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Project governance: Balancing control and trust in dealing with risk



Organizational performance can be enhanced by effective project benefit generation. Although it identifies the project owner as the single point of accountability for the realization of project benefits, the literature does not comprehensively discuss this role in the project governance model, nor the management approaches that can support this role. Based on principal–agent theory and a control–trust–risk approach, we have conducted an empirical study across various managerial contexts. Results suggest that trust of the project owner in the project manager is more effective in a turbulent environment, whereas more control by the project owner of the project management process is a superior management approach in a more stable project setting. Finally, a project governance model is introduced and the management role of the project owner is discussed.
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Project Governance: Balancing Control and Trust in Dealing with Risk
Zwikael, O., Smyrk, J. (2015). Project governance: Balancing control and trust in dealing
with risk. International Journal of Project Management, 33 (4), 852-862.
Organizational performance can be enhanced by effective project benefit generation.
Although it identifies the project owner as the single point of accountability for the
realization of project benefits, the literature does not comprehensively discuss this role in the
project governance model, nor the management approaches that can support this role. Based
on principal-agent theory and a control-trust-risk approach, we have conducted an empirical
study across various managerial contexts. Results suggest that trust of the project owner in
the project manager is more effective in a turbulent environment, whereas more control by
the project owner of the project management process is a superior management approach in a
more stable project setting. Finally, a project governance model is introduced and the
management role of the project owner is discussed.
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1. Introduction
Successful projects enhance productivity and organizational value (Lee et al. 2011;
Shenhar & Dvir 2007). One of the major determinants of their success is an effective project
governance structure (Lechler & Dvir 2010). Project governance seeks to create the
conditions for ordered rule and collective action (Stoker 1998) by providing a formal
representation of the organizational arrangements that surround a particular project. Given the
temporary nature of projects (Malach-Pines et al. 2009; Bakker et al. 2013), each one requires
a unique governance structure which, while distinct from the relatively stable standing
structures of the participating organizations, must nevertheless, co-exist with them. The
assignment of accountabilities to certain entities in the project governance model is important
(Too and Weaver 2013), because it helps bridge the gap between the expectations of a role
and the way that role is filled (Forbes & Milliken 1999) by attaching sanctions and rewards to
levels of performance (Zwikael & Smyrk 2011). Existing literature accepts project managers
as accountable for delivering outputs efficiently - to specification, on time and within budget
(Lewis et al. 2002). Such a view is consistent with the assumption that projects are
undertaken to deliver outputs (deliverables which take the form of artifacts, such as a bridge,
or an information system).
However, literature also challenges existing project governance models, suggesting
they are dated, incomplete, and of questionable value (Lechler & Cohen 2009; Zwikael &
Smyrk 2012). In particular, a major criticism is that such models are not reflective of recent
developments in the project management literature, especially those that view projects as
exercises aimed at realizing benefits desired by the funding organization (Scott-Young &
Samson 2009). ‘Benefits’, defined as ‘flows of value that arise from a project’ (Zwikael &
Smyrk 2012), for example ‘increased market share’ or ‘reduced operating costs’. While the
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importance of project benefits is well accepted (Shenhar & Dvir 2007), accountability for
their realization appears to be treated ambiguously in the literature (Remenyi et al. 1997). As
a result, this paper aims at understanding the impact of management accountability
approaches for benefit realization on project performance and their implications for project
governance. The research questions this paper attempts to answer are: (1) ‘does assignment of
benefit realization accountability improve project performance?’, (2) ‘to whom might such an
accountability be assigned?’, and (3) ‘what are the most effective management approaches to
support this role?’. The paper includes the development of a theoretical framework,
discussion of a quantitative study aimed at its validation, and introduction of a generic project
governance model.
2. Related theories and hypotheses development
This section reviews the governance literature and principal-agent theory as a
foundation on which to discuss the assignment of an accountability for benefit realization. It
then applies the control-trust-risk approach to establish appropriate management approaches
for this role, and develops a series of research hypotheses.
2.1 Project governance
Recent international financial scandals and the collapse of high profile corporations,
such as Enron and World-Com have brought into prominence the role of governance—
particularly as it relates to corporate performance (Bozec et al. 2010). Nigro et al. (2012)
stressed the importance of designing governance models to deal with the issues of inter-firm
relationships, following concepts of Transaction Cost Economics. In general, governance
provides a framework for ethical decision making and managerial action within an
organization that is based on transparency, accountability, and defined roles. Corporate
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governance concerns the manner in which corporations are regulated and managed (du
Plessis et al. 2005), and deals with the need to balance achievement of the organization’s
goals with those of its stakeholders, including society in general and shareholders in
particular. A governance structure seeks to reduce conflicts amongst different groups of
stakeholders that might otherwise impact negatively on performance, and provides a
framework through which the objectives of the organization are set (OECD, 2004).
For similar reasons, projects—unique processes (Marle et al. 2013) intended to realize
target benefits (Zwikael & Smyrk 2012)—also require their own governance models.
Whereas organizational structures are typically functionally-oriented, members of the teams
involved in projects are usually drawn from across functional and organizational boundaries
(Sundstrom et al. 1990), and so standing organizational governance structures are rarely
suited to projects—each of which requires a separate arrangement.
The literature has no commonly understood and agreed upon definition for project
governance (Bekker, 2014). Renz (2008, p. 356) defines project governance as “a process-
oriented system by which projects are strategically directed, integratively managed, and
holistically controlled, in an entrepreneurial and ethically reflected way”. The Project
Management Body of Knowledge (PMBOK
) defines project governance as “the alignment
of project objectives with the strategy of the larger organization” (PMI, 2013, p.553).
Moreover, the literature does not agree on the structure of a robust project governance
model (Zwikael and Smyrk, 2011), only that it should be based around four key principles
(Garland 2009): (1) identify a single point of accountability, (2) ensure a service delivery
focus, (3) separate the project and the organization governance structures, and (4) separate
stakeholder management and project decision making. Similarly, Turner (2009) suggested
three steps for project governance: (1) define the objectives, (2) define the means to achieve
the objectives, and (3) define the means of monitoring the progress. PRINCE2 (OGC, 2009,
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p. 306) argues project governance should “ensure that an organization’s project portfolio is
aligned to the organization’s objectives, is delivered efficiently; and is sustainable.” Muller
(2009) suggests governance models should help fostering projects to be successful, prioritize
projects for best use of resources, identify projects in trouble, and rescue, suspension, or
termination of these projects as appropriate.
Consequently, literature also suggests various project governance models. Ruuska, Ahola,
Artto, Locatelli and Mancini (2011: 650) identified three main categories of project
governance models based on the variety and level of stakeholder involvement: a single firm’s
governance scheme with its multiple projects, multi-firm projects where various companies
engage in contractual agreements, and projects as hybrid or network like structures involving
multiple interconnected actors relying on the presence of one supreme hierarchical authority.
