The Influence Of Project Governance Mechanisms And Formal Control On Opportunism And ProjectPerformance In IT Projects

To enhance the performance of IT projects and project management is not only the pursuit of the industry,but also an important issue in the field of engineering project management.Previous studies uncovered a variety of critical success factors including Earned Value Management,The Traditional Iron Triangle and Knowledge Management to improve project performance.Project governance,which has emerged as another key factor and garnered the attention of academicians in the recent past,has largely been overlooked.However,the past research on project governance mainly focused on defining the governance structures,various types of governance frameworks and models for project based organizations and defining the governance for different processes of a project but did not focus on exploring the governance mechanisms which are closely related to performance.A few researchers advocate project governance mechanisms as significant predictors of better performance and are useful to restrain the partners'opportunistic behavior.The governance mechanisms which are mainly reported in the recent literature are of two categories i.e.contractual governance and relational governance.Apart from project governance mechanisms,two other streams of literature have been emerged in the recent past which significantly enhance the performance of IT and software development projects.One of these streams is the exercising of formal control and the other one is identifying and managing the potential risks which negatively influence the project performance.The followers of the control stream are of the view that exercising the formal control i.e.behavior and outcome control may potentially play an important role in improving the project performance.To achieve the project goals,formal control specifies the standard practices that must be adhered to during the project activities and some particular outcome standards that must be attained.In addition,it focuses on the mechanisms which are designed to influence the controlees' behavior through constant performance evaluation.Moreover,the advocates of control are of the view that control activities are required to manage the behaviors of project stakeholders,to inspire the participants of the projects and to ensure that they are fully applying their skills and capabilities to achieve the project objectives.The past research on project control has mainly focused on the process performance,behaviors of the project participants but ignored the role of project control in restraining the project performance.Therefore,this study is carried out to measure the influence of project governance mechanisms and formal control on opportunism and project performance in the IT and software development projects.However,an obvious question which emerges is that how effective are the governance mechanisms and formal control in improving the performance of an IT and software development project in the presence of User Risk and Requirements Risk.The lack of users' participation during the different processes of a project and the complications in obtaining the accurate customer requirements can negatively impact the performance of an IT project.To date,there is little research which has considered the influence of project governance mechanisms and formal control on project performance in the presence of User and Requirements risk.Therefore,this research considers these risk factors as moderating variables and investigates their moderation effects on the relationship between a)project governance mechanisms and project performance and b)formal control and project performance.In total,thirteen hypotheses have been developed to be tested.Apart from these hypotheses,the current study provides a brief description of various theories to support the hypotheses and to explain the effectiveness of project governance in improving on project performance.This dissertation follows a positivist research philosophy where a quantitative deductive approach has been used to collect the data from 175 Pakistani IT and software development firms.Initially,500 questionnaires were distributed by using random sampling technique and 318 questionnaires were selected for final data analysis.Statistical Package for the Social Sciences(SPSS)and Structural Equation Modeling(SEM)through PLS-SEM have been used to analyze the hypotheses.For data analysis,the contractual and relational governance were conceptualized through different sub-constructs and facets.For example,contractual governance is a combination of fundamental elements,change elements and governance elements whereas relational governance is a combination of trust and relational norms(flexibility,solidarity and information exchange).To evaluate the measurement model,each sub-construct of contractual governance and relational governance were considered as an individual latent variable to avoid the discriminant validity and multicollinearity issues.Whereas,to measure the structural model,these facets of contractual and relational governance were merged into their respective constructs to test the developed hypotheses.The findings of the study indicate that contractual governance,relational governance and outcome control have positive significant effects on project performance and negative significant effects on opportunism.Behavior control doesn't prove to have significant effects either on project performance or on opportunism.User risk and requirements risk have significant moderation effects on the relationship between project governance mechanisms and project performance but these constructs do not have any moderating effects on the relationship between formal control and project performance.The findings will help not only Pakistan's software firms but also those in developing countries to improve their projects' performance through effective project governance.Firstly,current study provides a brief description of different theories being applied in the context of project governance.This study concluded that agency theory and TCE have significant contributions to improve the principal-agent relationship and to build successful business contracts respectively which as a result,are fruitful to increase the project performance.Secondly,this study extended the concepts of project governance mechanisms towards the IT and software development industry and analyzed the contractual and relational governance as mechanisms to restrain the opportunism and enhance the project performance.Thirdly,this study uses the formal control i.e.,behavior and outcome to control to reduce the opportunistic behavior of the managers and to increase the project performance.Fourthly,the overarching contribution of this study is to measure the moderation effects of user risk and requirements risk on the relationship between a)project governance mechanisms and project performance and b)formal control and project performance.In the end,the future research suggestions have been presented based on the limitations of the current research.For example,this study didn't consider the antecedent factors such as duration of contract,complexity and size of the project.Future research may consider these factors to add more detailed insights to this significantly important research area.Second,this study only considers the formal control i.e.behavior control and outcome control.It is suggested that future studies should also consider the informal control to investigate its effects on project performance and opportunism.