2024 journal article

Large interorganizational projects (LIPs): Toward an integrative perspective and research agenda on interorganizational governance

Journal of Operations Management.

Source: ORCID
Added: February 1, 2024

Organizations are becoming more reliant on projects to adapt and survive in an increasingly volatile, fast-moving, and competitive environment (e.g., Ramasesh & Browning, 2014; Roehrich et al., 2023; Tatikonda & Rosenthal, 2000). Terms such as “projectification” (Midler, 1995), “project society” (Lundin et al., 2015), and “project economy” (Nieto-Rodriguez, 2021) have been introduced to describe the growth of projects involved in delivering a large share of temporary interorganizational activities such as research and development (R&D), technology and new product development (NPD), capital goods and services, infrastructure, events, and organizational change. Some scholars have even suggested that projects have replaced continuous process structures (especially in the Western world), such as manufacturing activities, as the dominant form of organization in the 21st century (e.g., Nieto-Rodriguez, 2021; Shenhar & Dvir, 2007). While a large body of literature has identified that projects vary considerably in their complexity, novelty, uncertainty, and dynamism (Davies & Hobday, 2005; Loch et al., 2006), and that an increasing number are massive in scale (Flyvbjerg et al., 2003; Miller & Lessard, 2000; Scott et al., 2011), research on how multiple organizations in large interorganizational projects (LIPs) are governed is still in its infancy. This special issue (SI) of the Journal of Operations Management explores the key challenges and tensions involved in governing LIPs. We use the adjective “large” loosely to refer to interorganizational projects conducted at scale (here we loosely refer to factors such as physical size, impact, duration, as well as number of people and organizations involved), rather than focus on projects above an arbitrarily chosen value (e.g., $1 billon). Projects are “interorganizational” when comprised of multiple (often a mix of public, private, non-for-profit) organizations, working jointly to coordinate the production of unique, or customized, products and/or services in uncertain and dynamic environments (Jones & Lichtenstein, 2008; Sydow & Braun, 2018). LIPs are the organizational form most often used to produce basic science, create new products (or solutions), build public infrastructure, tackle problems related to social, economic, political, or environmental issues, and respond to natural disasters (e.g., Roehrich & Kivleniece, 2022). LIPs deliver transformational outcomes for communities and societies (Flyvbjerg, 2014) and are increasingly important in many industries and sectors such as healthcare, defense, aerospace, mining, telecommunications, information technology (IT), transport, utilities, “big science” experiments, and major cultural and sporting events (Bendoly & Chao, 2016; Caldwell et al., 2017; Mishra et al., 2020). Although projects are generally considered an important topic in operations and supply chain management (OSCM; e.g., Bendoly & Swink, 2007; Bendoly, 2014; Roehrich & Lewis, 2014; Mishra & Browning, 2020; Mishra et al., 2020; Salvadore et al., 2021), much of the research on LIPs has been undertaken by scholars in project management (PM) or adjacent disciplines (e.g., innovation management) using a variety of theoretical lenses to understand management, organizational, institutional, and governance arrangements. This research has often deployed a range of labels to describe LIPs, including “major projects” (Morris, 1994, 2013), “large engineering projects” (Miller & Lessard, 2000), “system of systems” projects (Davies & Hobday, 2005; Shenhar & Dvir, 2007), “megaprojects” of $1 billion or more (Flyvbjerg, 2017), “interorganizational projects” (Sydow & Braun, 2018), and “global projects” (Scott et al., 2011). We bring together prior studies under the label of LIPs to offer clarity and coherence moving forward with governance discussions. We draw attention to the fact that further OSCM research on LIPs is needed to address many unresolved interorganizational governance challenges. The governance of LIPs is particularly challenging in environments that are increasingly complex, novel, uncertain, and rapidly changing, giving rise to unresolved theoretical questions with important implications for practice and policy (Chakkol et al., 2018; Ramasesh & Browning, 2014; Shenhar, 2001). LIPs face significant governance challenges requiring contractual and relational governance and forms of collaboration among multiple organizations with often disparate goals, diverging interests, and varying levels of capabilities and resources (Roehrich & Lewis, 2014; Zheng et al., 2008). Research in PM, and related disciplines, has identified the challenges involved in organizing and managing LIPs in different environments (e.g., Davies et al., 2023; Shenhar & Dvir, 2007), and is beginning to