Strategic adaptations to environments inside China : An empirical investigation in the construction industry

Purpose – The purpose of this paper is to examine a series of environmental factors and industrial conditions governing the construction industry in China. The outcome of this part of the analysis sheds light on the development of appropriate competitive strategies and important resources and competencies (IRCs) to establish long‐term competitive advantages. Design/methodology/approach – The overarching conceptual framework consists of both external and internal analyses. Since, the scope of work is very broad, the materials presented in this paper is limited to external analysis of environmental factors. The study is primarily derived from a literature review and synthesis of data gathered from various public sources. Certain parts of the analysis utilize frameworks developed by other researchers and selective statistical methods. Findings – Some environmental factors, such as government intervention and legal and regulatory systems require the development of Guanxi (relationships) to cope with. Other factors including market structure, project procurement systems, horizontal market segments related to construction, regional characteristics and upstream and downstream functions within the construction value chain are suggestive of five potential types of competitive strategies: cost leadership, differentiation, market/product diversification, geographical diversification, and vertical/functional integration. Research limitations/implications – The research study as a whole is targeted at large construction firms in China that belong to the First class qualification category. Therefore, the proposed competitive strategies and IRCs may not be applicable to small and medium construction enterprises. Originality/value – Application of strategic management theories and empirical findings related to the Chinese construction industry is lacking. This research fills this gap and builds a foundation for future studies related to this industry.