Cultural Considerations in International Construction

Contracts
Edwin H. W. Chan1 and Raymond Y. C. Tse2

Abstract: International construction projects involve multinational participants from different political, legal, economic, and cultural
backgrounds. As one of the major issues affecting the management of international construction projects, culture deserves wide research.
This paper aims to establish a valid groundwork for further research on the impact of cultural issues on contractual arrangements; conflict
causation, and the selection of dispute resolution mechanisms for international construction projects. The paper reviews the characteristics
of international construction activities and discusses the cultural context. It sets the research background for disseminating the findings of
two surveys, carried out in Hong Kong and in London and Sydney. The study identifies the important features expected for the contract
of international construction projects and ascertains their significance to further in-depth research.
DOI: 10.1061/共ASCE兲0733-9364共2003兲129:4共375兲
CE Database subject headings: Contracts; Dispute resolution; Hong Kong; International factors; Construction industry.

Introduction research study, one conducted in Hong Kong during 1998, and the
Within the general trend of globalization, worldwide economic other in London and Sydney during 1999.
cooperation and technology transfer are common practice. Inter- The aim of this paper is to establish a valid foundation for
national construction projects are just one of the activities that further research on the impact of cultural issues on contractual
involve multinational participants from different political, legal, arrangements, conflict causation, and selection of dispute resolu-
economic, and cultural backgrounds. According to Latham tion mechanisms for international construction projects. Follow-
共1994兲, project procurement and construction disputes are two of ing this introduction, the second section reviews the characteris-
the major concerns in the construction industry. Conflict and dis- tics of international construction activities and discusses the
putes are causing major damage to the industry. cultural contextual factors that contribute to conflict and difficul-
The work of researchers such as Turin 共1972兲, Aniekwu and ties in the management of the international construction projects.
Okpala 共1988兲, and Ofori 共1984, 1991兲 show that similar prob- The third section introduces the research methodology and data
lems are noted worldwide and that the less-developed or devel- collection of the two surveys, the fourth section explains the data
oping countries are the worst hit by the problems. Research has analysis, and the fifth presents the key observations of the re-
been conducted to prevent and resolve construction disputes in search results and makes recommendations for further study in
specific countries 共Vorster 1993; Diekmann and Girard 1995; this area. The paper ends with a general conclusion.
Cheung 1998; Kumaraswamy and Yogeswaran 1998兲. More gen-
erally, Simon 共1987兲 argues that to understand real decision mak- International Construction Activities
ing, utility maximization is neither a necessary nor a sufficient
condition for the conclusion reached. The action comes from em-
pirical assumptions, including assumptions about how people Characteristics and Problems
view their world. International construction projects are those in which the contrac-
Although concerns about cultural issues seem to be discussed tor, the lead consultant, or the employer is not of the same domi-
widely in construction, their formal analysis is infrequent. Re- cile, and at least one of them is working outside his or her country
search is necessary to minimize the problems in the global con- of origin 共Stebblings 1998兲. The construction industry is complex
text. This paper disseminates the research findings of two sets of and multidimensional, and to improve this situation, the major
questionnaires carried out by the first writer as part of an ongoing construction projects in developing countries are often carried out
in joint ventures with construction companies from developed
1 countries. International collaboration can be of particular benefit
Associate Professor, Dept. of Building and Real Estate, The Hong
Kong Polytechnic Univ., Hung Hom, Kowloon, Hong Kong SAR. to less-developed and developing areas. Transglobal economic
E-mail: [email protected] developments offer an opportunity to develop products using the
2
Professor, International City University of America, Asian House, 1 most up-to-date expertise and knowledge in a cost-effective man-
Hennessy Rd., Hong Kong SAR. E-mail: [email protected] ner 共Clark and Ip 1999兲. International projects are normally fast
Note. Discussion open until January 1, 2004. Separate discussions paced but require a longer time span, and more parties are in-
must be submitted for individual papers. To extend the closing date by
volved. Collaboration between the concerned parties requires
one month, a written request must be filed with the ASCE Managing
Editor. The manuscript for this paper was submitted for review and pos- clear project definition, and each set of objectives under the defi-
sible publication on February 6, 2001; approved on July 1, 2002. This nition may be subject to changes as the project evolves.
paper is part of the Journal of Construction Engineering and Manage- Parties to international projects are also concerned with the
ment, Vol. 129, No. 4, August 1, 2003. ©ASCE, ISSN 0733-9364/ clarity of local laws and the interpretation of those contracts gov-
2003/4-375–381/$18.00. erned by local laws. Transglobal collaboration calls for greater

