The Effect Of Institutional Environment On The Compliance Risk Perception Of International Engineering Contractors:The Moderating Effect Of Absorptive Capacity

In recent years,engineering companies have repeatedly occurred in overseas markets and the Chinese government attaches great importance to contractors’ compliance management.Compliance has become an important cornerstone of high quality and sustainable development for Chinese international engineering contractors.However,the construction industry has mainly focused on the identification of enterprises,the exploration of factors and the development of anti-corruption strategy,ignoring the obstacles the contractor faced in the compliance process.What’s more,there is no research on compliance risks in risk management research.Risk perception is an important basis for the risk decision of international engineering contractors.Therefore,this thesis aims to reveal the impact of the host country’s institutional environment on compliance risk perception and explore the influence of enterprise heterogeneity.First,based the institutional theory,this study analyzes the influence of the legal completeness and efficiency of the host country on international engineering contractors’ compliance risk perception.Besides,this study explores the moderating effect of enterprise heterogeneity by introducing organizationlevel absorptive capacity.Finally,based on data collected by questionnaire,this study applies the Partial Least Squares Structural Equation Model to verify the theoretical model and assumptions.The results show a negative relationship between the legal completeness or efficiency of the host country and a contractor’s compliance risk perception.Further,this study finds potential absorptive capacity and realized absorptive capacity of a company are critical for its compliance risk management when legal completeness of the host country is low,but not when legal efficiency is low.This study reveals the inner mechanism of international engineering contractors’ compliance risk perception by clarifying the impact of objective environment and enterprise heterogeneity,which will provide a reference for international engineering contractors to manage compliance risk.