Morris and Geraldi (2011: 20-23) argued that the management of projects could be viewed at
three functional levels: technical, strategic, and institutional. Bekker (2014) combined the two
models described above into three ‘schools of thoughts’ – single firm, multi-firm, and large
capital. Finally, based on transaction cost economics, Winch (2001) proposed to extend the
narrow focus on transactions with the project client.
However, project governance models have lagged behind developments in the project
management literature. Recent literature accepts that projects have specific benefits to
achieve (Shenhar & Dvir 2007) and that the delivery of outputs is a (necessary but
insufficient) precondition to the realization of those benefits (Zwikael and Smyrk, 2012).
Despite this fundamental shift in the focus of the literature, little has been revealed about the
implications of benefit realization for project governance (Remenyi et al. 1997). In particular,
while the literature tends to be very prescriptive about outputs-related roles in projects (Pryke
2005), discussion about project benefits ignores the concept of accountability for their
realization (Muller & Turner 2005). Even where the emergence of new roles related to
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benefit management has been recognized (e.g. OGC 2009), the need to formalize them with
supporting accountabilities has been disregarded. Hence, this paper seeks to determine not
only whether models of project governance should be augmented with a supporting
accountability for benefit realization, but also how such a role could be reconciled with the
project manager’s accountability for output delivery (Herroelen 2005; Dvir & Lechler 2004).
The next section discusses principal-agent theory as a foundation for this core accountability.
2.2 Principal-agent theory
The project governance model is influenced by various organizational theories (Renz,
2008). Stakeholder theory (Freeman 1984) emphasizes the identification of key stakeholders,
such as customers and beneficiaries. Stewardship theory (Davis et al. 1997) emphasizes the
role of projects to guide stewards in the deployment of the resources that others have
entrusted them. In institutional theory (Aoki 2001), governance has a role in identifying
societal expectations of an organization and in confirming that a project is coherent with its
goals. Finally, resource dependency theory (Pfeffer and Salancik, 1978) suggests that projects
are shaped, not only by the funding organization, but also by those who have been
commissioned (as agents) to provide necessary resources.
This paper analyzes project governance through the lens of principal-agent theory
(Eisenhardt 1989) as the most widely recognized approach in the project governance
literature (e.g. Turner, 2009). The theory claims that it is inefficient for principals to assume
direct responsibility for the management of the organization (Fama & Jensen 1983) and
highlights the resulting goal conflict that arises when individuals with differing preferences
engage in cooperative effort. As a result, the application of principal-agent theory results in
the separation of ownership from control (Bozec et al. 2010), because the principal engages
an agent to perform some service on his/her behalf. Such an arrangement usually involves
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delegation to the agent of certain accountabilities—together with supporting decision making
authority. Principal-agent theory is preoccupied with determining the optimal form of
contract (expressed in terms of desired behaviors and outcomes) in the principal-agent
relationships (Eisenhardt, 1989). This stream has a broader focus and is applied to employer-
employee, lawyer-client, and buyer-supplier relationships. Because of the generality of its
context, principal-agent theory has also been usefully extended to the project environment
(Muller & Turner 2005).
A core element of principal-agent theory is the concept of accountability (Jensen
2000). Accountability is also a critical characteristic of effective governance (Brand 2007;
Roberts et al., 2005; Huse, 2005; Abednego & Ogunlana, 2006). Because accountability is
particularly important in the project context (Abednego & Ogunlana 2006; Lechler & Cohen
2009), and following criticism surrounding its application to project benefits (Remenyi et al.
1997; Zwikael & Smyrk 2011), this paper focuses on accountability for project benefit
2.3 Project benefit accountability
The principal in a project setting is also known as the “funder” (Zwikael & Smyrk
2012). The funder (commonly the owner of the firm or a senior executive) is the person with
the authority to approve the project and commit resources for its execution. In the
conventional outputs-based view of a project (e.g. Jensen 2000), the application of principal-
agent theory (Eisenhardt 1989) gives rise to an arrangement in which the funder (as principal)
assigns accountability for efficient output delivery to a project manager (as agent). When the
accountability for realization of benefits is introduced, however, a project governance issues
is raised: “who should be assigned such an accountability?”. There are two immediate
options for the assignment of project benefit accountability: the funder can decide to be self-
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accountable or assign such that accountability to the project manager as an agent. This
section will show why neither of these is desirable.
Because of their seniority and the associated demands on their time, project funders
are often unable to involve themselves meaningfully in particular projects. Consistent with
principal-agent theory, funders may elect to delegate accountability for benefit realization to
someone else in their organization—to whom is also delegated various authorities (especially
related to funding). Because the establishment of such agency arrangements shifts project
decision-making out to others (away from the funder), delegation of this kind forces a degree
of decentralization on the funding organization. The advantages of decentralization (through
the delegation of decision-making) are well documented in the literature. For example, Mihm
et al. (2010, p. 831) suggest that decentralization “increases solution quality, and raises the
organization’s ability to cope with environmental changes”. Aghion & Tirole (1997, p. 27)
argue that such delegation “will both facilitate the agent’s participation in the organization
and foster his incentive to acquire relevant information about the corresponding activities”.
Delegation is especially relevant when a “principal is overloaded with too many
activities…and therefore has little time to acquire the relevant information on each activity”.
In such a situation the principal loses “effective control and involuntarily endorses many
suboptimal projects” (Aghion & Tirole 1997, p. 3). Under the model proposed by Aghion &
Tirole (1997, p. 5) “the principal hires the agent to collect information about and implement
the project”.
While the principal needs to appoint someone to be held accountable for benefit
realization, we draw on existing theories to argue that such a role should not be filled by the
project manager. Firstly, because conflicts of interest must be avoided (Simon 1976), future
benefit realization cannot be compromised in the immediate interests of efficient output
delivery (for example, by making a conscious trade-off between the eventual magnitude of a
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benefit and completing the project on time). Secondly, we invoke the principle that in a
transaction, a “purchaser” is to be identified and separated from the role of “provider”
(Muller & Turner 2005). A project can be viewed as a transaction in which a client (the
funder) orders a product (output) from a supplier (the project manager) for an agreed fee (the
budget). Thirdly, project managers usually have a mindset that better suits output delivery,
rather than the realization of organizational benefits (Kerzner 2009). Lastly, the role of
project manager is, in any event, a transient position—to which the attachment of long-term
accountabilities may be most inappropriate (Zwikael & Smyrk 2012). Taken together, these
principles offer further support for the claim that “benefits are not delivered or realized by
the project manager and project team” (Cooke-Davies 2002). If neither the funder nor the
project manager is to be held accountable for benefit realization, a different entity is required
to fill that role.
This paper suggests that a “Project Owner” acts (as agent) on behalf of the funder (as
principal), seeking to ensure that the interests of the latter are being served throughout a
project. Similarly, the UK government (OGC, 2009) has defined a “Senior Responsible
Owner” as “a single individual with overall responsibility for ensuring that a project or
program meets its objectives and delivers the projected benefits”. The project owner should
be a senior executive who might be responsible after project completion for any ongoing
operation of its outputs. Because, in such cases, benefit accountability is associated with a
business unit, it would be usefully delegated to front-line management (Mihm et al. 2010),
and so a functional manager is often a good candidate to fill this role. For example, if a
project is to deliver a new incentive scheme so that staff turnover can be reduced, it would be
appropriate to appoint the Head of HR as the project owner—who then becomes accountable
to the CEO (as the funder) for the achievement of reduced staff turnover through the project.
