Host-Country Related Risk Factors in International Construction: Meta-Analysis

Abstract

Internationalization has been on the agenda of construction firms as a strategic option in global competition. Due to globalization every sector including the construction industry has faced with high levels of competitiveness, uncertainty, and risk. International construction involves common risks to domestic construction, as well as risks that are related to the host country. These risks have serious effects on the performance of international projects. Since the sustainable competitiveness of international contractors depends largely on the effective management of these risks, their assessment becomes vital for the success of international contractors. The main aim of this study is to analyse the risks for international construction projects that are related to the host country. Meta-analysis technique is used in order to determine these risks. This paper, therefore, reviews the literature that has been published in four most respected construction and management journals, these being; Journal of Construction Engineering and Management, Journal of Management in Engineering, Construction Management and Economics, and International Journal of Project Management for the period of 2000-2010. International construction risk assessment models are also reviewed within the context of this study, since host country related risk factors were found to have serious effects on the profitability of international contractors due to literature review. As a result; political stability, law and regulations, exchange rate risk, cultural differences, inflation, expropriation, tax discrimination, language barrier, bribery and corruption, force majeure, and societal conflicts in the host country are found to be the most important risk factors in international construction. Findings of this study can be used in risk assessment models for international construction projects.