JOURNAL OF CONSTRUCTION ENGINEERING AND MANAGEMENT © ASCE / JULY/AUGUST 2003 / 375

cultural understanding and sensitivity in terms of personnel man- mensions deserve in-depth study in the context of the interna-
agement by the concerned parties. Human problems are involved, tional construction industry. Construction professionals involved
such as language, communication, and the understanding of cul- with international projects should at least be able to recognize the
tural differences. It is generally acknowledged that the contextual expectations and behavior of others. Cultural issues are expected
environment of a country or region also influences the construc- to contribute to conflicts among parties to an international project
tion industry of each jurisdiction. Based on previous work by and increase difficulties in the management of the project 共Fellow
other researchers, Sheath, Jaggar, and Hibberd 共1994兲 compiled a and Hancock 1994兲. ‘‘Without understanding there can be no
set of environmental influences associated with construction and a friendship. If one wishes to understand a people one must identify
list of variables under each of the influence factors. The variables
oneself with them. One must study their language, customs and
have been used to study the impact of these contextual factors on
culture ... and they will be one’s friends’’ 共Broster 1976兲.
the choice of a project procurement system. Such a contextual
research approach can be adopted and elaborated for studying the
effect of culture on disputes in international construction projects. Dispute Resolution Processes

With dispute resolution processes becoming international and un-

Cultural Context
restricted by frontier, legal system, or national culture, ‘‘cultural
The term culture has wide connotations in anthropology and eth- unity’’ is disrupted. International arbitration is said to be a ‘‘true
nography. Its meaning is not clearly defined, and even anthropolo- clash of legal cultures’’ 共Shilston and Hughes 1997; Cremades
gists do not agree on one clear and precise definition. Definitions 1998兲. To interact with such a legal culture, traditional arbitration
differ greatly and are dependent on the theoretical perspectives of practices have to be modified to incorporate a proactive, flexible,
those who offer them. In the management literature, Hofstede and amicable 共nonadversarial兲 process. In awareness of this, prac-
共1984兲 defines culture as ‘‘the collective programming of the titioners and commentators have been proposing various schemes
mind which distinguishes the members of one human group from and innovative practices 共Cremades 1998; Uff 1998; Shilston and
other关s兴.... Culture, in this sense, includes systems of values and Hughes 1997兲. New legislation such as the Arbitration Act in the
values are the building blocks of culture.’’ In the context of con- U.K. and the Arbitration Ordinance in Hong Kong have been
struction management education regarding culture, Loosemore promulgated to reflect this need. The practice of combined me-
共1999兲 states that ‘‘it is now accepted that a culture of a society is
diation and arbitration adopted in many countries such as China
its shared values, understandings, assumptions and goals learned
has aroused much interest 共Chan 1997兲. Such a line of thinking
from earlier generations. It results in common attitudes, codes of
leads to fusion of amicable and ‘‘judicialized’’ alternative dispute
conduct and expectations that guide behavior.’’
Tso 共1999兲, an anthropologist and designer, suggested some resolution 共ADR兲.
parameters that could help to delineate the playing fields for the The good that a dispute resolution mechanism will do depends
concept of culture, but warned that the definition will shift within on the person using it. The balancing act is dependent upon the
the boundaries of the parameters. She suggested that one will find neutral party appointed for the task. In the process of resolving
the essence of the term culture within the following fields: ‘‘cul- disputes on an international construction project, the disputing
ture describes the social system created by a group of people; it parties and the neutral party are expected to participate in ‘‘shed-
starts from the moment that a few people get together regularly ding home-grown habits and prejudices’’ 共Shilston and Hughes
and begin to establish norms and rules through which they will 1997兲. Singh 共1998兲 claims that ‘‘in the context of large interna-
interact and communicate with each other and maintain order; it tional projects where there are several parties of different nation-
is about patterns of meaning; it is about shared beliefs, values, alities involved, ADR offers the immediate attraction of avoiding
perspectives, and worldviews; it is about shared behavior, prac- any difficulties of conflict of laws or jurisdictional problems
tices, rules, and rituals; it is not limited to groupings by race or which may arise. It also allows the parties to reach agreement as
ethnicity, but can describe a sub-culture within a society— to how their disputes should be resolved which can take account
designers, for instance; it is often associated with language and of national and cultural differences.’’
communication; it is viewed as a mental or cognitive construct, In construction disputes, the trend is toward conflict manage-
created in the minds of people; it is learned; it can be found in ment, with the emphasis on designing a dispute prevention system
materials: objects, artefacts, clothing, artwork, and so forth; and it to suit each project. This aims to focus on conflict in the very
can emanate from social institutions and structures, such as gov- early stage of a project and to design the most appropriate ADR
ernments, economies, and legal systems, as well as geographic
mechanism to be incorporated into the construction contract 共Vor-
and environmental factors.’’
ster 1993兲. In addition to the traditionally adapted arbitration,
Today, anthropologists take a relative position toward culture,
many new ADR mechanisms, such as mediation, an executive
believing that no one culture is ‘‘better’’ or ‘‘worse’’ than another.
tribunal, adjudication, a dispute resolution advisor, and a dispute
In this paper, we discuss problems related to culture as the word
is understood by every man in the street without elaboration. It is review board, have been developed. In the worldwide compara-
a very general concept within the fields described by Tso 共1999兲. tive study complied by Fenn et al. 共1998兲, the preferred choice of
In international construction projects, any party involved must ADR mechanisms and their practice in each country were quite
be cross-culturally competent. To be competent, Trompenaars and varied. For most large international construction projects, one of
Williams 共1999兲 claim that the transcultural manager should be the ADR mechanisms, or a combination of the mechanisms in the
aware of managing in seven dimensions: universalism versus par- form of multitier ADR mechanism, is incorporated into the con-
ticularism, individualism versus communitarism, specific versus struction contracts. This situation deserves vigorous investigation
diffuse, neutrality versus affectivity, inner directed versus outer to decipher the relationship between cultural issues and choice of
directed, achieved versus ascribed status, and sequential versus dispute resolution mechanisms for international construction
synchronic time. These complex psychological and behavioral di- projects.