address interorganizational project governance (e.g., Müller et al., 2023). Drawing upon a variety of theoretical perspectives on the governance of projects, programs, and project-based organizations (Müller et al., 2023), however, PM research on the governance of projects has, with a few exceptions (e.g., Levitt et al., 2019), neglected to consider how key concepts of collaboration (e.g., Gulati et al., 2012), relational and contractual governance (Bercovitz & Tyler, 2014; Poppo & Zenger, 2002; Roehrich & Lewis, 2014), and coopetition (Bengtsson & Kock, 2000) apply to LIPs. To fill this gap, management and OSCM scholars have recently explored the governance of LIPs including how collaboration is required to build cooperation between parties, control and coordinate interdependent tasks, and align the goals and interests of the different parties involved in LIPs (e.g., Aben et al., 2021; Hartmann et al., 2014; Oliveira & Lumineau, 2017; Tee et al., 2019; Zheng et al., 2008). Such inquiries are few however, and further research on the governance of LIPs is needed to understand how to align incentives, allocate decision rights and responsibilities, and ensure information flows and knowledge exchange to meet common goals (economic and social) values, and performance targets (Roehrich et al., 2020; Sarafan et al., 2022). Our goal with the present discussion is to encourage scholars to conduct further research on the nature, challenges, and dynamics of governance in LIPs. In particular, we encourage scholars to draw on insights from general management, OSCM, PM, and adjacent literatures to develop novel and interesting theoretical contributions with implications for how to improve the performance of large-scale endeavors and tackle grand challenges facing societies in the 21st century (George et al., 2016). The four papers appearing in this SI highlight a variety of theoretical perspectives, units of analysis, and methodologies to deepen our understanding of the governance of LIPs. They examine projects in a variety of industries, institutional contexts and settings, and explore practices across and within LIPs that have (or have not) been successful. With these studies as a backdrop, and guided by the discussion that follows, we are hopeful that future, concerted efforts to study LIPs will further advance conceptual, theoretical, and methodological contributions and support the advancement of science, practice, and policy in this vital area. To provide a foundation for assessing the state of knowledge in this domain, we begin with some relevant distinctions across the associated literatures. Notably, we distinguish between projects and other operational structures, identify key dimensions used to classify projects, and consider recent research addressing the increasing size of projects. In doing so, our discourse provides a relevant conceptualization of LIPs, critical to developing impactful theoretical and practical contributions. Although it is widely agreed that projects are temporary organizational structures designed to terminate on completion of their task, they are defined and approached in different ways in research published in OSCM, PM, and other management disciplines. PM researchers have traditionally emphasized the uniqueness of project endeavors (Pinto, 2010). In the Project Management Institute's (PMI) guide to the “Project Management Body of Knowledge (PMBOK)” a project is defined as “a temporary endeavor undertaken once to create a unique product, service, or result,” and the management of a project is the “application of knowledge, skills, tools, and techniques to project activities to meet project requirements” (PMI, 2021: 4). Many PM scholars draw a sharp distinction between unique, discrete, non-routine project tasks and standardized, ongoing, and repetitive process activities. Although it has long been established that projects contain “repetitive elements” (PMI, 2008: 5), until recently PM researchers emphasized that the element of repetitiveness does not undermine the “fundamental uniqueness of project work” (PMI, 2008: 5). Traditionally, PM textbooks and professional bodies have assumed that projects are essentially the same and can be managed by a “one-size-fits-all” approach using standardized processes and organizational arrangements (for a critique of this approach see Shenhar & Dvir, 2007). Such a standardized model assumes that projects are predictable, fixed, and relatively simple, and can be decoupled from environmental changes. However, scholars (e.g., Davies et al., 2023; Maylor et al., 2018; Morris, 1994) and professional bodies (e.g., PMI, 2021) have moved beyond this traditional approach, recognizing that many projects are uncertain, complex, and strongly affected by the dynamics of the environment, and that plans have to be flexible and projects adjusted during execution to situations that cannot be foreseen at the outset. In OSCM research, projects are often viewed as one-off, low-volume, unit stages of