A4 Conference proceedings

Ambiguous Nature of Project Business - How the Project Business Companies Try to Deal with Project Business Characteristics.

Open Access publication

LUT Authors / Editors

Publication Details
Authors: Alajoutsijärvi Kimmo, Mainela Tuija, Salminen Risto, Ulkuniemi Pauliina
Publication year: 2007
Language: English
Title of parent publication: Proceedings of The 23rd IMP Conference.
JUFO-Level of this publication:
Open Access: Open Access publication

Research under the topics of ‘project marketing' as well as ‘project business' is rather young. The first publications built around these titles are from the early 1990s (see e.g. Bansard, Cova & Salle 1993; Cova, Mazet & Salle, 1993; Cova & Holstius, 1993; Hadjikhani, 1996) with some exceptions (e.g. Mattson, 1973). Although there is, until now, a considerable amount of academic literature cumulated on project marketing and project management, there is still a clear need for a comprehensive analysis of the project business characteristics in relation to companies' patterns of action. As a starting point for our study it is important to make a distinction between management of project business (multi-project firms) and project management (single projects) as well as projects as management tools (management by projects). The first one concerns industries built around selling and delivering more or less extensive projects. Project management, in turn, concerns the management of individual projects while project as a management tool concerns situations in the "normal" business where projects are used as vehicles of internal development. The focus of this paper is on the management of project business. In other words, we are moving from the project-centric perspective towards the analysis of multi-project organizations (cf. Söderlund, 2002, 2004). The previous literature of project marketing and management (see the review in e.g. Skaates & Cova, 2005; Tikkanen et al., 2006, Cova & Salle, 2006) concentrates very much on the special characteristics of project business. The main characteristics of the project business are usually described by the so called D-U-C model (e.g. Cova & Hoskins, 1997). Discontinuity refers to single projects as time restricted mutual tasks for the seller and the buyer and to sleeping periods in the business relationships. Uniqueness describes the fact that projects are tailor-made, individual, and created through negotiations and interactions between the parties. Complexity is created by the know-how demands for a customer company and a seller company, as well as the variety and number of actors involved. In addition to these three most often named characteristics, several studies bring up additional features complicating project business, such as the need for extensive financial commitments, managing the processual project delivery, adaptation of internal structure to external environment and project portfolio management. We argue that the project marketing research tends to repeat and take these characteristics as granted without in-depth investigation. Furthermore, the characteristics of project business in the core literature are narrow from the theoretical point of view and, on the other hand, too general from the managerial perspective. We also argue that these business characteristics, interesting for researchers, are in fact challenging and troublesome for the project business firms. The key question for project business firms is how to alleviate or how to strengthen these characteristics. We aim to open up the argued business characteristics of the project marketing and management literature by setting them into the context of organization theory concerning adhocracies (Mintzberg, 1980, 1983) and project-based organizational structures (Eccles, 1981; Powell, 1996, 2001; Payne, 1995; Payne and Turner, 1999; Whitley 2006). Actually, organization literature has a longer tradition than project marketing literature in examining the same phenomena, but the first mentioned stream goes deeper into the interwoven nature of organizational structures and the characteristics of business environment. Because the organization literature is very extent, we have in the present study focused on limited number of the most well-known sources. However, it is interesting to note that project marketing literature refers to the previous literature on organizational structures so far only seldom. Our research questions are as follows:
What are the key characteristics of project business based on project marketing literature?
What are the key characteristics of project business firms based on organization design literature?
What are the core differentiating dimensions for project business firm's organization design?
What types of project business firms can be identified on the basis of these differentiating dimensions?
How do project business firms alleviate or strengthen the characteristics of their business in their organizational forms?
Based on the review of recent project marketing literature (e.g. Skaates & Cova, 2005, Tikkanen et al., 2006; Cova & Salle, 2006), we identify the most asserted characteristics of project business. In the same way, through using the organization theory on project based firms and temporary organizations we present the key characteristics of project based firms. These are employed in identifying the core differentiating dimensions through which a typology of project business firms is formed. The typology developed can be more described as taxonomy of holistic patterns of multiple variables rather than clearly distinguishable variables and their relations. Similar approach to classifying organizational dimensions of KAM has been taken by e.g. Homburg, Workman and Jensen (2002). This perspective can be described as configurational approach to organizational analysis (Meyer, Tsui & Hinings, 1993). According the this approach to organizational design, there is a limited range of organizational forms and that an understanding of the parts within an organization can be gained only by looking at the overall patterning rather than narrow set of organizational properties. The developed typology is illustrated though an empirical research. In the empirical part of the present paper we discuss how four the selected case companies cope with these challenging business characteristics, i.e. the managerial actions for smoothing troublesome consequences of industry characteristics or strengthening these characteristic for the company's competitive advantage. We reflect these characteristics in four project business companies operating in different industrial fields: provider of capital goods in the metal industry, manufacturer of heavy equipments for logistics operators, a solution provider in filtration and manufacturer of automatic roll wrapping systems. Although operating in different industries, the case companies seem to share several common characteristics in their business logics. However, their patterns of action in coping with the common characteristics vary from each other. One of the most interesting findings was the general mode of management towards "escaping" or "amplifying" these features of their industries.

Last updated on 2017-22-03 at 16:16