Inter- and Intraorganizational Trust in International Construction Joint Ventures

International joint ventures in construction often face a highly complex and dynamic environment because, in most instances, they are formed to build large-scale engineering projects. One can distinguish two organizational levels that together constitute the joint venture system: (1) the interorganizational level formed by the partners and (2) the intraorganizational level of the joint venture. The partners seek to reconcile their different interests on the interorganizational level, as each of them follows the goal of profit optimization. Here, formal control mechanisms are more important than trust. Actors on the intraorganizational level face the construction task. One of the primary requirements is to reduce the project complexity. Within the joint venture, many international construction joint ventures disentangle their responsibilities by functional separation and delegation of work. In a social group, delegation of work requires trust in the capability and willingness of others to perform their duties without supervision. Especially during the initial phase, international construction joint ventures are high-pressure environments without established teams. Trust is a mechanism that allows to reach goals efficiently within this setting. As a consequence, we can find a special form of trust in international construction joint ventures: necessitated general trust that is extended to everyone even without prior knowledge. These findings are new and have high practical relevance as trust proves to be a most important success factor.     

Performance of International Joint Ventures in Construction

International joint ventures (IJVs) have become popular because of their importance as a strategic alternative in global competition. The measurement of the performance of IJVs has been an important research topic for a few decades, however there is no consensus on an appropriate definition and measurement of IJV performance. In this study, a model is proposed to assess IJV performance in construction. The validity of the proposed drivers and measures of performance is investigated and relationships between them are analyzed. The effects of interpartner fit/relations, structural IJV characteristics, host country factors, and project-related factors on IJV performance are examined through a questionnaire survey. IJV performance is defined by a four-dimensional construct that considers the performance of the project, the IJV partners, the IJV organization itself, and the perceptions of the IJV partners. The results point out the significance of the interpartner fit and the quality of partner relations for a successful IJV operation. The findings of the study also suggest that project-related factors have a moderate influence on IJV performance. In a properly designed IJV structure, partners with compatible skills, resources, and cultures are found to maintain good relations and are expected to achieve greater IJV success.     

Implications of Culture in the Performance of International Construction Joint Ventures

Joint ventures have become popular because of their importance as a strategic alternative in global competition. One of the reasons why international joint ventures (IJVs) are difficult to manage is because the cultural distance between IJV partners has significant impact on alliance performance. Since construction projects are highly sensitive to external risks, the effect of the culture in the location in which the IJV operates is also significant. In this study, the effect of cultural similarity/difference relative to the national and organizational characteristics of partner companies on IJV performance is examined through a questionnaire survey. The impact of the cultural similarity/difference between an IJV partner and the host country is also assessed. The results of the study suggest that differences in organizational culture have a greater impact on IJV performance than differences in national and host country culture. The findings also reveal that similarity between the national cultures of IJV partners has a negative effect on IJV performance. The analysis of the data failed to provide evidence that IJV performance is affected by differences between the culture of the host country and the culture of an IJV partner.     

Toward a Multidimensional Performance Measure for International Joint Ventures in Construction

Measuring the performance of joint ventures has been an important research topic for a few decades. No consensus on an appropriate definition and measurement of performance of international joint ventures (IJVs) has yet emerged, and the validity of the underlying measures is still questionable. In this study, the construct validity of measures that define IJV performance in construction is evaluated using data obtained through a questionnaire survey. A second-order performance construct is proposed, which is measured by means of project performance, partner performance, performance of IJV management, and perceived satisfaction with IJV. The validity of the performance measures is evaluated by means of tests that assess content validity, reliability, and convergent and discriminant validity. The findings reveal that all proposed indicators are valid measures of IJV performance and that they correspond to different dimensions of performance. This research is expected to trigger further work on developing a multidimensional performance measure for IJVs in construction. In addition, the findings can help practitioners reflect on how they operate and measure the success of their IJVs.     

Model for Organizational Governance Structure Choices in Construction Joint Ventures

Due to the recent trend of utilizing joint ventures (JVs) in construction, construction firms are faced with the challenges in managing construction JVs. Among those challenges, the choice of organizational governance structure has a profound impact on JV performance, but receives little attention. The objective of this study is to investigate the choice of organizational design in construction of JVs and the underlying rationales of the choice. Through the theoretical lens that integrates both cost and resource perspectives, we develop a model that focuses on four major factors for determining governance structure choices, namely, corporate cultural difference, trust, needs for procurement autonomy, and motivation for learning. A case study of eight JVs in the Taiwan High Speed Rail project was conducted to empirically evaluate the proposed model. It is shown that the eight cases studied jointly replicate the linkage between the hypothesized determinants and the governance structure choices and reasonably support the proposed model.     

