Abstract/Summary

Construction firms increasingly take a global outlook and operate over large geographic areas, often across significant political and/or national borders. A growing source of firms working across borders is from emerging economies, in particular China. One of the significant challenges for these firms is the appropriate transfer and use of practices across headquarters and subsidiaries located in diverse regions that may exhibit very different institutional environments. Drawing upon the neo-institutional theory, this research aims to understand why and how Chinese construction firms transfer practices across borders to regions with distinctively different institutional environments. A single case study was conducted around a major Chinese construction firm transferring the prefabrication practice developed in Hong Kong to Mainland China. Data were collected through semi-structured interviews, observation, and documents. Thematic data analysis was employed. The case describes the transformation of the prefabrication practice and the influence on the local institutional arrangements, with the evidence of local policy shifting and best practices changing. The research contributes to international business literature by identifying ‘institutional detachment’ and ‘institutional participation’ as two strategic responses that mitigate institutional distance through an active approach to shape local institutional environments. Institutional differences can be lessened by buffering from the home environment and challenging the host environment. The level of institutionalisation of transferred practices in the host environment can be strengthened by cooperating with local actors and influencing local criteria. Further, the case study findings revealed a four-element process to describe why and how the prefabrication practice is diffused and transformed. The process has the following elements: localisation of the practice (aligning the meaning of the practice to local market opportunity); exploitation of the practice (transferring and internalising the prescribed activities); exploration of the practice (adding new activities internally and externally); and standardisation of the practice (accommodating the new meaning of the practice). The transforming approach presented in this research offers a framework for firms to navigate institutional landscapes thoroughly, bridge differences and achieve mutual business benefits.