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Research Methodology search and Documentation 共CIB兲 W87 Commission on Post-
Construction Liability and Insurance, held in September 1999 at
This study inquires into the extent of major differences between the University of Technology, Sydney, Australia, and was the
Eastern and Western cultures in the perception of contractual ar- commission’s annual meeting. The delegates included architects,
rangements and of resolving disputes. The study focuses on inter- builders, engineers, construction lawyers, insurance brokers, and
national projects involving parties from the U.K. and Hong Kong, surveyors. Most of the commission members were also members
which have significant differences and similarities that are appro- of the CIB W103 Commission for Construction Dispute and Man-
priate for this study. As the legal systems and construction indus- agement. The conference delegates provided valid samples for the
try institutional frameworks of both countries have the same ori- questionnaire survey on the research topic.
gins, some of the side issues, such as differences in legal system, The data from the 1998 survey are analyzed and presented in
business language, and structure of the construction industry, are this article, and the data from the 1999 surveys carried out in
eliminated from the scenario. Nevertheless, the organizational London and Sydney were analyzed with more advanced statistical
culture in the construction industries of the two countries is dif- tools to find out the correlations between questions and important
ferent, and Hong Kong is unique in terms of project management variables. The results of this analysis are presented in detail in the
and government control of construction work 共Walker and Row- following section.
linson 1990; Chan and Chan 1999兲.
The major difficulty in sampling for research on such a topic is
that the survey requires the respondents to have specialized Analysis and Results
knowledge and experience of the topic. In this study, the groups
suitable for sampling had first to be identified to ensure that re-
sponses were based on the respondents’ specialized knowledge Data Analysis of Pilot Study in Hong Kong, 1998
and genuine experience. Following a literature review on cultural Of the 51 respondents from the 200 sample targets 共representing a
context, this paper identifies the possible attributes of dispute and response rate of 25.5%兲, over 60% indicated that they had expe-
management difficulties in international construction activities. A rience in international construction, and about 25% were senior
pilot study was carried out to gauge the validity of the research on personnel. The opinions can safely be regarded as reflecting the
cultural aspects of international construction projects. A simple practical experience in international construction disputes that in-
questionnaire was prepared with a few leading questions on prob- volved cultural issues in Hong Kong. The data have to be viewed
lems and phenomena as perceived by the writer to solicit opinions with the knowledge that in recent years over 10 large construction
from persons with experience in international construction activi- projects were completed or being carried out in Hong Kong, with
ties. Backed by these indications, a more detailed questionnaire many international parties attracted to the region. The key points
was designed with questions focused to seek more reliable opin- of the survey results were
ions from groups identified within the target sample. 1. Over 75% of the respondents found that international con-
struction projects had a greater chance of having disputes;
Pilot Study on East-West Cultural Effect, Hong Kong 2. Over 75% of the respondents found that cultural differences
1998 among parties from different nationalities contributed to dis-
putes in international projects;
A single-page questionnaire with five yes or no questions was
3. Over 80% of the respondents found that Westerners and
distributed to about 200 construction professionals attending a
Asians have different attitudes toward disputes in interna-
public lecture on construction disputes delivered by Professor J.
tional projects; and
Uff, an eminent academic and practitioner of construction law
4. Over 75% of the respondents found that Westerners and
during his visit to Hong Kong in June 1998. The occasion pro-
Asians have different attitudes toward resolving disputes in
vided an opportunity to seek quick and valid opinions from a
international projects.
target sample, including builders, engineers, surveyors, and con-
The results provide a good indication of potential areas for
struction lawyers, who had knowledge of the construction indus-
further research. The broad questions needed to be probed in
try and were interested in construction law.
more detail in the follow-up surveys.