Roberts et al. (2005) introduced the concept of “effective accountability” claiming it to be
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highly important in corporate governance. Similarly, we argue here that effective
accountability for benefit realization is important in the project governance context. Hence,
we hypothesize that:
: Effective accountability for benefit realization enhances project performance
Whereas the first hypothesis suggests a direct effect on ‘project performance’, recent
literature has criticized the use of a single, overarching measure (e.g., Scott-Young & Samson
2008; Muller et al. 2012), as it does not allow factors that contribute to separate dimensions
to be distinguished (Pinto & Prescott 1990). An alternative approach distinguishes separate
dimensions of performance (Jugdev & Muller 2005; Pinto & Prescott 1990). One of these
dimensions commonly used in research (e.g. Aviram-Unger et al., 2013) is “efficiency”,
refers to meeting the agreed time and budget targets. Scholars (e.g., Dvir & Lechler 2004;
Narayanan et al. 2011) have argued that the relationship between project management factors
and performance is mediated by project efficiency. That is, a project meeting its efficiency
targets is more likely to show improved performance than one which does not meet those
targets. Hence, we propose a competing hypothesis:
: Efficiency mediates the relationship between accountability for benefit realization
and project performance
2.4 Management approaches to the discharge of accountability for project benefits
In order to support the project owner role, a model of managerial intervention is
required. Todeva and Knoke (2005) provide us with two separate approaches for managerial
intervention: (1) Control, a formal mechanism which is associated with legal documents,
such as a contract, enables the control of processes surrounding resource allocation and
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decision making; (2) Trust, the confidence in another’s will, or faith in a partner’s moral
integrity. Trust is associated with mutual understanding, unrestricted learning, and inter-
organizational knowledge-sharing and can substitute a more formal control mechanism by
avoiding several types of transaction costs, while still ensuring the other party meets their
Similarly, in the project context, the project owner who holds the accountability for
benefit realization (as an agent of the funder) can frame the relationship with the project
manager based on these two approaches. One option involves a high level of control by the
project owner of the project manager’s activities, for example, by extended reporting
requirements, and frequent progress presentations to the project steering committee. The
alternative approach reflects a higher degree of trust by the project owner in the project
manager by permitting him/her to make operational decisions ‘on the run’, thus allowing the
project to progress more smoothly (with fewer interruptions). The next section discusses the
contingent effectiveness of these two management approaches (control and trust) under
various levels of project risk.
2.5 The moderating effect of risk on the effectiveness of different approaches to benefit
Risk is associated with an uncertain event (Wang & Yang 2012) that, if it occurs, can
have a negative effect on achieving project objectives (Zwikael & Smyrk 2011). Although
risk cannot be fully eliminated, Chapman & Ward (2004) found that organizations spend
significant funds in risk management. Research into projects (Zwikael & Ahn 2011; Lewis et
al. 2002) and governance (Cui et al. 2012) suggests that risk is an important moderator for
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In particular, risk has also been found an important moderator in the selection of an
appropriate accountability management approach. Das and Teng (2001) discussed two types
of risks: (1) relational risk is the perceived threat that a firm will behave opportunistically and
consciously harm its partner’s interests, and (2) performance risk is the perceived chance that
factors such as market uncertainty, competition and governmental regulation may have
negative effects on results. In the context of project governance, because of the immediate
impact on project results, performance risk is the most relevant dimension (Zwikael & Smyrk
2012). The control-trust-risk approach suggests that performance risk moderates the impact
of control and trust approaches on performance, such that control is the preferred option “in a
stable environment with low performance risk, whereas trust is required in a turbulent
environment with high performance risk” (de Man and Roijakkers, 2009, p. 78). Hence, in
the project environment we expect control approaches to have stronger impact on on project
performance under low levels of project risk, whereas trust to have stronger impact in high
risk scenarios. Hence, the following moderation hypotheses are proposed (also illustrated
graphically in Figure 1):
: Risk moderates the relationship between control and performance, such that the
impact of control on project performance is stronger in low risk projects than in high
risk projects
: Risk moderates the relationship between the trust and performance, such that the
impact of trust on project performance is stronger in high risk projects than in low
risk projects
< Figure 1 about here >
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3. Research design
In order to test these hypotheses, an approach based on quantitative study using a
survey was chosen, as it can test constructed theories, and produce precise and numerical data
(Johnson & Onwuegbuzie, 2004). This section summarizes the method and measures used.
3.1 Participants and procedure
The unit of analysis in this study was a project. For each project, two questionnaires
were used - the first targeted project managers who were asked to report on trust, control and
risk in the most recent project they had managed, as well as to provide contact details of their
supervisors. A call for participation in the study was sent in an email to members of the
Project Management Institute in the Asia Pacific region. This group was chosen because of
their familiarity and experience with the project environment. Following completion of the
first questionnaire, a second questionnaire, which was matched to the first one using a project
code, was administrated to the supervisors. Referring to the same project, project managers’
supervisors were asked to assess the level of project performance. This approach has enabled
us to minimize same source bias.
Out of the 102 complete project manager-supervisor dyads received, 29 responses
came from India, 16 from New Zealand, 15 from Australia, and the rest from different Asia
Pacific countries. 20.2% of responses came from software organizations, 19.0% from
services, 11.9% from engineering, 13.1% from government, and 8.3% from production
organizations. Project duration ranged between 2 and 60 months with a mean of 15.6. 55.4%
of the projects were undertaken for an internal funder within the same organization, while
44.6% of the projects were commissioned by an external organization. 89% of responses
were male and 11% female.
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3.2 Measures
Project performance. Based on Aviram-Unger et al. (2013) this construct was measured
using two items that represented the project funder’s level of satisfaction with the realized
benefits at project completion. The two items were: “funder’s satisfaction with the project at
its end” and “extent to which the project deliverables were fit-for-purpose”. The items were
measured on a five-point Likert scale (1=low to 5=high). The scale’s alpha coefficient was
Project efficiency. ‘Project efficiency’ was measured by two items: time and cost overruns,
as suggested by Bryde (2005). Participants were asked to indicate the extent to which the
project deviated from planned schedule and cost (in percentages), as set at the start of the
project. ‘Project efficiency’ was then calculated as the reversed average of the two reported
variables to ensure higher scale values represent higher levels of efficiency. The scale’s alpha
coefficient was .69.