Performance in International Construction Joint Ventures: Modeling Perspective

This paper reports on a self-reported survey of performance in international construction joint ventures formed and operated by Australian and British contracting organizations. Based on previous studies, a questionnaire survey was developed to investigate the relationships between reported risk and success factors, and the performance of ventures. Through structural equation modeling, the paper empirically examines the effect of key processes such as partner selection, venture formation, and operation on venture performance. The results provide evidence that local partner attributes influence venture formation which, in turn, is strongly and positively related to its operation. These results also suggest that the negative impact of host government-related risks on venture formation is direct, while their impact on venture performance is indirect, through creating a “less certain” operating environment. Project-related risks appear to have strong and negative dual “direct and indirect” effects on venture performance. Based on these empirical results, the paper advocates that selecting a suitable complementary local partner and adopting a proactive risk management strategy are vital antecedents to successful venture performance.     

Using Analytic Network Process to Predict the Performance of International Construction Joint Ventures

Strategic collaborations such as joint ventures (JVs) have become an important way of exploiting business opportunities for construction companies. However, such entities are difficult to manage due to their composite structures, which entail diverse organizational cultures, styles, and objectives. Therefore, measurement of JV performance has been an interesting research topic although there is no consensus on the definition, measures, and variables of performance yet. Considering the inherent complexities of the construction projects, only an adequate combination of criteria allows assessing the international construction joint venture (ICJV) performance. Within this study, an analytic network process model is developed to examine the links between the determinants of performance and to observe the influences of these factors on the ICJV performance. As a result, interpartner relations, structural factors and interpartner fit are found to be the most important determinants of ICJV success. Effectiveness of conflict resolution and control mechanisms contribute significantly to ICJV performance. Cultural fit is the most important fit that should be attained between the partners. The performance of the model is tested on eight real construction projects and satisfactory results are obtained.     

Social Network Analysis of Collaborative Ventures for Overseas Construction Projects

As the world construction market becomes more globalized, an increasing number of construction companies, including both large companies (LCs) and small and medium-sized companies (SMCs), have extended their business to the global market. During this process, the number of collaborative ventures to mitigate the burden of entry risks has greatly increased. This study aims to investigate the formation of construction firms’ collaborative networks for performing international projects from both the LC and SMC network perspectives. To this end, 389 real cases of overseas projects executed by Korean firms over the last two decades that involved collaboration were analyzed using social network analysis (SNA) approach. The result showed that LCs and SMCs have different perspectives when pursuing collaborative ventures for overseas construction projects; LCs have a tendency to form large and dense networks, whereas SMCs prefer to maintain long-term and targeted relationships. Moreover, this study showed a series of apparent tendencies in the development of collaboration networks to realize better profit performance under risky project conditions. Through analysis based on real cases, this study validated the applicability of SNA in analyzing the collaboration in the construction domain. More importantly, this study is useful as an aid for developing collaboration strategies to achieve better outcomes while considering the relevant network patterns and their different levels of performance under the assorted network attributes.     

Fuzzy Analytical Hierarchy Process Risk Assessment Approach for Joint Venture Construction Projects in China

Research and practice show that construction joint venture (JV) activities in China are opportunities that can bring potential benefits but at the same time may generate many risks. While research has studied these risks and presented useful advice for managing individual risks, the methodologies used to analyze the risks were mainly qualitatively based, and there is a gap in using the quantitative method that can integrate a risk expert’s knowledge to assess the risks associated with JV projects. This paper sets up a hierarchy structure of the risks and then develops a fuzzy analytical hierarchy process (AHP) model for the appraisal of the risk environment pertaining to the JVs to support the rational decision making of project stakeholders. An empirical case study is used to demonstrate the application of the proposed fuzzy AHP model. It is concluded that the fuzzy AHP model is effective in tackling the risks involved in JV projects. The information presented in this paper should be shown to all parties considering JV business opportunities in China, and the proposed approach should be applicable to the research and analysis of risks associated with any type of construction projects.     

Strategic Management Practices in Turkish Construction Firms

This paper presents a study that aims to define the present position of Turkish construction companies in terms of strategic management. It is based on a survey measuring strengths and weaknesses in the “strategic management” practices of Turkish construction companies, and thus reveals potential opportunities and threats in a generalized manner. The results highlight the current strategic management practice of construction firms for designing their own future. Toward this aim, a detailed questionnaire was administered to 52 construction companies. The culture of companies and their perceptions of strategic management were shown to have serious shortcomings. However, specialization on different project types through joint venture companies established by their partners was found to be a major strength of many companies. These companies also pointed out the developing and unstable nature of both the political and economic structure of Turkey as their most significant threat. This disadvantage has inclined many firms to choose investment in the private sector as a response.     

