Partner selection model for international construction joint ventures due to host country related risk factors

Due to globalization internationalization has been on the agenda of the construction firms for the last few decades and has become one of the most important research topics of the literature. International construction involves uncertainties common to domestic construction projects as well as risks specific to the host country. Construction firms mostly evolve collaborative relations with local construction firms as a strategic way of reducing the country risk and gaining competitive advantage. Construction firms also evolve collaborative partnerships with foreign partners in lieu of local partners due to complementary resources of the partners. Since, joint ventures (JVs) allow achieving a temporary partnership between participating firms; JVs have also been emerged as a popular strategy in international construction market. Construction firms have participated in international joint ventures (ICJVs) in order to enter new markets around the world as well as share the risks related to the host country and most of the time imply to the host government policies. The performance of ICJVs mostly depends on the selection of the appropriate partner and the success in the management process of ventures. Selection of the appropriate partner becomes vital for the success in management process of ventures and the performance of the project. International contractors share host country related risks, improve quality and also create value through successful joint ventures. Therefore, it becomes necessary for international contractors to concern the risks that are related to the host country as well as their potential gains while selecting a partner in order to establish an IJV. Political, economic, and socio-cultural environment of the host country are the main determinants of country risk. These risk criteria and their sub-criteria are including tangible and intangible variables. Consequently, Analytical Network Process (ANP) is selected as the most appropriate tool for this study, since it also allows interdependencies between the determined tangible and intangible variables. The main aim of this study is to develop a partner selection model for ICJVs due to host country related risk factors. Host country related risk factors including; economic, political and socio-cultural risks, industry related risk factors and projects related risk factors are the determinants of the developed model. Keywords: Partnerships, international construction joint ventures, international construction, partner selection, analytical network process.