Dynamic Capabilities of Project-Based Organization in Global Operations

Abstract

Project-based organizations are a unique organizational form where business activities are implemented and managed around temporary projects. The aim of this research was to better understand how project-based organizations manage and implement dynamic capabilities to develop, transform, and sustain their strategic advantage in a competitive global environment. This study reviewed and synthesized various theories in strategy and operations management and examined the global operational practices of two successful European engineering–construction companies to derive effective management strategies that reflect the theoretical aspects of dynamic capabilities. The findings identified three sets of theoretically and empirically grounded management strategies (i.e., diversification, decentralization, and value integration) that can help project-based organizations sense, seize, and reconfigure resources to successfully adapt to a dynamic business environment. This led to a generic strategic framework and research propositions. This research extends a valuable theoretical lens, dynamic capabilities, to investigate the managerial challenges in project-based organizations. The proposed strategic framework and theoretical propositions not only offer important practical implications for project-based organizations, but also open a new interdisciplinary research area at the interface between dynamic capabilities theory and the unique project environment.