Preparing Civil Engineers for International Collaboration in Construction Management

Economic globalization is increasingly affecting both the construction industry and academia. It is changing the traditional roles of civil engineers and construction managers. Cross-cultural collaboration and communication skills, multinational team management skills, the ability to overcome the social challenges of geographically distributed teams, and familiarity with construction materials, standards, and methods of foreign countries are vital for modern construction professionals. However, the traditional skills and education style of engineers and construction managers do not equip them to successfully deal with such issues. This paper describes the experiences of a university course International Collaborative Construction Management that was developed to educate the next generation of civil engineers to be more internationally savvy. Throughout the three years that the course has been conducted to date, students in Turkey, the United States, Israel, and Brazil were grouped in multinational teams. They collaborated to develop construction schedules, cost estimates, risk assessment plans and response strategies and to prepare bid documents for actual construction projects. Within the context of this course, students were introduced to the different challenges of cross-cultural collaboration and improved their technical/managerial skills through direct involvement in hands-on experiences.     

Disputes and Dispute Resolution Systems in Sino-Foreign Joint Venture Construction Projects in China

There has been a sharp increase in the number of Sino-Foreign Joint Venture (SFJV) construction projects in the People’s Republic of China since the 1990s. Despite the Chinese Government’s new measures for boosting foreign involvements, entering into the construction market remains problematic for many foreign contractors. One of the problems concerns construction disputes. In light of this, this paper reports a study on disputes and dispute resolution systems in SFJVs. A questionnaire survey of 41 practitioners in the field was carried out. The main purpose was to identify the most common sources of disputes and the most commonly used dispute resolution methods in SFJVs. Results show that the sources of construction disputes can be classified into three categories: contractual, cultural, and legal matters. The most commonly used dispute resolution methods are mediation and arbitration. These findings will give both Chinese and foreign contractors invaluable insights into disputes and dispute resolution systems in SFJV projects.     

Factors Affecting International Construction

A construction company’s decision to expand into international markets must be based on a good understanding of the opportunities and threats associated with international business, as well as the development of company strengths relative to international activities. These factors were evaluated in this study by surveying the executives in charge of international construction of large United States based contractors. The information was collected by means of two rounds of a Delphi survey, the results of which were used as input in an analytic hierarchy process (AHP). The findings indicate that track record, specialist expertise, project management capability are the most important company strengths; loss of key personnel, shortage of financial resources, and inflation and currency fluctuations are the most important threats relative to international markets; and increased long term profitability, the ability to maintain shareholders’ returns, and the globalization and openness of the markets are the most important opportunities available in international works. This study is of relevance to practitioners as it systematically highlights the factors that affect international construction for the benefit of executives of medium-to-large size construction companies who are considering expanding into overseas markets. It is of relevance to researchers too as it demonstrates the successful use of the combined Delphi and AHP.     

Risk Management in International Construction Joint Ventures

This paper identifies the risk factors associated with international construction joint ventures (JVs) from and “integrated” perspective. The risk factors are grouped into three main groups: (1) Internal; (2) Project-specific; and (3) External. It examines the most effective mitigating measures adopted by construction professionals in managing these risks for their construction projects in East Asia. Based on an international survey of contractors, it was found that the most critical risk factors exist in the financial aspects of JVs, government policies, economic conditions, and project relationship. When entering a foreign construction market in the form of a JV, a foreign construction company could reduce its risks if it would carefully select its local partner, ensure that a good JV agreement is drafted, choose the right staff and subcontractors, establish good project relationships, and secure a fair construction contract with its client.     

Lessons Learned from Principled Negotiation in International Construction Projects

Compared with other dispute resolution approaches, negotiation is still the easiest, most efficient, and most time- and cost-saving approach, if conducted appropriately. However, dispute resolution in international construction projects faces many unique challenges. This requires effective negotiation approaches, principles, and strategies. Although principled negotiation has been developed for more than two decades and is widely accepted by academics as an effective approach to solving conflicts and disputes, its applications in industries are still very limited. Practitioners need applicable guidelines and lessons learned. This paper, by reviewing and analyzing the negotiation processes in two international projects, discusses the key challenges facing construction dispute negotiation and the applications and limitations of principled negotiation in dispute resolution.     

