Javier C. Cuervo

Entry and business strategies used by international architectural, engineering and construction firms in China

International architectural, engineering and construction (AEC) firms need to decide on the appropriate market entry mode and business strategies when undertaking projects overseas. The objectives of this research are to investigate the effective market entry modes for penetrating China and the effective business strategies for managing projects in China. The research method is based on a structured questionnaire and data were collected via postal survey. Interviews have been conducted to complement the survey. The results show that establishing a wholly owned subsidiary in China is the most effective entry mode. Foreign AEC firms need to adopt a differentiation strategy by providing niche and superior service. They must also pay great attention to customer satisfaction to gain competitive advantage and clinch and manage projects. To succeed in China, foreign AEC firms need to set up a physical office there, to develop a good understanding of local by‐laws, understand client requirements better and therefore provide them with a superior product or service.

Ownership advantages/disadvantages of Singapore transnational construction corporations

Expanding beyond Singapores boundaries has been a source of increased business for Singapore transnational construction corporations (STCCs). This paper analyses the significance of ownership advantage and disadvantage factors of STCCs in pursuing their international construction business, relative to other ASEAN contractors and contractors from developed countries. Moreover, this study examines if these ownership factors do vary significantly according to firm specific contextual variables in the STCCs such as size, international age, multinationality and extent of specialization/diversification. Based on responses from 22 STCCs, this study has found that the most important ownership advantage factors of STCCs were identified as coming from: (1) information, knowledge, technology and R&D capability; (2) the firms name and reputation; and (3) management and organizational capability. Relative to established international contractors STCCs have a significant size disadvantage with reference to certain project types.

A cointegration approach to the price dynamics of private housing. A Singapore case study

This paper looks into the dynamics of private housing prices in Singapore from the first quarter of 1985 to the fourth quarter of 1995. Employing the cointegration analysis, the paper shows that overall private housing price is cointegrated with real gross domestic product, prime lending rate and private housing starts. An error‐correction mechanism is also incorporated in the estimation of changes in the overall private housing price to account for the short‐run deviations from the equilibrium relationship among these variables.

Significance of location factors for Singapore transnational construction corporations

Dunning’s eclectic paradigm of international production, which focuses on the ownership, location and internalisation factors, presents a useful framework to explain the foreign value‐added activities of transnational corporations. “Eclectic paradigm” means a general framework or model chosen from what is preferred from various theories, systems or doctrines. The present study extends the eclectic paradigm to a study of Singapore transnational construction corporations (STCCs) and examines what location factors are viewed as the most significant for STCCs engaged in foreign value‐added construction‐related activities in their major international construction market. This study examines if these location factors vary significantly according to firm‐specific contextual variables in the STCCs, such as size, international age, multinationality and extent of specialisation/diversification, as well as the major reasons for STCCs to export their services overseas. The most important host location factors identified by STCCs operating in other Southeast Asian countries are: the host governments’ attitudes, policies and regulatory framework; the social, political, cultural and geographic factors; and the cost of doing business factors.

Global performance measures for transnational construction corporations

The top transnational construction corporations (TCCs) are ranked according to their international revenues by the Engineering News Record. The amount or share of international revenues of a contractor however does not necessarily reflect the contractors global performance. The geographic spread of works in different countries and regions of the world and the extent of liberalization or protection of markets do influence the global performance of TCCs. To account for these factors, new measures of global spread, global intensity and global intensity with domestic performance are proposed which measures the global performance of contractors. These measures of global performance were applied to the top 20 international contractors reported by the ENR. The ranking of the top 20 TCCs shifts when the new measures of global performance are applied to these companies. One salient finding is that not all TCCs belonging to the top five, in terms of international revenues, are truly global construction corporations based on new global performance indicators. A significant implication for future research work is to assess how managers of TCCs can transform global presence and performance, as reflected in these new measures, into global competitive advantages.

Significance of internalization factors for Singapore transnational construction corporations

Singapore Transnational Construction Corporations (STCCs) are engaged in foreign value‐added construction‐related activities in foreign markets. A survey was undertaken to assess the significant factors that serve as reasons for STCCs to benefit from their internalization advantages. The protection of the reputation of the firm and the quality of service to clients were the two related and more important reasons for internalization. STCCs with greater international presence also stressed on avoiding the costs of broken contracts and ensuing litigations as an incentive for internalization. Regardless of the size, years of international experience, or whether specialized or diversified, STCCs viewed the ranking order of seventeen internalization factors to be significantly the same. Besides controlling costs, managers of STCCs will do well by guaranteeing the quality of works to foreign clients to maintain and enhance further the reputation of the firm and contribute positively to the Singapore brand name.

Protecting the survival of local SMEs during rapid tourism growth: ongoing lessons from Macao

Purpose The purpose of this paper is to investigate how rapid tourism growth in Macao affected local small and medium-sized enterprises (SMEs). The liberalization of the gaming industry to multinational corporations (MNCs) in 2002 led to a sevenfold increase in foreign direct investments (FDI) in Macao. Design/methodology/approach A survey grounded in issues concerning how SMEs adapt to the effects of FDI in Macao was carried out by interviewing managers of local SMEs, MNCs and an SME association. Information from various published sources was also consulted to complement and update the analyses. Findings Findings revealed that the emergence of investments by MNCs in Macao brought favorable and unfavorable effects to local SMEs. Local SMEs were challenged in terms of recruiting and retaining human resources, given the attractive salaries and training offered by MNCs. Equally challenging for local SMEs was the effect of economic growth on the costs of property space in Macao’s small territory. However, local SMEs have advantages when collaborating with MNCs as the former serves as important partners in networking. Local SMEs can collaborate quicker with their network of local stakeholders which MNCs lack and need. The government and various stakeholders will need to continue their role in developing the capacities and capabilities of local SMEs. Research limitations/implications The research study has important public policy implications on structuring the foreign labor and property needs of local SMEs. Originality/value This paper provides insights on the challenges SMEs in small-open economies experience during rapid tourism growth fueled by MNCs, and some policy recommendations are proposed.

An Entrepreneurial Perspective on Developed Economy Firms’ Learning from Asia

Abstract Emphasizing the learning aspect of entrepreneurship in international business contexts, this chapter illuminates both the differences between the effectuation of entrepreneurial competencies by individuals and the capabilities developed in multi-national firms and the interrelationships between these two processes. Based on an integrative perspective that combines Dunning’s international business paradigm with Sarasvathy’s dynamic model of effectuation, two parallel levels of entrepreneurial learning were posited to occur as enabling mechanisms for the process of reverse-transferring learning from foreign affiliates in developing markets in Asia to the firms’ respective headquarters located in developed economies. Cases of reverse knowledge transfer in three multi-nationals (Amway, Panasonic and P&G) with integrated operations in China and India, were analyzed and shown to support the developed integrative perspective on entrepreneurial learning, reverse knowledge transfers and firm performance, presented in the earlier part of the chapter.