Project benefit accountability. This independent variable was measured using a two item
scale with reference to both trust and control approaches described earlier (Todeva and
Knoke, 2005). ‘Trust’ was represented by the project owner’s ‘level of acceptance’ (as
principal) of delegating management responsibilities to the project manager (Abednego
& Ogunlana 2006). ‘Control’ was assessed by the ‘level of project involvement of the project
owner in the project management process’ (Pfeffer & Salancik 1978). These variables were
gauged using a five point Likert scale (1=low to 5=high). The scale’s alpha coefficient was
Project risk. Based on Zwikael and Ahn (2011), the level of this variable was reported by
project managers. They were asked to estimate the level of project risk at the commencement
of each project on a five point Likert scale (1=low to 5=high).
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3.3 Data analysis
In this study we used two data analysis approaches to test our hypotheses. The first set of
hypotheses was tested by Structural Equation Modeling (SEM), as it involved direct impact
and mediating paths. We compared the fit of nested alternative models based on model
parsimony and overall Chi-Square. A model that is more parsimonious and has significantly
smaller Chi-Square value will be considered as a better fitting model. Because the evaluation
of SEM requires multiple measures (Dvir & Lechler 2004) two were used. The Root Mean
Square Error of Approximation (RMSEA) is a measurement of non-centrality, which
estimates how well the fitted model approximates the population covariance matrix per
degree of freedom. Browne & Cudeck (1993) suggested that an RMSEA value smaller than
0.08 indicates a close fit and that the model should be accepted. The Comparative Fit Index
(CFI) assesses the relative reduction in lack of fit, with a threshold value of 0.85 (Bentler &
Bonett 1980). Further, we used Akaike’s (1987) information criterion (AIC) to evaluate the
relative fit of our best-fitting model and a non-nested alternative model, where smaller AIC
values represent better fit.
Moderating hypotheses (H
and H
) were tested by hierarchical regressions. Following
the guidelines by Aiken and West (1991), the predictor and moderator variables were mean
centered before creating an interaction term to minimize multicolinearity effects. The
predictors (control and trust) were entered in model 1 and the moderating variable (risk) in
model 2, to test for main effects; the interaction terms between risk and each of the two
independent variables (control and risk) were entered in model 3. Because the moderation
hypotheses establish a specific direction, both were tested using a one-tailed test.
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4. Results
4.1 The impact of benefit realization accountability effectiveness on project performance
First, we conducted a Confirmatory Factor Analysis to examine the distinctiveness of the
multi-item variables in the study. We compared the fit of three models. The first was the
hypothesized four-factor model, which included the two accountability approaches (control
and trust) in a combined “benefit accountability” factor, as well as risk, efficiency and
performance. The second model further combined efficiency and performance to create a
nested three-factor model. The third model was a default one-factor model, in which all
variables formed one factor. The hypothesized four-factor model (RMSEA=0.048; CFI=0.99)
fits the data better than the three-factor model (RMSEA=0.120; CFI=0.92), and the one-
factor model (RMSEA=0.200; CFI=0.73). Furthermore, the Chi-Square difference test
showed that the hypothesized four-factor model fits the data significantly better than the
three-factor model (X
=18.35; df=3) for significance level below 0.01. Descriptive
statistics and correlations among all four factors (as well as the two benefit accountability
management approaches) are presented in Table 1. Results show significant positive
correlations between the two management approaches that might be adopted by the project
owner in discharging his/her benefit accountability and project efficiency and performance.
< Table 1 about here >
Next, we tested the competing hypotheses H
and H
on the impact of benefit
realization accountability effectiveness on project performance, using the four factors
identified above: benefit accountability, risk, efficiency and performance. Hypothesis H
(represented in Figure 2a) tested the direct effect of benefit accountability effectiveness on
project performance. While the correlation was significant, the model fit was only marginally
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significant (RMSEA=0.11; CFI=0.97). The competing hypothesis H
proposed that project
efficiency mediates the effect of benefit accountability effectiveness on performance. Results
of this full mediation model (presented in Figure 2b) are again only marginally significant
(RMSEA=0.11; CFI=0.93). As a result, we also analyzed a partial mediation relationship
(Figure 2c), which provided better results (RMSEA=0.04; CFI=0.99). Finally, model 4 tested
a non-nested alternative partial mediation model (i.e. reversed sequence between efficiency
and performance), though with poorer results (RMSEA=0.09; CFI=0.96). Risk was set as a
control variable in all four models.
< Figure 2 about here >
In order to determine the best nested model, a Chi-Square test was conducted to
statistically compare the full and partial mediation models. The test showed that the partial
mediation model (Figure 2c) fits the data significantly better than the full mediation model
=14.9; df=1) for significance level below 0.001. Additionally, the AIC value showed
that this partial mediation model had the smallest value (AIC=60.82), followed by the non-
nested partial mediation model (Figure 2d) with AIC=67.59. Hence, we accepted the partial
mediation model as the best-fitting model. To confirm the partial mediation effect we
calculated the variance accounted for (VAF), which “determines the size of the indirect effect
in relation to the total effect” (Hair et al., 2014, p. 225). The VAF value (25%) falls within
the partial mediation range. We conclude that project efficiency partially mediates the
relationship between project benefit accountability effectiveness and project performance.
Furthermore, because the VAF value is very close to the lower partial mediation effect range
(20%), results suggest that project performance is more appropriate than project efficiency to
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serve as the dependent variable in our moderating analysis of the second research hypothesis
4.2 The moderating effect of risk
The second set of research hypotheses focused on the moderating effect of risk on the
relationship between the two benefit management approaches and project performance. In
order to allow a moderation test, the conditions set by Sharma et al. (1981) have been tested
first. Results of the correlation analysis (Table 1) suggest no significant correlations between
the moderating variable (risk) and both the predictors (control and trust) and the criterion
variable (project performance). As a result, this case falls within the second quadrant in
Sharma et al.’s model as a full moderator. In other words, the moderating variable is not
related neither to the criterion not the predictor, neither it interacts with the predictor. Hence,
a moderation analysis was conducted using a stepwise regression, as described earlier.
Results, presented in Table 2, confirm that the interactions between risk and control
(p<0.001) and risk and trust (p<0.05) affect project performance. These analyses support both
parts of the second hypothesis.
< Table 2 about here >
Information from the regression equations was extracted to plot the relationship
between trust and control and project performance at low and high levels of risk (Figures 3a
and 3b). Low control and low trust pertain to -1 SD below their means. In contrast, high
control and high trust refer to +1 SD above their means.
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< Figure 3 about here >
5. Discussion
This section provides a discussion of the effectiveness of benefit realization
accountability on project performance in various project contexts.
5.1 The project owner’s accountability for benefit realization
The literature identifies accountability as a core component of effective governance
(Abednego & Ogunlana 2006; Brand 2007). It has become widely accepted that benefit
generation is the underlying objective of all projects (Zwikael & Smyrk 2012). The results of
our empirical study have confirmed that assignment of an accountability for benefit
realization has a positive effect on project performance. This result is an extension to Shenhar
and Dvir’s claim (2007) that managers need to take further responsibilities for business
results, rather than focus only on project efficiency. Such an accountability is in alignment
with: (1) governance literature, which recognizes the importance of ownership (Cai &
Tylecote 2008), (2) principal-agent theory, which requires separation of ownership and
control (Eisenhardt 1989), and (3) management literature, which highlights trade-offs
between efficiency and effectiveness (Chase et al. 2007).
