Entry Strategy of Korean Construction SMEs in the African Market

Africa is emerging as a promising land for companies exploring foreign market entry opportunities. The purpose of this study is to address the factors influencing entry mode decision of Koreanconstruction SMEs in the African market. Using a cross-country comparative case study approach,we analyzed entries of Korean specialty contractors in three African countries: Morocco, Nigeria,and Algeria. Findings reveal that entry mode is highly influenced by host country factors suchas regulations and safety. In particular, SMEs stagger entry mode and entry process to thehost country uncertainty level. To keep an option to expand the investment later in Algeriaand Nigeria having a high uncertainty level, SMEs start with low level engagement, for instancesubcontractor, and extend further when they have acquired enough proprietary information aswell as a strong local network. This staged entry mode is grounded in real option theory. Thisresearch emphasizes on industry factors relevant on the entry mode decision and the uniquetraits of the construction industry. It also builds a systematical approach of Korean constructionSMEs towards the African market. Another implication of this research is to raise the awarenessfor the reciprocal growing interest of Korean SMEs for the African market that needs to bestimulated by more incentive policies.