Essays on global sourcing of technology projects.

Abstract

The goal of this dissertation is to address two key challenges that have emerged from the increasing globalization of technology projects. One set of challenges relates to the choice of the type of project organization that is appropriate for a particular type of project work and scope. The other set of challenges relates to the identification of actionable strategies for improving project performance, given the type of project organization. Using a parsimonious classification scheme based on the distribution of project organizations across firm and/or geographical boundaries, this dissertation identifies five different types of project organizations that are used in practice: Collocated Insourcing, Distributed Insourcing, Outsourcing, Offshoring, and Offshore-Outsourcing. Following this conceptualization, primary data from 830 information technology and product development projects spanning more than 65 countries and 26 industries is used to examine specific sets of research questions underlying the focal challenges. This dissertation is organized into three essays. The first essay conducts a theoretically grounded empirical investigation into examining whether the impact of project uncertainty (technological uncertainty, requirements uncertainty, and architectural uncertainty) and project management style (project control and project autonomy) on project performance is dependent upon the type of project organization. Contrary to conventional wisdom, the results indicate that project organization types that span country boundaries (Offshoring and Offshore-Outsourcing) outperform Collocated Insourcing project organization, particularly in projects with higher requirements uncertainty and architectural uncertainty. Also, compared to Collocated Insourcing project organization, project control has a greater positive impact on project performance in Offshore-Outsourcing project organization, while project autonomy has a greater positive impact on project performance in Distributed Insourcing project organization. The second essay investigates the role of project organization type on the extent of product integration issues in a technology project and its consequent impact on project performance. Specifically, the extent of product integration issues in a project is measured by determining the extent of Design-Interface Misalignment--the incompatibility of interdependent task modules during the product integration phase--in a technology project. The results indicate that design-interface misalignment is significantly greater in projects that span country boundaries (Offshoring and Offshore-Outsourcing) compared to all types of domestic project organizations (Collocated Insourcing, Distributed Insourcing, and Outsourcing). Further, design-interface misalignment has a significant negative impact on project performance, and this impact is particularly severe in the case of Offshore-Outsourcing project organization compared to Collocated Insourcing project organization. The final essay presents a formal econometric specification for estimating the technical efficiency of a project, defined as the maximum attainable level of project outputs for a given level of project inputs. An econometric model that includes a structural factor (type of project organization) and several infrastructural factors (risk management planning, agile management practices, face-to-face interaction, and employee turnover) to explain the variation in technical efficiency across projects is specified. The results indicate that the choice of the type of project organization is associated with the technical efficiency of a project: Distributed project organizations, particularly Offshoring and Offshore-Outsourcing, exhibit significantly lower technical efficiency compared to Collocated Insourcing project organization. Further, as expected, employee turnover is negatively associated with the technical efficiency of a project. In contrast, project management practices such as risk management planning, agile management, and face-to-face interaction are positively associated with the technical efficiency of projects. The dissertation concludes with a discussion of the key findings from each of the three essays. Limitations and directions for future research are also identified.