Large interorganizational projects (LIPs): Toward an integrative perspective and research agenda on interorganizational governance

Abstract

Organizations are becoming more reliant on projects to adapt and survive in an increasingly volatile, fast-moving, and competitive environment (e.g., Ramasesh & Browning, 2014; Roehrich et al., 2023; Tatikonda & Rosenthal, 2000). Terms such as “projectification” (Midler, 1995), “project society” (Lundin et al., 2015), and “project economy” (Nieto-Rodriguez, 2021) have been introduced to describe the growth of projects involved in delivering a large share of temporary interorganizational activities such as research and development (R&D), technology and new product development (NPD), capital goods and services, infrastructure, events, and organizational change. Some scholars have even suggested that projects have replaced continuous process structures (especially in the Western world), such as manufacturing activities, as the dominant form of organization in the 21st century (e.g., Nieto-Rodriguez, 2021; Shenhar & Dvir, 2007). While a large body of literature has identified that projects vary considerably in their complexity, novelty, uncertainty, and dynamism (Davies & Hobday, 2005; Loch et al., 2006), and that an increasing number are massive in scale (Flyvbjerg et al., 2003; Miller & Lessard, 2000; Scott et al., 2011), research on how multiple organizations in large interorganizational projects (LIPs) are governed is still in its infancy.

This special issue (SI) of the Journal of Operations Management explores the key challenges and tensions involved in governing LIPs. We use the adjective “large” loosely to refer to interorganizational projects conducted at scale (here we loosely refer to factors such as physical size, impact, duration, as well as number of people and organizations involved), rather than focus on projects above an arbitrarily chosen value (e.g., $1 billon). Projects are “interorganizational” when comprised of multiple (often a mix of public, private, non-for-profit) organizations, working jointly to coordinate the production of unique, or customized, products and/or services in uncertain and dynamic environments (Jones & Lichtenstein, 2008; Sydow & Braun, 2018). LIPs are the organizational form most often used to produce basic science, create new products (or solutions), build public infrastructure, tackle problems related to social, economic, political, or environmental issues, and respond to natural disasters (e.g., Roehrich & Kivleniece, 2022). LIPs deliver transformational outcomes for communities and societies (Flyvbjerg, 2014) and are increasingly important in many industries and sectors such as healthcare, defense, aerospace, mining, telecommunications, information technology (IT), transport, utilities, “big science” experiments, and major cultural and sporting events (Bendoly & Chao, 2016; Caldwell et al., 2017; Mishra et al., 2020).

Although projects are generally considered an important topic in operations and supply chain management (OSCM; e.g., Bendoly & Swink, 2007; Bendoly, 2014; Roehrich & Lewis, 2014; Mishra & Browning, 2020; Mishra et al., 2020; Salvadore et al., 2021), much of the research on LIPs has been undertaken by scholars in project management (PM) or adjacent disciplines (e.g., innovation management) using a variety of theoretical lenses to understand management, organizational, institutional, and governance arrangements. This research has often deployed a range of labels to describe LIPs, including “major projects” (Morris, 1994, 2013), “large engineering projects” (Miller & Lessard, 2000), “system of systems” projects (Davies & Hobday, 2005; Shenhar & Dvir, 2007), “megaprojects” of $1 billion or more (Flyvbjerg, 2017), “interorganizational projects” (Sydow & Braun, 2018), and “global projects” (Scott et al., 2011). We bring together prior studies under the label of LIPs to offer clarity and coherence moving forward with governance discussions. We draw attention to the fact that further OSCM research on LIPs is needed to address many unresolved interorganizational governance challenges.