Survey Concerning Dispute in International Project,

Data Analysis of Surveys in London and Sydney, 1999
London 1999
A two-page questionnaire was handed out to about 200 delegates Return Rate of London Survey
at a construction law annual conference at the Construction Law About 200 copies of the questionnaire were distributed to the
and Management Center, King’s College of London University. conference delegates in London, of which 26 were returned, rep-
The conference was held in September 1999 and was the 12th resenting a 13% response rate for this group. Most of the ques-
annual gathering of experts in construction law. The delegates tionnaires were returned during the conference, but some were
included architects, builders, engineers, construction lawyers, and returned by post. Only one copy was answered by a respondent
surveyors. The conference provided readily available random who did not have direct involvement in international construction
samples and the best focus for a questionnaire survey on the projects, and that copy was not included in the data analysis.
research topic.
Return Rate of Sydney Survey
About 40 copies of the questionnaire were distributed to the con-
Survey Concerning Dispute in International Project,
ference delegates in Sydney. To make up for the views of Asian
Sydney, Australia, 1999
members who were absent from the plenary meeting, 7 copies
The same questionnaire was distributed to about 50 delegates at a were sent to experts in Hong Kong known to have direct involve-
plenary meeting of the Council of International Construction Re- ment in international construction contract disputes. Among the

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Table 1. Answer Scores of London and Sydney Questionnaire Surveys
Questions S N R1 共%兲
共a兲 S⫽Average score 共1 if Yes, ⫺1 if No. zero otherwise兲
Q.1. Have you ever been involved with international projects? 1 38 NA
Q.2. International projects have more chances to give rise to dispute in comparison with domestic 0.263 38 61
contract work
Q.3. Cultural differences among all parties involved in project of different nationalities contribute to 0.711 38 79
dispute in international projectsf
Q.5. In comparison with Westerners, Orientals 共ethnic Chinese兲 have different attitudes toward resolving 0.447 38 66
contract dispute in international projects. 共Note: most respondents indicated in Q.6 that Orientals
prefer informal methods.兲
Q.9. In comparison with domestic construction contracts, do you find mediation with a neutral third party ⫺0.053 38 39
to facilitate negotiation has a less important role in resolving disputes on international projects?
共b兲 S⫽Level of importance 共1 is most important兲
Q.4. Parties of an international project prefer to use which of the following dispute resolution mechanisms to resolve disputes:
Negotiation for commercial settlement between parties of a contract 1.694 36 64
Engage third neutral party to facilitate negotiation 2.485 33 27
Retain adjudicator to give ruling 3.80 30 10
Retain dispute resolution board to give ruling 4.313 32 0
Arbitration 3.816 38 11
Multitiered dispute resolution mechanism specifically designed for project 3.667 33 3
Q.7. Rank factors contributing to disputes in international projects
Contract arrangements are not appropriate for project 3.314 35 34
Local government intervention 4.848 33 6
Cultural clash among parties involved in project 3.257 35 34
Unlike domestic market, no need to worry about long-term business relationship 5.028 36 6
Not familiar with local environment 共e.g., power supplies and infrastructure supports兲 4.514 35 9
Difference in legal system and interpretation of law 4.886 35 3
Different economic muscles 5.242 33 0
Noncooperation of local residents 7.324 34 3
Capability in project management 4.889 36 14
Q.8. Rank factors causing disputes in international projects:
Tender has NOT been properly prepared and assessed 2.946 37 22
Scope definition NOT clear 2.50 36 28
Inadequacy of technical specification 3.243 37 11
Unrealistic obligations for parties under contract 3.556 36 14
Local government policy is NOT compatible with international practice 5.265 34 9
Incompetence or unfairness of contractor administrator 4.118 34 15
Dispute resolution mechanism is NOT integrated in contract 6.063 32 0
N⫽number of respondents; R%1⫽percentage of respondents who ranked the corresponding factor 1.