The incorporation of a project owner into established models of project governance
also has fundamental implications for the role of project managers, traditionally the funder’s
agent. Instead, we suggest a cascading of accountability: from the funder to the project owner
for realizing benefits and then from the project owner to the project manager for delivering
the outputs that are necessary for achievement of those benefits. The separation of the roles of
project manager and project owner can be used as the foundation for a project governance
- 20 -
model in which the project owner becomes the project manager’s principal and the project
manager becomes the project owner’s agent (Muller & Turner 2005).
5.2 The project governance model
The previous section discussed the role of the project owner in ensuring the
realization of project benefits. The role of the project owner is also central for the shape of a
project governance model. Whereas previously a project manager interacted directly with the
funder, this interaction now takes place with the project owner who in turn liaises with the
The funder commits funds and/or approves the allocation of labor to the project
(Zwikael and Smyrk, 2011). However, after approving the business case, the project funder is
usually too busy to be actively involved in project execution. Hence, the project funder may
choose to appoint a project owner to oversee the development of the project plan (by the
project manager), and works closely with the project manager during execution.
The project owner is accountable to the funder for project benefit realization in
general and for the fulfillment of the business case in particular. Based on principal-agent
theory, the project owner should: (1) not face a conflict of interest, (2) be recognized as a
single point of accountability, and (3) be separated from the project manager. Because of the
long term time horizon of project benefit realization, it is also important that the project
owner has a strategic mindset. The project owner would be expected to chair meetings of the
steering committee - a small group of powerful project supporters assembled to support the
project owner in the discharge of his/her accountability to the funder by overseeing the
project’s execution and, later, benefit realization (Zwikael & Smyrk 2012).
Based on principal-agent theory (Eisenhardt 1989), a project manager is to be held
accountable to the project owner for delivering the project’s committed outputs, fit-for-
purpose, within the constraints of an agreed budget and timeframe and without causing
- 21 -
undesirable outcomes (Zwikael and Smyrk, 2011). The project manager will usually have a
project team to support his/her work in delivering the project’s outputs. The generic project
governance model based on these principles is presented in Figure 4. Note that because the
funder is not actively involved in the project he/she is not an official part of the governance
model, but instead has an overseeing role.
< Figure 4 about here >
It is to be expected that this model will, from time-to-time, give rise to conflicts
between the project owner and manager despite their distinct accountabilities. For example,
the project owner may suggest additional improvements in the quality of project outputs to
more closely match customer needs—thus enhancing benefit realization. It is to be expected
that a project manager may be reluctant to accept such a change because it may have
implications on the delivery date of the outputs (for which he/she is accountable). Based on
the principal-agent theory, we suggest that if such conflicts emerge, the project owner’s view
should prevail.
5.3 The project owner role under various project risk levels
In addition to confirming the positive relationship between the effective
accountability of a project owner for benefit realization and project performance, the results
of this study also exposed the moderating effect of risk, thus reinforcing the importance of
risk as a contextual construct in project governance. More specifically, we found that under
low and high levels of risk each management approach to the discharge of accountability
impact project performance differently.
It was found that project owner’s control of the of project management process is
important in low risk situations (Figure 3a), whereas the project owner’s trust in the project
- 22 -
manager is important in high risk scenarios (Figure 3b). These results are similar to the
findings of de Man & Roijakkers (2009) in their control-trust-risk approach for alliance
governance. The following paragraphs suggest how this theory can be operationalized for
various project contexts.
High risk projects have more uncertainty regarding output delivery. For example there
is no guarantee that a novel product sought from an R&D project will be delivered. As a
result, project managers become preoccupied with the relatively short term problems of
project execution and less concerned with the longer term goal of realizing benefits. In such
cases, additional control by the project owner of the project management process is likely to
focus on mitigating short term threats. These actions may not be readily accepted by the
project manager (who could see them as a form of interference). Consequently, such actions
may have little, if any, positive impact on long term project performance. On the other hand,
in low risk projects, (such as a road construction project) delivery of outputs is more certain.
In these cases attempts by the project owner to intervene in the project management processes
may be seen as complementary to existing output delivery control activities, thus having a
positive impact on eventual long term benefit realization. For example, involvement of this
kind by a project owner could well be directed at judging the acceptability of gaps between
planned and actual levels of performance (as reflected in the project plan) and then
facilitating actions that will close any unacceptable gaps. A practical and useful control
approach is conducting project audits or stage-gate reviews (Turner, 2009).
Trust of the project owner in the project manager will have the greatest impact on the
performance of high risk projects because of two potential mechanisms. High levels of trust
are likely to encourage the assembly of a high quality business case and project plan at the
beginning of a project and strong leadership during benefit realization at its end—both
contributing to project performance (Zwikael & Smyrk 2011).
- 23 -
6. Conclusions
While in the past, the literature has focused on efficient project output delivery (for
example, ensuring a bridge construction is completed on time), more recently it has
acknowledged the importance of benefit realization (for example, ensuring the number of
accidents on this road is reduced). Despite this shift in emphasis (e.g. Zwikael and Smyrk,
2012), the literature has lagged behind in accommodating the implications of these
developments for project governance. As a result, project governance models are still
concerned primarily with a sole accountability for output delivery. Following previous
attempts to incorporate benefit accountabilities into project governance models (e.g. OGC
2009; Muller & Turner 2005), and based on principal-agent theory (Eisenhardt 1989), this
paper supports an appointment of a project owner for each project (Zwikael and Smyrk,
2012) and suggests criteria for such an appointment. Furthermore, we propose a generic
project governance model, which includes two key players: the project owner (who
represents the project funder’s interests in the project) and the project manager. Commonly, a
steering committee (lead by the project owner) and a project team (lead by the project
manager) will also be involved.
The title of our paper paraphrases that of a paper on control-trust risk theory by de
Man and Roijakkers (2009), reflecting our objective of extending this theory to the project
governance environment. Accordingly, our paper also discusses the effectiveness of the
managerial approaches of control and trust (Todeva and Knoke 2005) in defining the role of
the project owner. We propose that a management approach for the project owner based on
trust in the project manager will be more effective in high risk projects, whereas one based on
control of the project management process will be more effective in low risk situations.
- 24 -
Recapturing our research questions we conclude that the assignment of benefit
realization accountability improves project performance. A project owner should be assigned
the accountability for realizing the business case in general and securing the flow of target
benefits in particular. The project owner is, effectively, the funder’s agent. Ideally, the project
owner will chair the steering committee. Accordingly, a project manager is to be held
accountable by the owner for delivery of project outputs.
