Chang, T; Deng, X; Hwang, B G and Zhao, X (2019) Improving quantitative assessment of political risk in international construction projects: The case of Chinese construction companies. Journal of Construction Engineering and Management, 145(12): 04019083, ISSN 0733-9364
Abstract
Political risk is one of the most prominent dangers for International Construction Companies (ICCs) to deal with in overseas countries. Despite considerable studies on political risk management in international business, few have been focused on quantitative political risk assessment methods in international construction projects. Thus, this study aims to establish a quantitative model for assessing political risk in such projects. Through the comprehensive literature review and the pilot interviews with 10 industry experts, 36 political risk source variables were first identified. Then, a questionnaire survey was conducted with 155 respondents, and a confirmatory factor analysis (CFA) was performed to group these variables into six exogenous driver components and six endogenous vulnerability components. Subsequently, a quantitative assessment model was developed, based on the vulnerability theory and the Cannikin Law, and validated by 294 cases obtained from 45 Chinese Construction Companies (CCCs). This study incorporated the vulnerability variables and the Cannikin Law in political risk assessment and provides ICCs with a more effective approach to assess political risk using the available data from international research institutes and project systems. The application of the model can also facilitate in political risk warning and management in the international construction business. As the model proposed in this study can be applied to ICCs in different countries, the findings and outcomes of this study can contribute to the global body of knowledge of political risk management.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | cannikin law; international construction project; political risk; risk assessment; vulnerability |
| Index terms: | international business, risk management, international construction, risk assessment, interview, confirmatory factor analysis, construction company, survey, literature review, research institute, vulnerability, questionnaire, international construction project, body of knowledge |
| Subjects: | financial risk, environmental hazards, statistical analysis, data collection methods, strategic management, research organizations, risk assessment, organization, knowledge management, data analysis and analytics |
| Topics: | International Construction, Risk Management, Sustainability, Cost Management, Business Strategy, Information Management, Research Practice |
| Descriptive scope: | 4 PCEA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here