production at the opposite end of a spectrum from repetitive or steady-state processes, where at the extreme the same task is performed continuously (Figure 1; Hayes & Wheelwright, 1984; Wheelwright & Clark, 1992; Browning, 2017). In the OSCM literature, projects involve anything from new product development to IT implementation, from asset and process maintenance efforts to large-scale quality management initiatives. In short, they can be highly specific and localized, or broadly cross-cutting. They can be critical to the initiation of repetitive processes, or critical to their later stage augmentation. Accordingly, they are associated with the production of low-volume artifacts (enterprise installations, a new product, fixes to things), each of considerable variety. In contrast with the assumption often found in PM literature that projects are unique and the “antithesis of repetition” (Pinto, 2010: 25), OSCM research recognizes that projects include standardized tasks, recipes, or templates that can be replicated, or contain elements that are well understood and repeated in other projects (Browning, 2017; Holweg & Maylor, 2018; Maylor et al., 2018). While the product, service, or outcome of a project may be unique, its production may involve a collection of common, and even standardized, processes and best practices (Davies & Brady, 2000). In recent OSCM work, considerable attention has, therefore, been afforded to processes involved in executing projects (Bendoly et al., 2014; Browning, 2010; Browning & Ramasesh, 2007; Mishra & Browning, 2020), such as the information exchange among members of a project team (e.g., Bendoly, 2014; Bendoly et al., 2010), dynamics of prioritization and monitory within project teams (Bendoly et al., 2014), and the experience and information uses to select and manage project teams (Bendoly & Swink, 2007; Salvadore et al., 2021). Which is to say, projects can vary greatly, but common theoretical phenomena, broadly generalized, can transcend project contexts. As a result, common theoretical lenses have also proven powerful across a range of project types. At the same time, scholars have found value in leveraging a variety of such lenses even in a single project context. R&D and NPD project activities have been examined under both organizational (Verma et al., 2011) and interorganizational collaborative (Mishra et al., 2015; Mishra & Shah, 2009) perspectives. Research connecting project work to more continuous processes has focused on the dynamics of back-peddling on technology implementation projects (Bendoly & Cotteleer, 2008). Such perspectives and dynamics represent only a handful of phenomena that various theoretical lenses and empirical efforts have uncovered (and have still yet to uncover) with relevance to the OSCM community. In addition to PM and OSCM research, projects have also attracted the attention of scholars working in a variety of sub-disciplines of management, particularly organization studies (e.g., Lundin et al., 2015) and innovation management (e.g., Shenhar & Dvir, 2007), and many topics addressed in general management have a bearing on projects (Browning, 2017). In an influential article defining projects as a form of temporary organization, Lundin and Söderholm (1995) suggested that although the result of every project is a unique (or one-off), customized product, process, and/or service, the tasks performed range from unique to repetitive. Building on this formulation, innovation scholars distinguish between unique and repetitive projects (Davies & Brady, 2016; Davies & Hobday, 2005). A unique project performs innovative, non-recurring, and highly uncertain tasks such as developing a new product or complex system, whereas a repetitive project performs standardized, routine, and predictable tasks that will be repeated in the future (e.g., projects based on mature product lines; Davies & Brady, 2000). At any particular time, an organization may perform a variety of unique and repetitive projects, including hybrid projects combining unique and repetitive tasks. With this in mind, and given the various roles of projects discussed to this point, we can now unpack the different environmental dimensions shaping how alternate types of projects are organized, managed, and governed. Informed by contingency theory (Burns & Stalker, 1961) and strategy research (Wheelwright & Clark, 1992), scholars recognize that distinct organizational processes and structures are required in order to properly accommodate four key project attributes: novelty, uncertainty, pace, and complexity (Davies & Hobday, 2005; Geraldi et al., 2011; Shenhar & Dvir, 2007; Stinchcombe & Heimer, 1985). Let us consider each of these dimensions in turn. Projects are often distinguishable according to the degree of novelty in the products and processes they give rise to, on a continuum from incremental to radical or breakthrough innovation (Wheelwright & Clark, 1992). Projects also vary in terms of the uncertainty involved, ranging from routine