total 47 questionnaires sent out, 13 copies were returned, and The average score S can be used to compare the importance of
most of the respondents in this group were Asian. All returned each factor. The factors in questions 4, 7, and 8 in the survey were
copies were valid, representing a 27% response rate for this ranked using the importance index. The general picture is given in
group. The scores for both surveys are presented in Table 1. Table 1, which shows the average score of respective factors.
In questions 2, 3, 5, and 9, the scores are based on the follow-
ing counting system: 1 if yes, ⫺1 if no, and 0 otherwise.
Suppose that the frequency for the above three options is f y , Interpretation of Scores
f n , f o , respectively; then the weighted average score is • All the respondents in this sample have been involved with
( f y ⫺ f n )/( f y ⫹ f n ⫹ f o ). If the answer is neutral 共not in favor of international projects.
yes or no兲, then the expected value of the average score should be • International projects have more chances to give rise to dis-
close to zero. putes in comparison with domestic contract works 共with an
In questions 4, 7, and 8, the level of importance of the factors average score⫽⫹0.263); 61% of the respondents ranked this
共ranked from 1,2, . . . 兲 was calculated using the following for- as factor 1.
mula: • The majority of the respondents indicated that cultural differ-
ences among all parties involved in the project did contribute
S⫽ 兺 k f k / 兺 f k for k⫽1,2, . . . (1)
to disputes 共with an average score⫽⫹0.711). About 80% of
where f k is the frequency of the response who has given k to the the respondents ranked this as factor 1.
factor, and k ranges from 1 共most important兲 to 2, 3,.... Note that • There was also a strong indication that Orientals 共ethnic Chi-
the index S cannot be less than one. nese兲 prefer informal methods for resolving contract disputes