Mobilizing Institutional Knowledge for International Projects

Multinational engineering consultants, contractors, and real estate developers work on projects in various countries, encountering many challenges that arise from cross-national differences. These projects frequently bring together diverse participants in an unfamiliar environment. In these situations, firms are exposed to different “institutions”—regulations, norms, and cognitive-cultural beliefs—that can increase misunderstandings, delays, and costs. Knowledge of these institutional elements is critical to create a project that is both locally sustainable and profitable for the firm. Departing from institutional theory and the knowledge-based view of the firm, we conduct exploratory research based on interviews from informants in 15 firms to identify the methods that multinational real estate developers, contractors, and engineers use to transfer and mobilize institutional knowledge for their global projects. We contribute to theory by adding to the developing literature that uses institutional theory to examine differences on global projects and by analyzing the specific methods firms use to transfer institutional knowledge internally, across projects and divisions. Ultimately, this research, combined with the work of others, can develop new processes for firms engaged in international projects to enhance their mobilization of institutional knowledge, and thereby improve the outcomes of international projects.     

International Comparison of Cost for the Construction Sector: Purchasing Power Parity

The importance of the construction sector in national economies around the globe and the global nature of the industry require a prudent international comparison of construction costs. From the view of international construction ventures, cost comparisons have generally been accomplished using published currency exchange rates. Global organizations dealing with development aid and the comparison of the gross domestic product (GDP) of nations have used an approach that has its roots in established econometric theories. This approach is based on the Casselian purchasing power parity (PPP) doctrine that essentially conducts the comparison based on the local purchasing power of currencies, as opposed to exchange rates. The World Bank, which conducts the GDP comparison, uses the PPP-based approach to compare construction sector output. This paper provides an overview of the background and application of PPP and its use for international cost comparisons conducted for various nations. Methods currently used for construction cost comparisons are reviewed. A critical review of domestic construction cost comparison approaches is provided with the intent to identify the key differences between temporal and spatial comparisons. Case studies of construction cost factors are used to demonstrate the importance of PPP-based cost comparisons for construction economics.     

Strategies Adopted by International Architectural, Engineering, and Construction Firms in Southeast Asia

There are many business opportunities for international architectural, engineering, and construction firms to work in Southeast Asia (SEA) due to its high volume of construction demand and its growing economy. Before entering the region, these industry practitioners need to decide on the appropriate market entry modes and business strategies. The objectives of this research are to investigate the effective market entry modes and business management strategies that industry practitioners can adopt for SEA projects. The research method is based on a structured questionnaire. The study found that the most effective market entry modes are: setting up wholly owned foreign subsidiaries and forming project joint ventures with local firms. The most effective business strategies are: providing a superior product or service and paying great attention to client satisfaction. It is recommended that industry practitioners place emphasis on customer satisfaction by considering all aspects of the client’s requirements and the proposed project’s usage throughout its intended life cycle, to differentiate itself from its competitors.     

Determinants of International Architectural, Engineering, and Construction Firms’ Project Success in China

As China becomes a member of the World Trade Organization, many international architectural, engineering, and construction (AEC) firms are undertaking or expected to undertake projects there. This study identifies the significant factors that contribute to the successful performance of projects undertaken by international AEC firms in China. Data were collected using structured questionnaires from foreign (non-Chinese) AEC firms that have completed projects in China. Personal interviews with 27 experts were also conducted to supplement and test the survey findings. The findings reveal that the variable that affects the most number of success measures is the AEC firm’s ability to understand the client’s requirement. Achieving this brings about good project quality performance and owner satisfaction. Furthermore, firms that have superior product or service quality would also achieve better project performance. The interviewees also exhorted the importance of having core competencies as a critical success factor for projects in China. Practitioners may use the findings to help them manage their projects in China, so as to achieve higher levels of success.     

Adoption and Use of Interorganizational ICT in a Construction Project

The objective of this research is to explain why actors are not using interorganizational information and communication technology (ICT) in construction projects in the intended way, by determining the mechanisms that influence the way actors use this ICT over time during a construction project. This explorative research results in a theoretical model that contains four key categories that explains the way actors use ICT in construction projects: (1) personal motivation; (2) external motivation; (3) knowledge and skills; and (4) acting opportunities. The model is compared with three existing influential models about the adoption and use of ICT: the unified theory of acceptance and use of technology, the theory of planned behavior, and the technology acceptance model. In these models missing elements are found. In addition, it is found that fundamental characteristics of construction projects, such as the fragmented and temporarily nature of construction projects, and the different working practices, resources, and objectives of the organizations involved cause most of the barriers to the intended use of interorganizational ICT.