Innovation Management in Project-Based Firms

Project-based firms have an organizational structure, capabilities and routines that clearly distinguish them from manufacturing firms. Some have claimed that these characteristics make project-based firms more innovative than, for instance, manufacturing firms, others argue the contrary. The central question in this research is to what extent the specific characteristics of project-based firms affect innovation management. We focused on new product or service development projects in project-based firms, and investigated the influence of firm characteristics on success factors for these projects. We performed an exploratory case study to generate hypotheses, and subsequently tested these hypotheses using a large scale comparative survey of project-based and non-project-based firms in the Dutch Information and Technology, Construction, Engineering and related industries. We find that development projects enable project-based firms to follow more innovative strategies. To execute these development projects successfully, they are to be managed differently than is currently described in the innovation management literature. Multidisciplinary teams and planning, for example, hamper development projects of project-based firms. It seems that in project-based firms the experts within one discipline, who work each at separate business projects, need to work together in development projects, since collaboration between disciplines abounds. On the contrary, in manufacturing firms, where specialization abounds, the experts of the various disciplines need to collaborate in multidisciplinary development teams. In project-based firms the project leader is subsequently needed to translate the specialized new services and products, and to ensure that these are implemented within projects executed to customer order. This is clearly a different task than for heavyweight project leaders in manufacturing firms, who have to ensure and enable communication and collaboration between the various disciplines. Furthermore, it seems that project-based firms should apply a more emergent style of project management on their development projects, as their capabilities in efficient project planning hamper the quality of the services and products that are developed.