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Table 2. Ranking for Question 4 Subject to Conditions in Question 2 Table 4. Frequency of Questions 2 and 3
Question 2 Question 3
Question 4 Yes No Answer Yes No Indifference Total
Parties to international project prefer to use which of the following Question 2 Yes 21 1 1 23
dispute resolution mechanisms to resolve disputes: No 7 2 4 13
Negotiation for commercial settlement between 1 1 Indifference 2 0 0 2
parties to contract Total 30 3 5 38
Engage third neutral party to facilitate negotiation 2 2 Note: ␹ 2 ⫽26.6; number of degrees of freedom⫽2⫻2⫽4; ␹ 2 (p
Retain adjudicator to give ruling 4 3 ⬍0.05)⫽9.49; ␹ 2 (p⬍0.01)⫽13.28.
Retain dispute resolution board to give ruling 6 6
Arbitration 5 5
Multitiered dispute resolution mechanism 3 4 Statistical Analysis
specifically designed for project
Note: To determine association between two variables x and y, we apply Rank Correlation Study
Spearman’s rank-order correlation: r⫽1⫺6⌺(x⫺y) 2 /N(N 2 ⫺1), where
N is sample size; rank correlation⫽0.989. To know whether the views of the construction industry on the
factors contributing to disputes in international projects are asso-
ciated with their preferred resolution mechanism, a rank correla-
in international projects in comparison with Westerners 共with tion study is employed. In Tables 2 and 3, the order of each factor
an average score⫽⫹0.447); 66% of the respondents ranked in questions 4 and 7 are ranked according to the respondents’
this as factor 1. answers to question 2. The rating is given as a number from 1, 2,
• However, the results suggest that mediation with a neutral 3rd 3 . . . , where 1 is the most significant. In Table 2, the rank-order
party to facilitate negotiation is irrelevant to resolving disputes correlation is 0.989, which suggests that the ranking of the factors
in international projects. The score is not different from zero in question 4 does not depend their answers to question 2. How-
and is not sufficient to justify any other explanation. There is ever, the rank-order correlation in Table 3 is ⫺0.35, which indi-
no significant comparison with domestic construction disputes. cates that the ranking of the factors in question 7 would be dif-
• In question 4, respondents indicated that parties of an interna- ferent when the respondents have different views on question 2.
tional project prefer to use negotiation for commercial settle-
ments 共average score⫽1.694); 64% of the respondents ranked
this as factor 1. The next preferred option was to engage a Statistical Findings
neutral 3rd party to facilitate negotiation 共average score The results imply that those who believe that international
⫽2.485). projects have more chances to give rise to dispute tend to agree
• In question 7, cultural clashes 共average score⫽3.257) and in- with the rank order in question 7 共that is, cultural clashes and
appropriate contract arrangements 共average score⫽3.314) inappropriate contract arrangements are the two most important
were the two most important factors contributing to disputes in factors contributing to disputes in international projects兲.
international projects.
• In question 8, which related to contractual matters, the respon-
dents indicated that unclear scope definition was the main fac-
Correlations Between Questions
tor causing disputes in international projects 共average score Tables 4 and 5 show the frequencies of questions 2 and 3 and
⫽2.50), followed by improper tender arrangements 共average questions 3 and 5, respectively. For instance, it is possible that the
score⫽2.946). respondents who viewed international projects as having more
chances to give rise to disputes than domestic contract work
would agree/be neutral/disagree that cultural differences contrib-
Table 3. Ranking for Question 7 Subject to Conditions in Question 2 ute to disputes in international projects. We categorize the an-
swers to the questions as yes, no, and indifferent, respectively.
Question 2 Therefore, the following hypotheses are proposed:
Question 7 Yes No In Table 4, the null hypothesis is that the relative frequency of
yes, no, and indifferent in question 2 is the same for the relative
Rank factors contributing to disputes in international projects
frequency of yes, no, and indifferent in question 3. The alternative
Contract arrangements are not appropriate for 1 2
project
Local government intervention 8 4
Cultural clash among parties involved in project 2 1 Table 5. Frequency of Questions 3 and 5
Unlike domestic market, no need to worry about 4 6
Question 3
long-term business relationship
Not familiar with local environment 共e.g., power 7 3 Answer Yes No Indifference Total
supplies and infrastructure support兲 Question 5 Yes 17 3 5 25
Difference in legal system and interpretation of law 6 5 No 8 0 0 8
Different economic muscles 5 8 Indifference 5 0 0 5
Noncooperation from local residents 9 9 Total 30 3 5 38
Capability in project management 3 7 Note: ␹ 2 ⫽23.8; number of degrees of freedom⫽2⫻2⫽4; ␹ 2 (p
Note: See note to Table 2; rank correlation⫽⫺0.350. ⬍0.05)⫽9.49; ␹ 2 (p⬍0.01)⫽13.28.

