implementation of Automation Technology may assist in reducing problems such as labor shortage, high fatalities in accidents and low quality which are among the major factors lead to project delay. Thus, this paper studies the acceptance of Automation Technology among the contractors and the limitations and barriers of the Automation Technology implementation. Questionnaires were distributed to Class A contractor in Kuala Lumpur area. The results of this study will shed some lights to the construction players in implementing Automation Technology in Malaysian construction industry, thus strategies to move forward can be recommended.