Foreign investors entering emerging markets have to take strategic decisions on where and how to set up operations. These decisions have to accommodate institutional conditions that vary not only between countries, but also within the host economy. Moreover, in Vietnam transition economy, institution changes rapidly as government carried out many reforms create substantial barriers to foreign investors. We offer a whole picture about institutional changes in Vietnam. We also bring a theoretical framework to analyze how institutions in an emerging economy influence entry strategy decisions of foreign construction firms. On this basis, we analyze the determinants of two key aspects of entry strategy: location and entry mode in Vietnam. We find that sub-national institutional variables have a significant influence on both dimensions. The availability of scarce resources affects the location of FDI and the likelihood of Greenfield entry. Institutional pressures arising from incumbent state-owned firms lead to a preference for joint venture entry. Transparency and ability access to information are important to attract foreign investment, especially in form of Greenfield. In Vietnam, the South has better institutional performance than the North, but difference in region does not influence the entry strategies of foreign construction firms.