projects utilizing risk management, contingency planning, and instructions for dealing with foreseeable uncertainties (or “known unknowns”) to highly innovative projects (Bahemia & Roehrich, 2023; Loch et al., 2006) facing unforeseeable uncertainties (or “unknown unknowns”) (Phillips et al., 2023; Pich et al., 2002; Ramasesh & Browning, 2014). Pace (or, sometimes, urgency) describes how much time is afforded (often tied to how much is available) to complete project work (Lindkvist et al., 1998; Shenhar & Dvir, 2007). Finally, the degree of complexity and interdependencies among tasks in a project system hierarchy can range from single component or product assembly (in a manufacturing process project), through a system comprising many components and subsystems, and to the most complex “system of systems” projects (Hobday, 1998; Shenhar, 2001). Complexity is the dimension most frequently used to classify LIPs, with operationalization of complexity typically based on system scope and interorganizational structure (Davies & Hobday, 2005; Shenhar, 2001). Efforts to define complex projects often refer to Simon's (1962) influential view that organization structures should mirror the complexity of systems they are producing, based on a hierarchy of interacting components (e.g., Davies & Mackenzie, 2014). Building on this idea, Hirschman (1967) emphasized that the complexity challenge is not the size itself, but the difficulty of establishing organizational and governance structures to coordinate, adjust, and fit together components of a project into a coherent whole and adjust to changing conditions and unforeseeable interdependencies. Shenhar (2001) identified three types of projects based on their increasing degree of complexity (and associated increases in scale): assembly, system, and array. A relatively simple “assembly project” (a single component, subsystem, product or service) is often conducted in-house by a small development team. A “system project” is more complex because it consists of many interacting components and subsystems and is often arranged in a platform, with multiple functions that together meet a particular user or operational requirement such as an aircraft or mobile communication network. The most complex “array projects” involve a large collection of systems, each providing a specific function that work together to accomplish a common goal such as large-scale airports, high-speed railways, or the staging of the Olympics. Whereas assembly projects tend to be smaller in scale and conducted internally by a team in collaboration with specialized suppliers, increasingly complex projects require larger and more elaborate forms of interorganizational governance to cope with the challenges of coordinating the integration of multiple components, managing interfaces, and dealing with interdependent tasks (Davies & Mackenzie, 2014; Roehrich et al., 2023; Shenhar & Dvir, 2007). In this perspective, LIPs are often system or array projects, which are typically managed as a large interorganizational “program” of interrelated projects to deliver strategic objectives beyond what individual projects can do alone (Davies & Mackenzie, 2014; Turner & Müller, 2003). System projects are often initiated and managed by a client or prime contractor, with a central project (or program) office established to coordinate the large network(s) of in-house departments and external suppliers, all involved in the design and production of the system project. Systems integration is considered a core capability that organizations must acquire or develop to understand the whole system, manage the interfaces among components and subsystems, and deliver a system that is ready for operations (Bendoly & Cotteleer, 2008; Hobday et al., 2005; Tee et al., 2019; Whyte & Davies, 2023). Array projects, in contrast to system projects, require a large standalone umbrella organization (typically a client, prime contractor, or joint venture delivery partner) established on a temporary basis for the duration of the project (Shenhar, 2001; Shenhar & Dvir, 2007). This organization deals with financial, legal, and political issues, engages with multiple stakeholders (beyond external suppliers to also include organizations such as chambers of commerce, higher educational institutions, and citizens interest groups—Kalra & Roehrich, 2019). It acts as a “meta-systems integrator” to coordinate work undertaken by many contractors within the program (consisting of a multitude of differently sized, interrelated projects with varying degrees of complexity; Davies & Mackenzie, 2014). During the construction of the London 2012 Olympics, for example, the umbrella organization consisted of a client and delivery partner responsible for managing the overall program, along with contractors and suppliers responsible for individual systems projects within the array (Davies & Mackenzie, 2014). Over the past few decades, researchers have used different labels to categorize a new species of increasingly