The governance of LIPs is particularly challenging in environments that are increasingly complex, novel, uncertain, and rapidly changing, giving rise to unresolved theoretical questions with important implications for practice and policy (Chakkol et al., 2018; Ramasesh & Browning, 2014; Shenhar, 2001). LIPs face significant governance challenges requiring contractual and relational governance and forms of collaboration among multiple organizations with often disparate goals, diverging interests, and varying levels of capabilities and resources (Roehrich & Lewis, 2014; Zheng et al., 2008). Research in PM, and related disciplines, has identified the challenges involved in organizing and managing LIPs in different environments (e.g., Davies et al., 2023; Shenhar & Dvir, 2007), and is beginning to address interorganizational project governance (e.g., Müller et al., 2023). Drawing upon a variety of theoretical perspectives on the governance of projects, programs, and project-based organizations (Müller et al., 2023), however, PM research on the governance of projects has, with a few exceptions (e.g., Levitt et al., 2019), neglected to consider how key concepts of collaboration (e.g., Gulati et al., 2012), relational and contractual governance (Bercovitz & Tyler, 2014; Poppo & Zenger, 2002; Roehrich & Lewis, 2014), and coopetition (Bengtsson & Kock, 2000) apply to LIPs.

To fill this gap, management and OSCM scholars have recently explored the governance of LIPs including how collaboration is required to build cooperation between parties, control and coordinate interdependent tasks, and align the goals and interests of the different parties involved in LIPs (e.g., Aben et al., 2021; Hartmann et al., 2014; Oliveira & Lumineau, 2017; Tee et al., 2019; Zheng et al., 2008). Such inquiries are few however, and further research on the governance of LIPs is needed to understand how to align incentives, allocate decision rights and responsibilities, and ensure information flows and knowledge exchange to meet common goals (economic and social) values, and performance targets (Roehrich et al., 2020; Sarafan et al., 2022).

Our goal with the present discussion is to encourage scholars to conduct further research on the nature, challenges, and dynamics of governance in LIPs. In particular, we encourage scholars to draw on insights from general management, OSCM, PM, and adjacent literatures to develop novel and interesting theoretical contributions with implications for how to improve the performance of large-scale endeavors and tackle grand challenges facing societies in the 21st century (George et al., 2016). The four papers appearing in this SI highlight a variety of theoretical perspectives, units of analysis, and methodologies to deepen our understanding of the governance of LIPs. They examine projects in a variety of industries, institutional contexts and settings, and explore practices across and within LIPs that have (or have not) been successful. With these studies as a backdrop, and guided by the discussion that follows, we are hopeful that future, concerted efforts to study LIPs will further advance conceptual, theoretical, and methodological contributions and support the advancement of science, practice, and policy in this vital area.

To provide a foundation for assessing the state of knowledge in this domain, we begin with some relevant distinctions across the associated literatures. Notably, we distinguish between projects and other operational structures, identify key dimensions used to classify projects, and consider recent research addressing the increasing size of projects. In doing so, our discourse provides a relevant conceptualization of LIPs, critical to developing impactful theoretical and practical contributions.

The PM literature tends to use the concept of governance as an umbrella category to describe how relationships among parties in LIPs are arranged and organized (e.g., Denicol et al., 2020), often focusing on practical concerns such as strategy, control, and performance systems (e.g., Bourne et al., 2023). Some PM scholars have, however, started to recognize that there is a need to advance our theoretical understanding of interorganizational project governance (e.g., Müller et al., 2023). As a case in point, the successful set-up and execution of LIPs depend on multiple organizations collaborating over a defined time-period (Roehrich et al., 2023; Roehrich & Lewis, 2014). To grapple with this challenge, it is critical to have a solid theoretical understanding of what this entails. For example, here collaboration refers to organizations voluntarily helping their partners to achieve common (and private) goals (Castañer & Oliveira, 2020).

Two facets of collaboration are worth distinguishing both theoretically and practically: (i) building “cooperation” among parties with interdependent tasks and (ii) achieving the “coordination” of those interdependent tasks (Gulati et al., 2012). Cooperation ensures that varying priorities, incentives, and interests are aligned to implement the required interdependent tasks to reach a common goal. Related to cooperation, coopetition refers to the simultaneous pursuit of cooperation and competition to create value (Gnyawali & Park, 2011; Wilhelm, 2011). On the other hand, coordination refers to the effective alignment and adjustment of partners' actions and tasks to jointly accomplish a common goal (Gulati et al., 2012).

