Localization Typologies Evident among Foreign Enterprises Active in the Chinese Construction Market

Abstract

The successful globalization of enterprises is predicated on them finding the right balance between retaining the core competitive advantages of home-grown strengths while integrating the best of locally sourced resources and competitive circumstances to leverage those core competencies to maximum strategic effectiveness. Despite the great academic interest that exists in this research area, no comprehensive investigation has been attempted to profile the localization practices of construction enterprises in a foreign context. This deficit is addressed in this study with an investigation of the degree to which foreign firms active in the Chinese construction market have adapted their business activities in response to local circumstances. Five localization parameters are considered: (1) client base, (2) human resources, (3) factor inputs, (4) value chain, and (5) new capability acquisition. Sixty foreign firms active within the Chinese construction market were investigated. Cluster analysis techniques were used to identify generic localization patterns. Five major patterns of foreign firm localization and five minor patterns were generated, which provide a better understanding of localization activities of international construction companies. Clear and strong trends are evident within the 10 localization cluster patterns. The uncovered localization patterns offer important insights to construction industry practitioners, particularly emerging market entrants, in formulating or reviewing their foreign market entry strategies, in addition to significant data against which researchers may explore the validity of extant theories of localization.