Dynamic capability: Understanding the Relationship Between Project Portfolio Management Capability and Competitive Advantage

Project Management Institute (PMI)
Publication Type:
Conference Proceeding
PMI® Research & Education Conference 2010: Defining the Future of Project Management, 2010, pp. 1 - 34
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This research employs the dynamic capabilities framework to improve understanding of the relationship between organizational project portfolio management (PPM) capabilities and competitive advantage. A growing stream of literature on PPM includes best practice studies that show correlations between PPM practices and project portfolio outcomes; however, these studies are not theoretically grounded and do not provide explanations about the mechanisms that may lead to the correlations. The research reported in this paper employs a multiple-case study to provide indepth understanding of organizational PPM capabilities. The research investigates the management of new product development (NPD) project portfolios at six diverse organizations, including three from the rapidly growing and increasingly important service sector. The findings illustrate that an organizational PPM capability goes beyond the processes and procedures used; organizational structures and human dimensions are important components of the capability. PPM is shown to contribute to competitive advantage through the mechanisms of a dynamic capability by enabling organizations to reconfigure the resource base to respond to changes in the environment. Organizational learning is found to be instrumental for a dynamic PPM capability and insights are provided into the ways that organizations establish and evolve their PPM capabilities. The findings also contribute to the understanding of how PPM is tailored to environments through an analysis of differences between service and manufacturing industries; PPM is largely similar in the service and manufacturing environments studied, but exhibits differences related to the differing levels and types of dynamism in the environments, differing levels of flexibility in resources and the ongoing trend towards a service focus in manufacturing industries.
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