Collaboration, cooperation/coopetition, and coordination in LIPs are supported and stimulated by governance mechanisms. Contractual governance refers to legally binding, formal agreements specifying the roles and responsibilities of exchange partners (Cao & Lumineau, 2015; Poppo & Zenger, 2002; Roehrich et al., 2020). Contracts are legally enforceable and used primarily to control and coordinate exchange relationships (Ring & Van de Ven, 1992; Williamson, 1985) which includes the delegation of authority, power, decision rights, formal rules and regulations, roles and responsibilities, and standard operating procedures (Cao & Lumineau, 2015; Poppo & Zenger, 2002; Roehrich et al., 2021). While a contract's control clauses (e.g., termination, monitoring, incentives, and disincentives) focus on ensuring that the other party in a relationship will perform in accordance with one's expectations, coordination clauses (e.g., frequency and nature of meetings, specifying roles) support the management of a myriad of interdependent tasks and activities between organizations (Caniëls et al., 2012; Roehrich et al., 2023). Various organizational structures and roles (e.g., lead organizations, hierarchical authority, integrated project teams, advisory boards, and relationship managers) are established as additional governance structures to better support LIPs. Their roles are highly elaborate, relatively stable, and well defined (although flexible) in the contracts governing LIPs (Bercovitz & Tyler, 2014; March & Simon, 1958).

Often complementing contractual governance by addressing its shortcomings (Cao & Lumineau, 2015; Oliveira & Lumineau, 2017; Roehrich et al., 2020; Zheng et al., 2008), relational governance refers to emerging, socially derived “arrangements” emphasizing, for example, the emergence of communication and decision-making channels supporting parties' efforts to coordinate and control their actions (Poppo & Zenger, 2002; Roehrich & Lewis, 2014). Relational governance embraces more trust-based social (and moral) norms and rules (Cao & Lumineau, 2015; Roehrich et al., 2020). Social norms and rules are considered to be behavioral guidelines that enforce social obligations in the relationship (Caldwell et al., 2017). The related term of relational contract refers to the shared norms of cooperation and obligation that parties establish informally to control and coordinate exchange processes among parties (Caniëls et al., 2012; Macneil, 1980). Pervasive among a myriad of highly interdependent parties engaging in multiple, sequential, complex transactions, relational contracts build trust among parties (Claggett & Karahanna, 2018) by reducing information asymmetry (Liu et al., 2009), and helping them design more effective contracts in support of collaboration (Mayer & Argyres, 2004).

Taken together, contractual and relational governance mechanisms have the potential to completement each other. For instance, organizations engaged in long-term relationships in LIPs become more familiar with each other (Gulati, 1995) and learn to specify more detailed contracts (Poppo & Zenger, 2002; Ryall & Sampson, 2009). Also, specifying rules and responsibilities during the negotiation phase in a relationship may help organizations to get to know each other, build up trust, and have a “knowledge repository” (i.e., the contract) for later phases of the project (e.g., Roehrich et al., 2021; Zheng et al., 2008). Governance mechanisms working in combination may improve the relationship and LIP performance, although their interaction may also lead to increased transaction costs, conflicts, and coordination problems (e.g., Aben et al., 2021; Howard et al., 2019; Kalra et al., 2021; Oliveira & Lumineau, 2017). For example, the study by Caniëls et al. (2012) argues that contractual incentives, hierarchical mechanisms based on authority, and relational or trust-based mechanisms smooth the coordination process and drive efficiencies by reducing transaction or governance costs. This suggests that governance mechanisms must be jointly developed and tailored to each other to obtain improvements in performance and avoid potential negative interactions (Olsen et al., 2005; Roehrich et al., 2020).

Despite the potential value that various structures and mechanisms of governance can yield, independently and in concert, the development and application of various governance structures and mechanisms are certainly not without their own challenges. Several distinct, yet interrelated, challenges in particular present promising avenues for future LIP research: (i) the cooperation/coopetition challenge, (ii) the coordination challenge, (iii) the challenge in combining contractual and relational governance mechanisms, and (iv) the governance dynamics challenge. We discuss each of these in turn.