JOURNAL OF CONSTRUCTION ENGINEERING AND MANAGEMENT © ASCE / JULY/AUGUST 2003 / 379

hypothesis is that the relative frequency of yes, no, and indifferent • DR mechanisms that have not been integrated into the con-
in question 2 is not the same for the relative frequency of yes, no, tract; and
and indifferent in question 3. • Local government policy that is not compatible with inter-
In Table 5, the null hypothesis is that the relative frequency of national practice.
yes, no, and indifferent in question 3 is the same for the relative
frequency of yes, no, and indifferent in question 5. Recommendations for Further Study
The alternative hypothesis is that the relative frequency of yes,
no, and indifferent in question 3 is not the same for the relative From the literature review and the results of this study, the writers
frequency of yes, no, and indifferent in question 5. recommend further study of the following aspects of conflict
The chi-square test can be applied to the 3⫻3 matrix in Tables management and contractual arrangement related to cultural is-
4 and 5 and is known as ␹ 2 ⫽⌺( f o ⫺ f e ) 2 / f e , where f o and f e sues:
represent the observed and expected frequencies respectively. The • As cultural diversity exists within a country or region, it will
chi-square value in Table 4 is 26.6 and in Table 5 is 23.8. We be more appropriate for further research to focus on the two
compare the obtained chi-square value with the critical value. cultural syndromes: collectivism and individualism.
Therefore, we need a chi-square value of at least 13.28 共9.49兲 to • Many publications 共Low 1996; Chan 1997; Singh 1998兲 advo-
reject the null hypothesis at the 0.01 共0.05兲 level of significance. cate that collectivist cultures prefer mediation and procedure
As our obtained ␹ 2 in both cases exceeds the critical values, we with animosity reduced. This position might overlook the fact
must reject the null hypothesis. that because of their ‘‘group value,’’ collectivists have very
different 共almost opposite兲 attitudes toward opponents who are
ingroup or outgroup members when dealing with conflicts,
Statistical Findings particularly when the conflict is full-fledged. Further study
Hence, the views of respondents on question 2 共international may help to understand procedural preferences and contractual
projects have more chance for dispute兲 and question 5 共Orientals arrangements when dealing with international construction
have different attitudes toward resolving disputes in international conflicts.
projects兲 would depend on their views on question 3 共cultural • People of two different cultures have different tolerances for
differences contribute to dispute in international projects兲. uncertainty avoidance 共Hofstede 1997兲. Such considerations
should be taken into account to study the contractual arrange-
ments that contribute to disputes in international projects.
• Project scope definition and tender assessment are factors that
Key Observations and Recommendations
cause disputes. This general conclusion may apply to domestic
and international construction projects and warrants further
Key Observations of Research Results study to investigate the underlying criteria that apply only to
international projects.
Combining the surveys carried out in 1998 and 1999, the follow- • An appreciation of the factors that influence international con-
ing are the key observations of the research results: struction projects calls for a more comprehensive study of con-
1. Cultural differences contribute to disputes in international textual factors, which include the general nature of construc-
projects. Those who believe this tend to take the view that tion projects, socioeconomic characteristics of international
Orientals have different attitudes toward resolving contract projects, international legal culture and the institutional setups
disputes in such projects. This also suggests that those who for dispute resolution, and international sociocultural differ-
believe that cultural differences contribute to disputes in in- ences in perceiving and resolving disputes. A very demanding
ternational projects tend to agree that such projects have integrative research process will be required to investigate all
more chances to have disputes. the influential factors and their correlations.
2. Irrespective of whether the project is international or not, the
preferred dispute resolution 共DR兲 mechanisms in order of Conclusion
priority are
Cultural differences can do substantial damage to the organization
• Negotiation for commercial settlement 共the obvious
of an international construction project. This study has illustrated
choice兲;
the views of construction professionals on the extent to which
• Engagement of a neutral third party to facilitate negotia-
culture influences disputes and the choice of dispute resolution
tion; and
mechanisms. It provides good groundwork for understanding the
• Multitiered DR mechanisms.
3. The most significant factors contributing to disputes in inter- influential forces that affect international projects. Cultural diver-
national projects are sity in international projects cannot be avoided or ignored. A bet-
• Contractual arrangements that are not appropriate; and ter understanding of influential cultural factors will help to reduce
• Cultural clashes. and manage conflicts in international construction projects. Rec-
4. The least significant factors contributing to disputes in inter- ognizing and sensibly manipulating cultural differences could
national projects are allow improvements in the efficiency and profitability of interna-
• Noncooperation from local residents; and tional projects. For future research on managing international
• Local government intervention. construction projects, account should be taken of the influence of
5. For contractual matters, the most significant factors contrib- the behavior, values, beliefs, and cultural background of the par-
uting to disputes in international projects are ticipants.
• Project scope definitions that are not clear; and
• Tenders that are not properly prepared and assessed. Acknowledgments
6. For contractual matters, the least significant factors contrib- The first writer thanks Professor J. Uff for permitting him to
uting to disputes in international projects are conduct the survey in his seminars and conferences. He is also

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