It is important to note here various limitations of this research, including the use of an
underdeveloped scale to gauge accountability for benefit realization, data collection at a
single point in time, and the application of principal-agent theory which has been the subject
of some criticisms in the literature (for example, see Munari et al. 2010). Another limitation
is that this paper relies on the literature which suggests that trust and control are alternative
managerial approaches, whereas it is important to state that others perceive them as related, in
particular when trust levels are high, project owners may give more control to project
managers. Finally, whereas this study tested moderation and mediation effects separately,
future research might examine a combined approach for moderation-mediation analysis, as
well as validate the proposed theoretical framework in various types of project,
organizational contexts, and cultures.
- 25 -
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Figure 1. The study theoretical model (including competing hypotheses)
for benefit
realization based
on control
Project performance
for benefit
realization based
on trust
- 34 -
2a. Direct effect. X
=9.0; df=4; RMSEA=0.11; CFI=0.97
2b. Full mediation. X
=27.7; df=12; RMSEA=0.11; CFI=0.93
2c. Partial mediation. X
=12.8; df=11; RMSEA=0.04; CFI=0.99
2d. Non-nested reversed partial mediation. X
=19.59; df=11; RMSEA=0.09; CFI=0.96
Figure 2. Competing structural equation models for the impact of benefit accountability
effectiveness on project performance (controlled by level of risk)
Note: RMSEA = Root Mean Square Error of Approximation; CFI = Comparative Fit Index
0.510** 0.770***
Project Benefit
0.248 0.534***
Performance Project
0.526*** 0.714***
Project Benefit
Project Benefit
Project Benefit
- 35 -
Figure 3a. The moderating effect of risk on the relationship between control and project
Figure 3b. The moderating effect of risk on the relationship between trust and project
Low High
Project Performance
Low Risk
High Risk
Low High
Project Performance
Low Risk
High Risk
- 36 -
Figure 4. The project governance model
- 37 -
Mean STD (1) (1a) (1b) (2) (3)
(1) Project benefit
accountability effectiveness 3.40 1.07 (0.78)
(1a) Control (1-5) 3.34 1.21
(1b) Trust (1-5) 3.46 1.16 0.634***
(2) Project efficiency (%) 27.30 34.46 0.213* 0.202* 0.183 (0.69)
(3) Project performance (1-5)
3.74 0.95 0.445***
(4) Risk (1-5) 3.61 0.89 -0.039 0.053 -0.128 0.029 0.184
Table 1. Pearson correlations among the study’s continuous variables
(*p<0.05; **p<0.01; ***p<0.001)
- 38 -
Model 1 Model 2 Model 3
Control 0.169 0.118 0.157
Trust 0.324** 0.386*** 0.325**
Risk 0.227** 0.239**
Control * Risk -0.368***
Trust * Risk 0.171*
F change 12.603*** 6.462** 6.097**
F value 12.603*** 11.020*** 9.738***
R squared 0.203 0.252 0.337
Table 2. The moderating effect of risk on the effectiveness of management approaches on
project performance (one-tailed test)
(*p<0.05; **p<0.01; ***p<0.001)
... Effective risk management is a consequence of a sensible project governance system [16]. Additionally, [16,17] stated that project-oriented associations need an exceptional governance system that is different from the customary structures to cope with the risks because the projects are temporary [18,19]. Likewise, [11,20] explored the theory that sensible governance mechanism effectively enhances the quality of a software project, which is a substantial forecaster of project performance. ...
... A general risk management process has the following steps: 1-context establishment; 2-risk identification; 3-risk assessment, measuring the level of risk; 4-risk calculation; 5-risk control/treatment [29]. Moreover, risks in the project can negatively affect and create hurdles to achieving the objectives of that project [17]. Project risk discusses that condition, which poses a severe threat and makes the barrier to completing projects relevant to the IT field [15]. ...
... Consequently, prior literature such as that of [27] proved that project governance with its elements has a significant vital role in project performance. Researchers [17] strongly focused on governance elements to avoid uncertainties and risks (one of the important features of an effective governance mechanism) efficiently. Thus, the study proposed the following hypotheses: ...
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In this study, we explore the impact of contractual governance (CG) on project performance (PP) under the mediation of project management risk (PMR). Contractual governance influences favorably IT projects performance in an emerging market context where the IT sector is growing. The principal-agent theory is used to build a research model that schedules project governance and IT project risk management. Data were collected from 295 IT professionals and the response rate was 73.75%. Smart PLS was employed to test proposed relationships. The findings postulate a strong causal relationship between the CG, PP and PMR. Fundamental elements (FE), change elements (CE), and governance elements (GE) have a significant positive relationship with project management risk (PMR), and PMR positively affects PP. Additionally, PMR mediates the relationship of FE, CE and GE with PP. Overall, the results of the study provide pragmatic visions for IT industry practitioners and experts, but the unscheduled risk to the IT industry may bring enormous harm. Consequently, effective and well-structured governance in a strategic way tends to improve the project performance by monitoring and managing both project risk and quality. In addition, the study empirically supports the significant impacts of project governance dimensions i.e., fundamental elements, change elements and governance elements on project management risk and project performance. It also guides researchers and adds value to the project performance-related literature by filling the gap.
... Project management is centered on planning, organizing, and controlling resources to achieve specific goals within a predetermined time, cost, and quality framework (Geraldi and Lechter, 2012). Effective project management contributes to project success by ensuring the fulfillment of client expectations and maintaining control over the project life cycle with the support and commitment of top management to implement well-documented projects and systems, including identifying qualified personnel, motivation, and communication (Zwikael and Smyrk, 2015;Kumar et al., 2021). ...
... In recent years, there has been an increased emphasis on Management Control Systems (MCS) as an effective means to enhance project performance. MCS encompasses various techniques and tools that businesses use to coordinate and control their activities to achieve organizational goals (Nogueira, Hernández and Negrín, 2002;Zwikael and Smyrk, 2015). ...
... An additional project goal is to promote decentralized decision-making in residential construction firms. Decentralized decision-making empowers project managers and teams to make informed decisions based on localized information, enabling rapid responses to project challenges (Zwikael and Smyrk, 2015). By fostering decentralized decision-making, the application will help firms to effectively address project risks and uncertainties, ultimately improving project outcomes. ...
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... However, the type of construction project governance (CPG) that is being currently practiced-hierarchical CPGhas failed to respond to these two characteristics (responsiveness and resilience) because of the low levels of trust across construction project networks [9,10]. Indeed, many construction projects based on a hierarchical governance framework face low performance such as time delay and cost overrun due to governance failures that arise from a low level of trust [11,12]. In response to this, various industries have begun to consider blockchain technology (BT) as an enabler for a more flexible trust-based CPG due to its transparency characteristic [13,14]. ...
... As can be seen from Table 2, CPG is characterized by six distinct factorstransparency, accountability, responsibility, fairness, responsiveness, and resilience -arising from five CPG theories [24][25][26]. Various assumptions based on CPG theories provide contextual information about the current practices and challenges of CPG [12]. ...
