Institutional complexity affecting the outcomes of global projects

This report is of the findings of a project that aims at understanding the effect of institutional and cultural differences to outcomes of global projects. The aim of this research is to model institutional complexity in global projects accurately enough that one can predict their impact on the project performance, build tools and procedures for project managers for predicting project performance, managing risks and creating better foundations for improved project performance. It is a complex endeavor to start gaining understanding from global projects, creating a theory that applies to a range of practical solutions and giving predictably to project managers without being impractical. This has to begin by describing the chain of phenomena from the outcomes backwards toward the inception of a project. After this chain has been thoroughly characterized, researchers can begin the second stage, which is to classify the phenomenon into categories. In the third stage, researchers articulate a theory that asserts what causes the phenomenon to occur, and why. The scope of the research was intentionally limited to a sub-set of institutional complexity in this first phase. We chose to collect data from cultural differences in projects. The first hypothesis was that cultural differences are likely to have an effect on project performance and coordination. At this stage, the correlation between, for example, most commonly used dimensions of culture and performance was not understood thoroughly enough to actually model any behavior. However, a basic framework for categorizing the basic phenomena was found. Altogether seven case studies were conducted concerning global projects executed by Kone Oyj, Foster Wheeler Energia Oy and LT Consultants Ltd. These case study projects provided a basis that can be described as the Finnish project management culture. As we recognized to follow the basic thinking that every project and encounter is context specific, one could come up with dozens of different sets of attributes depending on the projects studied. This one is one of many alternatives and might be typical to the company, persons and professions. After identifying some of the main characteristics of Finnish project management culture encountering, and in some situations colliding with more than 10 European and Middle East project management cultures, the following main conclusions are presented concerning the mechanisms affecting in these encounters: - Decisive is not the "size" of the differences between the cultures rather than the situational match/mismatch between the differences - The nature of previous encounters define some of the nature of future encounters - Situational adaptation of one party reduces the need for adaptation of the other party Based on these observations we recommend the following: 1. Acquire local institutional knowledge as much as possible and as early as possible. 2. Cooperate and utilize knowledge of local partners who have the right connections to right people and authorities and who know the correct way of working with them. 3. Practice self-reflection. 4. Pay attention to situational characteristics and not so much to the stereotypes of national cultural differences. Further empirical data from these two groups of variables should be generated by conducting more case studies with systematic way of documenting all dependencies between the variables and project performance