large-scale projects that are immensely important for society but associated with high rates of failure. Morris (1994, 2013) suggested that the capabilities required to manage “major projects” often exceed those of the organizations contracted to deliver them, and successful outcomes depend on careful planning during the front-end phase (see also Lewis et al., 2023). Research on “large engineering projects” around the world found that inadequate front-end strategizing and poor governance contributed significantly to the poor performance (Miller & Hobbs, 2005; Miller & Lessard, 2000). In their studies of “global projects,” Scott et al. (2011) and Levitt et al. (2019) find that stakeholder alignment is difficult to obtain when multiple parties become involved in large and often cross-national and public–private projects. Research on “megaprojects” costing $1+ billion (Flyvbjerg et al., 2003; Merrow, 2011) has shown that the majority of these are delayed and over budget because of unrealistic assumptions, deception, and optimism bias about initial budgets and schedules. In each research stream, projects are characterized as large and interorganizational because they involve many organizations needing to work together to deliver high-value, complex, one-off products and/or services (Bakker et al., 2016; Jones & Lichtenstein, 2008). The fastest growing, and arguably most influential, body of research on LIPs can be attributed to these megaproject examinations (typically system and array projects; e.g., Flyvbjerg, 2014). In most megaprojects, a single client—under public or private ownership—contracts a large engineering firm or joint venture delivery partner to build cooperation and coordinate the interdependent tasks and subprojects performed by networks of organizations (Denicol et al., 2020; Jones & Lichtenstein, 2008). Research on megaprojects has addressed aspects associated with interorganizational governance such as program management (Denicol & Davies, 2022), risk and uncertainty (Sanderson, 2012), collaboration and relational contracting (Davies et al., 2016; Gil & Tether, 2011; Tee et al., 2019), interorganizational architectures (Denicol et al., 2021), and public–private relationships (Kwak et al., 2009). The PM literature tends to use the concept of governance as an umbrella category to describe how relationships among parties in LIPs are arranged and organized (e.g., Denicol et al., 2020), often focusing on practical concerns such as strategy, control, and performance systems (e.g., Bourne et al., 2023). Some PM scholars have, however, started to recognize that there is a need to advance our theoretical understanding of interorganizational project governance (e.g., Müller et al., 2023). As a case in point, the successful set-up and execution of LIPs depend on multiple organizations collaborating over a defined time-period (Roehrich et al., 2023; Roehrich & Lewis, 2014). To grapple with this challenge, it is critical to have a solid theoretical understanding of what this entails. For example, here collaboration refers to organizations voluntarily helping their partners to achieve common (and private) goals (Castañer & Oliveira, 2020). Two facets of collaboration are worth distinguishing both theoretically and practically: (i) building “cooperation” among parties with interdependent tasks and (ii) achieving the “coordination” of those interdependent tasks (Gulati et al., 2012). Cooperation ensures that varying priorities, incentives, and interests are aligned to implement the required interdependent tasks to reach a common goal. Related to cooperation, coopetition refers to the simultaneous pursuit of cooperation and competition to create value (Gnyawali & Park, 2011; Wilhelm, 2011). On the other hand, coordination refers to the effective alignment and adjustment of partners' actions and tasks to jointly accomplish a common goal (Gulati et al., 2012). Collaboration, cooperation/coopetition, and coordination in LIPs are supported and stimulated by governance mechanisms. Contractual governance refers to legally binding, formal agreements specifying the roles and responsibilities of exchange partners (Cao & Lumineau, 2015; Poppo & Zenger, 2002; Roehrich et al., 2020). Contracts are legally enforceable and used primarily to control and coordinate exchange relationships (Ring & Van de Ven, 1992; Williamson, 1985) which includes the delegation of authority, power, decision rights, formal rules and regulations, roles and responsibilities, and standard operating procedures (Cao & Lumineau, 2015; Poppo & Zenger, 2002; Roehrich et al., 2021). While a contract's control clauses (e.g., termination, monitoring, incentives, and disincentives) focus on ensuring that the other party in a relationship will perform in accordance with one's expectations, coordination clauses (e.g., frequency and nature of meetings, specifying roles) support the management of a myriad of interdependent tasks and activities between organizations (Caniëls et al., 2012; Roehrich