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Construction project governance (CPG) acts as a ‘steering wheel’ that keeps a construction project steady in a challenging external environment. CPG frameworks can be divided into two types: control-based hierarchical governance and trust-based relational governance. To increase cooperation and networking between the participants in a project, effective CPG depends on well-combined control and trust mechanisms. However, the current CPG framework, which is control-based, is biased toward hierarchical governance and can lead to a lack of trust in the construction project. These issues have resulted in several studies that have focused on blockchain technology (BT) as a potential enabler for addressing the low levels of trust in CPG. However, existing research in this area has failed to address the nature of the relationship between trust as a key CPG challenge and BT. Hence, this paper aims to identify trust as a major CPG challenge and potential BT capabilities to reveal the relationship, through a state-of-the-art review. The findings show that the effective use of three decentralized BT capabilities (decentralized data storage, validity, and access) can positively influence the three relational norms (mutuality, flexibility, and solidarity), which are the functional tools of relational governance. Thus, a more flexible trust-based CPG framework is proposed by establishing relational governance with blockchain technology. Ultimately, this study is expected to enhance the trust between the key stakeholders in construction projects and enable more efficient collaboration and networking between them.KeywordsBlockchain technology (BT)Construction project governance (CPG)Hierarchical governance (HG)Relational governance (RG)Trust
... Decision making and risk perceptions play an important part in defining project strategy. (Zwikael & Smyrk, 2015) illustrate that in turbulent environment, trust of the project owner in the project manager is more effective, whereas in in a more stable project setting, more control by the project owner of the project management process is a superior management approach. Finally, management role of the project owner is discussed and a project governance model is introduced. ...
... (Francis et al., 2008)conclude project management and reputation of PM as a critical success factor. (Zadeh et al., 2017) work highlights cooperation and (Hsieh et al., 2020) work on goodwill, ) on deception, (Flyvbjerg, 2006) on inaccuracy and forecast risk in project management, optimism bias and strategic misinterpretation while (Poster, 2013) brings out the variable as emotions and (Zwikael & Smyrk, 2015) control and trust. ...
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Business strategy has been much researched, but project strategy still remains in an area of ambiguity and is mostly misinterpreted. Strategy itself is a loosely used term in various references and contexts. The present article attempts to clarify such ambiguities and reveal the correct usage of the term "Strategy", thereby elucidating project strategy. By an exhaustive literature review the article provides the work done in the sector of human factors and their influence on project strategy. The research gaps in the area of human factors are identified and an empirical study is presented to identify the important human factors. A questionnaire survey is conducted with 129 respondents majorly from the project related industry. 16 variables identified from the gaps in the literature survey are analyzed. Principal Component Analysis (PCA) method is applied in order to identify human factors which impact project strategy. The analysis shows 3 independent variables as important. Factor Analysis is carried on this and validity and reliability of the factor is illustrated. Finally through a multivariate multiple regression analysis, the paper concludes that Charisma, Reputation of Project Manager and Trust between client impact project strategy. Data collection is further suggested to study the other variables. The research is a part of an ongoing PhD thesis on project strategy.
... związane z monitorowaniem jakości czy terminowości produkcji, co wpłynęłoby na zmniejszenie dostarczanych braków czy nieterminowe dostawy. Jest to istotne, ponieważ jak wskazuje literatura przedmiotu zaufanie w relacjach biznesowych, w tym zleceniach projektowych, powinno być wspomagane właściwym zastosowaniem podejścia i narzędzi kontrolnych (Zwikael & Smyrk, 2015). ...
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Project governance is a dynamically developing research area. The growing interest in the field results in its broader use in various aspects of project management. The paper's main objectives are to outline the current state of knowledge in the field of project governance and its opportunity to adapt in project procurement. The study emphasizes the importance of business practitioners' awareness of the need to distinguish between supervision and management issues and to indicate the application of supervisory and managerial tasks in project procurement. The literature analysis highlight that the issue of project procurement supervision is relatively rarely explored by researchers. The conducted empirical study indicates a lack of understanding among business practitioners of the need to separate supervision and management of project procurement. It became evident that many supervision tasks are not carried out at the procurement level.
Purpose This study aims to understand how project leaders' interactive use of the project management control systems (MCS) impact IT project performance, by examining the mechanisms through which this relationship is enacted. Design/methodology/approach Data were collected from a cross-sectional survey of 109 IT project managers working in Canadian and USA-based organizations. A moderated mediation model was analysed by hierarchical component reflective-formative measurement modelling using PLS-SEM. Findings Results suggest that the leader's interactive use of project MCS is associated with IT project performance, and this relationship is partially mediated by team learning behaviour. In addition, the relationship between the interactive use of project MCS and team learning behaviour is moderated by the organization's emphasis on process accountability, with the effect being stronger under the conditions of higher emphasis on process accountability. Originality/value This study contributes to the literature on the use of controls in the IT project-based business environments by explaining how the project leader's style of use of controls influences project team learning behaviour that in turn impacts project performance. Additionally, this study extends the project governance and accountability literature by identifying and empirically examining how the perceptions of project leader's institutionalized organizational accountability arrangements moderate the impact of the interactive use of control systems on team learning behaviour. A methodological contribution of the study is the scale development to measure leader's perceptions about the organization's emphasis on process accountability.
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The chapter addresses the importance of project quality (PQ) in the mediation of the project governance´s endeavours and its outcomes (of project performance). It provides a multilateral vision of what quality is from different stakeholder´s point of view. It intertwines the seminal contribution of Deming´s theories (of profound knowledge and optimization) which influenced decisively the evolution of the project management body of knowledge (PMBOK) with the total quality management (TQM). The chapter addresses moreover the types of quality processes and enters the domain of quality assurance as a system of relevance to ensure the fulfilment of quality standards. Within the PMBOK revisits a few theorizations (as the MODest framework) and enters the realm of the total quality management (TQM).
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Projects and programmes are approved and funded to generate benefits. Project Management for the Creation of Organisational Value proposes a complete framework that seeks to support such an objective from project selection and definition, through execution, and beyond implementation of deliverables until benefits are secured. Because it is preoccupied with deliverables, accepted project management practice is flawed. Project Management for the Creation of Organisational Value proposes an alternative approach, which seeks a flow of target outcomes for the organisation investing in the project. Project Management for the Creation of Organisational Value provides support for all those who play a role of leadership in projects at different levels. Senior executives, practitioners and academics will find in this book a comprehensive guide to the conduct of projects and programmes, which includes robust models, a set of consistent principles, an integrated glossary, enabling tools, illustrative examples and case studies.
The northern California town of Mendocino, which was the shooting background for the film “East of Eden” starring James Dean, retains some of the air of its late nineteenth century role as a harbor to ship out lumber cut from the mountainsides. Ex-hippies-turned-farmers and artists live in the surrounding area. In the latter half of the 1990s, we rented a house facing the Pacific Ocean from an artist every summer. My wife and daughters went back and forth to Stanford for their activities, but I burrowed myself there for the summer with our dog Robin, brought back with us from Japan, and focused on writing my survey on comparative institutional analysis: Toward a Comparative Institutional Analysis (MIT Press, 2001). Mornings and evenings I took Robin for a walk on the cape where there was a greater than 180 ° view. In the morning, the horizon was veiled in fog, while in the evening the ocean was tinted red by the setting sun. It was the perfect place for rethinking problems and reorganizing chapters. Robin was a small mixed breed with some Shikoku-ken, but she was stubborn and at times got into fights with a large Coast Guard officer’s watch dog. My family enjoyed meals made from the organic produce we bought at the farmers’ market (so many varieties of tomatoes); we also went to the harbor to buy albacore tuna and fresh sea urchin still in its thorny shell.