The contributions to this SI address one or more of the four governance challenges that we have outlined. The work of Radaelli et al. (2023) examines how sponsors and program managers developed a platform to stimulate collaboration, both cooperation/coopetition and coordination, in a LIP. Specifically, in their study, parties expanded access rules for “platform renting” and created a “distributed governance” approach to minimize interdependencies among organizations and encourage cooperation/coopetition and coordination. Whereas prior research on LIPs often focused on a single LIP which is disbanded upon completion of its goal, Radaelli et al. focus on how multiple organizations collaborated in a program of interrelated projects to achieve less-specific, common, and private goals over a long period of time. Drawing on adjacent literature on technological platforms, Radaelli et al. identify why organizations join and remain committed to a platform and how problems of collaboration (both problems associated with cooperation/coopetition and coordination) are overcome to achieve long-term common goals.

Informed by an in-depth, longitudinal case study of the development of Europe's global satellite navigation systems, the work by Rouyre et al. (2024) considers how governance mechanisms are used to address coopetition among parties in PPPs. The authors demonstrate how an imbalance between cooperation and competition can result in coopetition tensions, which become catalysts for changing governance mechanisms when parties hide (rather than share) information and engage in opportunism (rather than mutual support). Complementing prior research emphasizing interplay between contractual and relational governance mechanisms, Rouyre et al. show how a mix of governance mechanisms in PPPs are implemented by a centralized actor, the joint use of contractual and relational governance, and a coopetition mindset. The authors also contribute to research on the dynamics of governance in LIPs by illustrating how governance mechanisms and coopetition co-evolve over time. A combination of governance mechanisms implemented and adapted during different phases of PPP projects may lead to the emergence, alleviation, reinforcement, and management of coopetition tensions.

The paper by Fang et al. (2023) considers how contractual and relational governance mechanisms are used to address the considerable “setbacks” often associated with PPPs, such as delays, cost overruns, or failures to meet performance specifications. They build a dynamic governance theory by using divergent cases involving recovery following a critical setback, as well as project failure, paired with insights from the literature. A systems dynamics simulation model reproduces the adjustments to governance and outcomes found in the cases examined. Fang et al. contribute to our understanding of the dynamics of governance in LIPs by showing how contractual and relational governance mechanisms interplay and unfold over time. Their model has important implications for the performance of LIPs, because it identifies how adjustments to contractual and relational governance mechanisms are required to address project setbacks triggered by events, and how the interplay between adjustments may produce unintended outcomes.

The evolution in governance occurring when LIPs transition from a project to operations is addressed by the contribution of Zhang et al. (2023). This transition is characterized by a fundamental shift from temporary to relatively permanent organizations—from multiple actors collaborating to achieve a defined project goal to ongoing operations with long-term, evolving goals. The authors develop a conceptual framework to account for the organizational design strategy, structures, and processes required to manage the transition in a LIP during the overlapping period when the project organization begins to disband and the operational organizations start to become involved. While prior research has drawn attention to how governance mechanisms are implemented and adjusted as projects move from one phase to the next in the project lifecycle, Zhang et al. suggest that more research on governance is required to understand the fundamental problem of transitioning when the two worlds of projects and operations collide.

Bringing together a myriad of public, private, and nonprofit organizations and stakeholders, LIPs have seen a justified increase in interest in academia, practice, and policy. This has motivated and laid the foundation for scientific discoveries and technology, the development of new products and services, and the creation of large-scale technological systems and infrastructure. In our discussion, we distinguish key dimensions and categories of LIPs. We further draw attention to the fact that LIPs face significant interorganizational governance challenges requiring various forms of collaboration, cooperation/coopetition, and coordination, as well as contractual and relational governance to align multiple organizations with disparate goals, diverging interests, and varying levels of capabilities and resources. We also put forward a research agenda for each of the four governance challenges that scholars may find interesting. Finally, we introduced the contributions and insights made by the papers in this SI. These exemplar studies and the questions posed in our discussion serve to encourage scholars to conduct research on the nature, challenges, and dynamics of governance in LIPs. Such future work must leverage the combined insights from general management, OSCM, PM, and adjacent literatures to develop novel and interesting theoretical contributions with implications for how to improve the performance of LIPs. Following this path, it is our hope that future systematic and comprehensive efforts to study the governance of LIPs will further advance conceptual, theoretical, and methodological contributions, and support the advancement of science, practice, and policy in this area.