et al., 2023). Various organizational structures and roles (e.g., lead organizations, hierarchical authority, integrated project teams, advisory boards, and relationship managers) are established as additional governance structures to better support LIPs. Their roles are highly elaborate, relatively stable, and well defined (although flexible) in the contracts governing LIPs (Bercovitz & Tyler, 2014; March & Simon, 1958). Often complementing contractual governance by addressing its shortcomings (Cao & Lumineau, 2015; Oliveira & Lumineau, 2017; Roehrich et al., 2020; Zheng et al., 2008), relational governance refers to emerging, socially derived “arrangements” emphasizing, for example, the emergence of communication and decision-making channels supporting parties' efforts to coordinate and control their actions (Poppo & Zenger, 2002; Roehrich & Lewis, 2014). Relational governance embraces more trust-based social (and moral) norms and rules (Cao & Lumineau, 2015; Roehrich et al., 2020). Social norms and rules are considered to be behavioral guidelines that enforce social obligations in the relationship (Caldwell et al., 2017). The related term of relational contract refers to the shared norms of cooperation and obligation that parties establish informally to control and coordinate exchange processes among parties (Caniëls et al., 2012; Macneil, 1980). Pervasive among a myriad of highly interdependent parties engaging in multiple, sequential, complex transactions, relational contracts build trust among parties (Claggett & Karahanna, 2018) by reducing information asymmetry (Liu et al., 2009), and helping them design more effective contracts in support of collaboration (Mayer & Argyres, 2004). Taken together, contractual and relational governance mechanisms have the potential to completement each other. For instance, organizations engaged in long-term relationships in LIPs become more familiar with each other (Gulati, 1995) and learn to specify more detailed contracts (Poppo & Zenger, 2002; Ryall & Sampson, 2009). Also, specifying rules and responsibilities during the negotiation phase in a relationship may help organizations to get to know each other, build up trust, and have a “knowledge repository” (i.e., the contract) for later phases of the project (e.g., Roehrich et al., 2021; Zheng et al., 2008). Governance mechanisms working in combination may improve the relationship and LIP performance, although their interaction may also lead to increased transaction costs, conflicts, and coordination problems (e.g., Aben et al., 2021; Howard et al., 2019; Kalra et al., 2021; Oliveira & Lumineau, 2017). For example, the study by Caniëls et al. (2012) argues that contractual incentives, hierarchical mechanisms based on authority, and relational or trust-based mechanisms smooth the coordination process and drive efficiencies by reducing transaction or governance costs. This suggests that governance mechanisms must be jointly developed and tailored to each other to obtain improvements in performance and avoid potential negative interactions (Olsen et al., 2005; Roehrich et al., 2020). Despite the potential value that various structures and mechanisms of governance can yield, independently and in concert, the development and application of various governance structures and mechanisms are certainly not without their own challenges. Several distinct, yet interrelated, challenges in particular present promising avenues for future LIP research: (i) the cooperation/coopetition challenge, (ii) the coordination challenge, (iii) the challenge in combining contractual and relational governance mechanisms, and (iv) the governance dynamics challenge. We discuss each of these in turn. As mentioned earlier, collaboration in LIPs depends, among other factors, on cooperation and, by extension, on the resolution of possible conflicts among parties (Bouazzaoui et al., 2023; Caldwell et al., 2009; Engelhart et al., 2023). One of the biggest cooperation challenges in LIPs is, however, aligning participants who have possibly not worked together before, who have limited time available to build cooperation before delivering vital products and/or services for the LIP, and who may also have limited opportunities to work together again in the future. The development of cooperation among parties in LIPs is shaped by “temporal embeddedness” (Jones & Lichtenstein, 2008; Sydow et al., 2004). LIPs are temporary (even when occurring over a long duration of years or even decades) because they have a beginning (including an often long front-end phase—e.g., Lewis et al., 2023) and a defined endpoint. Despite often being standalone and relatively autonomous from the parent organization, each LIP is embedded in a wider organizational and institutional context within which it is undertaken and must be understood in relation to past and future projects (Engwall, 2003). Project-based firms may address this temporal embeddedness by developing project capabilities and routines in-house to sup