Although the concept of moderator variables has been used extensively in marketing-related studies, much confusion persists as to how they are defined and identified. To alleviate this confusion, the authors present a typology of moderator variables with a framework for identifying their presence and type. Simulated data are used to illustrate and validate the proposed framework.
The purpose of this chapter is to outline the development of the idea of "stakeholder management" as it has come to be applied in strategic management. We begin by developing a brief history of the concept. We then suggest that traditionally the stakeholder approach to strategic management has several related characteristics that serve as distinguishing features. We review recent work on stakeholder theory and suggest how stakeholder management has affected the practice of management. We end by suggesting further research questions.
A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM), by Hair, Hult, Ringle, and Sarstedt, provides a concise yet very practical guide to understanding and using PLS structural equation modeling (PLS-SEM). PLS-SEM is evolving as a statistical modeling technique and its use has increased exponentially in recent years within a variety of disciplines, due to the recognition that PLS-SEM’s distinctive methodological features make it a viable alternative to the more popular covariance-based SEM approach. This text includes extensive examples on SmartPLS software, and is accompanied by multiple data sets that are available for download from the accompanying website (
This paper analyzes the survival of organizations in which decision agents do not bear a major share of the wealth effects of their decisions. This is what the literature on large corporations calls separation of 'ownership' and 'control.' Such separation of decision and risk bearing functions is also common to organizations like large professional partnerships, financial mutuals and nonprofits. We contend that separation of decision and risk bearing functions survives in these organizations in part because of the benefits of specialization of management and risk bearing but also because of an effective common approach to controlling the implied agency problems. In particular, the contract structures of all these organizations separate the ratification and monitoring of decisions from the initiation and implementation of the decisions.
This book is based on the hypothesis of a governance gap. It presents a multi-dimensional view, from the perspectives of corporategovernance, project management, and the development sector, includingnonprofit governance, which substantiates this hypothesis. The hypothesisis further corroborated by ethical normative considerations whose particularintricacy and weight carry perhaps the most fruitful explorations inthese chapters.The book's case study, which follows the course of a major developmentproject carried out over a period of 20 months, has confirmed thehypothesis of the governance gap. The analysis of around 400 exampleshas led to a multi-perspectival understanding of the kinds of problems andopportunities that come into focus once one begins to address governanceissues. Based on this understanding, drawing on the governance rolesframed in organizational theories and on several models developed byscholars at the University of St. Gallen, a solution for bridging this governancegap has been developed, the so-called Project Governance Model.Its application to the experience and understanding gained from this particularproject has proven to be fundamental.The governance gap, which this book has examined, is specific to thefunctioning of development projects in nonprofit organizations or NGOs.That gap has special interest if only because NGOs are in the business,finally, of promoting self-governance among the people with whom theycarry out their projects.Project governance is defined herein as a process-oriented system bywhich projects are strategically directed, integratively managed, and holisticallycontrolled, in an entrepreneurial and ethically reflected way, appropriateto the singular, time-wise limited, interdisciplinary, and complexcontext of projects.Six key responsibilities have been identified. Together, they constituteintegrated modules of the Project Governance Model (and are italicized inthe following paragraphs):System management provides a systemic understanding of the environmentand of influences. This book adapts the St. Gallen ManagementModel to the context of development projects, an application that allowsone to set up a project in the first place. The same system understanding,and the lessons that come from it, allow all of the involved actors, from themanager to the donors and stakeholders, to steer the project in its environmentand to guide it toward specific objectives.The specific tasks of the governance board in directing and controllingthe project and its mission are the subject of mission management.Pursuing the development mission requires sensitivity to what developmentcooperation signifies. True development cooperation is made possibleonly through a discursive and recognition-based approach. The challengesinherent in development cooperation may pose threats to the integrityof the project - and indeed, the case study has identified 130 caseswhich have ethical relevance to that integrity. The study has yielded theneed to resort to a universally valid normative foundation. Such a foundationis proposed in integrity management through an approach which combinesdiscourse ethics and recognition ethics. Such a combined approachallows development actors to understand and explicate integrity challengesto the integrity of the project and its organizational elements, creatingso-called tension-zones between the challenges and the elements themselves.A practical process model illustrates how such integrity challengescan be resolved.Development cooperation ultimately relies on stakeholders. In order togo beyond lip-service to these parties, management tools and managementcommitment are needed. The proposed extended stakeholder managementmodule provides a model with specific focus on the broad identification ofstakeholders and a continuous monitoring of the expectations and claimswhich come to exist between the project and its stakeholders.Risk management allows one to detect risks in an all-inclusive way onceagain through reliance on system understanding. This book has emphasizedin particular the need for strategies capable of responding when risk down-sides occur with all of their troubling and messy consequences, aswell as the need for monitoring risks on the level of project governance.Finally, audit management expands on the audit roles of governance. Insightsderiving from the case study propose that internal audit capabilitiesbe strengthened in development projects and that audit needs are alignedon the governance level.In summary, the proposed model for project governance allows one toclose the governance gap in development projects, which was outlined indetail, and thereby contributes to bridging another gap as well, the famousone between theory and practice. The importance of such project governance,however, does not lie exclusively in its support for a proper implementationof development objectives; project governance as it is presentedhere also becomes an implicit part of the objective of true and systemicallyunderstood development cooperation.
Principles of Contemporary Corporate Governance aims at providing a concise presentation of key topics and emerging themes in corporate governance. The text provides both law and business students, as well as practitioners of law and management, with an easy-to-follow explanation and analysis of key corporate governance principles. The book consists of five different parts: Part One introduces the reader to the meaning of the concept 'corporate governance'; Part Two focuses on corporate governance in Australia; Part Three discusses board and committee structures and risk management policies; auditors and audits; and an overview of directors' duties and liabilities; Part Four adds an international perspective to corporate governance (US, UK, Germany); Part Five deals with some policy issues and possible future developments and possible corporate governance trends. © Jean Jacques du Plessis, James McConvill and Mirko Bagaric 2005.
Strategic Management: A Stakeholder Approach was first published in 1984 as a part of the Pitman series in Business and Public Policy. Its publication proved to be a landmark moment in the development of stakeholder theory. Widely acknowledged as a world leader in business ethics and strategic management, R. Edward Freeman’s foundational work continues to inspire scholars and students concerned with a more practical view of how business and capitalism actually work. Business can be understood as a system of how we create value for stakeholders. This worldview connects business and capitalism with ethics once and for all. On the 25th anniversary of publication, Cambridge University Press are delighted to be able to offer a new print-on-demand edition of his work to a new generation of readers.