Which Strategies Are More Effective for International Contractors during Boom and Recession Periods?

Abstract

Given the global financial crisis and other plummeting market conditions in 2008, the international construction market moved from boom to recession. Although this recession is expected to be completed soon, many international contractors still have difficulty deciding on the strategies that are more effective during volatile market conditions. Korean contractors have already experienced one recession in recent times, instigated by the Asian financial crisis in 1997, and two boom economies before and after this recession. To investigate more effective strategies used in the overseas construction market, this study evaluates 31 Korean contractors’ international performance over the different periods (boom, recession, and reboom) and analyses the effects of diversification, localization, strategic alliance, resources cost allocation, and financial soundness by using 14 key variables. The results showed that regional diversification had a profound effect on overcoming the recessionary periods. Localization was also strongly positive, specifically during the reboom period. Particularly, the outperforming contractors were found to increase the level of localization and the proportion of joint ventures with third countries’ contractors across the different periods. These findings are expected to assist international contractors in developing more effective strategies given fluctuating global economic conditions.