Content area
Abstract
The Chinese economy has experienced radical growth as a result of China’s economic transition during last decades. The large demand for construction and China’s recent accession to the World Trade Organisation (WTO) has attracted an increasing number of foreign construction companies to enter the Chinese construction market. This research studies how Western Multinational Construction Companies (WMCCs) achieve competitive advantages in the Chinese construction industry.
Substantial literature in strategic management and in construction industry is critically reviewed and a theoretical mode is established to explore sources of competitive advantages of WMCCs. A modified grounded theory strategy is adopted to collect data and explore solutions to the research problem.
Research results reveal two different models of sources of competitive advantages of WMCCs in mainland China due to different levels of economic transitions in different market sectors. Institutional forces play different roles according to the different levels of economic transitions. In some sectors, where the market is less developed, institutional forces make ‘the rules of the game’ for business activities. In other market sectors, where the market is well developed, institutional forces serve as ‘invisible background’ for business activities. Driven by different institutional impacts, WMCCs develop different sources of competitive advantages. Besides the institutional forces, firm-specific ownership advantages derived from market imperfections and firm resources, and country-specific national advantages derived from ‘national diamond(s)’ also provide sources of competitive advantages for WMCCs in mainland China.