Using PLS-SEM Path Modeling to Determine Factors Influencing Performance of Malaysian Construction Firms in International Markets

International market expansion into foreign markets has become increasingly important for construction firms. In this borderless world, no market is safe from foreign competition. This situation is also evident for the construction firms, as international construction is not a new phenomenon. Hence, firms have to be prepared and adopt effective strategies to face various challenges in unfamiliar environments and most importantly be able to sustain and perform in new business ventures. The main aim of this research is to determine the factors influencing the performance of the Malaysian construction firms in international markets. Questionnaire surveys were sent to 115 construction companies registered with CIDB Malaysia. A structural equation modeling (SEM) using partial least square (SMART PLS 2.0) was used to determine significant factors influencing performance of the firms. The confirmatory factor analysis carried out through SEM-PLS analysis has revealed that firm factors have significantly influenced the firm’s performance. The findings based on loadings generated by the PLS-SEM model revealed the eleven significant factors influencing the firm’s performance are the firm’s ability to assess market signals and opportunities, long-term and strong management strategic orientation and objectives, superior management and organizational dynamic capabilities, firm’s financing capacity and competencies, strong resources related to level of knowledge and Research and Development, profit targets, level of knowledge and international experience, product differentiation (strong brand name), reputation, good track record and competitive advantage. The five significant performance factors are based on the acquirements of competitive advantages, return of investment, prestige, stability, business expansion and security of the firm.