Abstract and Figures

Purpose – The purpose of this paper is to introduce project business as a research field. The project business view in
this paper puts focus on the management of firms and their businesses, and this way the paper complements the
existing project-centric view of the role of projects and their management in various business contexts.
Design/methodology/approach – The paper proposes a conceptual framework for project business and identify
relevant research areas and themes. These research areas and themes are derived by using the knowledge and
experience obtained from scientific project business research conducted in Finland since the early 1990s. Findings –
This paper describes project business as a research field by introducing a project business framework and the four
major research areas inherent in the framework: management of a project, management of a project-based firm,
management of a project network, and management of a business network. It also suggests specific research areas
and themes within the framework that are relevant and contribute to new knowledge in the project business field.
Practical/implications – The project business framework described in this paper, including the suggested research
areas and themes, is important in focusing research and for development of practical application of project-based
business activities in firms and in public organizations. Originality/value – The paper reveals avenues that lead
towards the development of a new body of knowledge for project business that focuses on managing both firms and
projects effectively in their networked business environments.

Framework of project business: four distinctive management areas

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Project business
as a research
field
Karlos Artto
Finland Industrial Management,
Helsinki University of
Technology,
Espoo, Finland, and
Jaakko Kujala
Finland Industrial Management,
University of Oulu, Oulu, Finland
Abstract
Purpose – The purpose of this paper is to
introduce project business as a research field.
The project
business view in this paper puts focus on the
management of firms and their businesses,
and this way
the paper complements the existing project-
centric view of the role of projects and their
management
in various business contexts.
Design/methodology/approach – The paper
proposes a conceptual framework for project
business and identify relevant research areas
and themes. These research areas and themes
are
derived by using the knowledge and
experience obtained from scientific project
business research
conducted in Finland since the early 1990s.
Findings – This paper describes project
business as a research field by introducing a
project
business framework and the four major
research areas inherent in the framework:
management of a
project, management of a project-based firm,
management of a project network, and
management of a
business network. It also suggests specific
research areas and themes within the
framework that are
relevant and contribute to new knowledge in
the project business field.
Practical/implications – The project business
framework described in this paper, including
the
suggested research areas and themes, is
important in focusing research and for
development of
practical application of project-based
business activities in firms and in public
organizations.
Originality/value – The paper reveals
avenues that lead towards the development of
a new body of
knowledge for project business that focuses
on managing both firms and projects
effectively in their
networked business environments.
Keywords Project management, Project
planning, Business planning, Finland
Paper type Research paper
Introduction
The significance of project business is
increasing. Recently, project-based
business
activities are part of all private firms
and public organizations. Although
existing studies
analyze projects, firms, and business,
and practitioners increasingly refer to
project
business, the concept of project
business as a research field has
remained ambiguous. The
contemporary critical project research
attempts to seek new perspectives to
projects and
their management by adopting a rather
project-centric point of departure; in
addition,
many existing critical project studies
focus on organizational issues. This
paper
complements these existing project-
centric and organizational views by
concentrating
primarily on the management of firms
and their businesses.
The approach of this paper is to
analyze the project business field and
simultaneously to provide an original
definition for project business through
its
relevant themes. This paper has two
objectives to:
The current issue and full text archive of this
journal is available at
www.emeraldinsight.com/1753-8378.htm
Project business
as a research
field
469
Received 5 May 2008
Accepted 20 June 2008
International Journal of Managing
Projects in Business
Vol. 1 No. 4, 2008
pp. 469-497
q Emerald Group Publishing Limited
1753-8378
DOI 10.1108/17538370810906219
(1) describe project business as a
research field through introducing a
project
business framework and the four
major inherent research areas; and
(2) suggest specific research areas and
themes that are relevant and contribute
to
new knowledge in the project business
field.
This paper is divided into two parts
that are in line with the two objectives.
The first
part introduces a project business
framework that makes a distinction
between four
major areas. In the second part of the
paper, the project business framework
is applied
to analyze project business as a
research field. We suggest relevant
research areas and
themes by analyzing existing and
emerging research. Our analysis is
facilitated by the
use of the knowledge and experience
from the scientific project business
research
conducted in Finland since the early
1990s. The conclusions of the paper is
a
description of the whole project
business research field by means of
several specific
research areas that are considered
relevant for future research and also
for empirical
application in firms and in public
organizations.
Project business framework
Project research is expanding its view
towards wider aspects of project
business. Artto
and Wikstro
¨
m (2005) define it as: “Project
business is the part of business that
relates
directly or indirectly to projects, with
the purpose of achieving objectives of
a firm or
several firms.” This definition refers to
multiple projects and multiple firms.
Also
So
¨
derlund (2004) uses the dimensions of
single vs multiple projects, and single
vs
multiple firms, while categorizing
project research published recently in
one
mainstream project management
journal and in major management
and
organization journals. Engwall (2003)
emphasizes the imperative of
understanding
the project’s context and not simply
the project as an isolated whole.
Indeed, both projects and firms are
organizational entities that represent
relevant
players in the business context.
Furthermore, the business contents of
multiple projects
and multiple firms are often related in
a complex manner. The project
business
framework in Figure 1 shows major
areas of research and of managerial
application
with a single and with several firms,
and with a single and with several
projects that
Figure 1.
Framework of project
business: four distinctive
management areas
One
project
Many
projects
One
firm
Many
firms
1. Management of a
project
3. Management of a
project network
2. Management of a
project-based firm
4. Management of a
business network
IJMPB
1,4
470
may cross one or several firms’
business activities. The project
business framework
illustrates four distinctive areas under
the headings:
(1) management of a project;
(2) management of a project-based
firm;
(3) management of a project network;
and
(4) management of a business
network.
The areas differ as to whether the
object of the management is a project,
a
project-based firm, a project network,
or a business network.
The management of a project is an
area which is well-researched. The
existing
extensive research in this area makes
the field of management of a single
project rather
well known. This well-known project
management knowledge has been
developed
throughout the last 60 years of modern
project management (Morris, 1994).
The
standard documents of project
management currently issued by
international project
management organizations represent
an excellent overview of what the
management
of a single project includes in its
application area (ISO, 1997; PMI,
2004; IPMA, 2006;
APM, 2006). International project
management organizations have built
their own
project management guidelines upon
knowledge areas (or processes)
included in
project management, which should
prove useful for project management
practitioners
and for company users (Morris et al.,
2006). It is typically maintained that
project
management consists of the following
broad areas of knowledge (or
processes) that all
include procedures, methods, and
tools that are characteristic of project
management:
project integration management, scope
management, schedule management,
cost
management, resource and personnel
management, communication
management,
risk management, procurement
management, and quality
management. These project
management knowledge areas are also
addressed frequently in the themes of
management studies in mainstream
project management journals:
The management of a project area
addresses the management of a single
project rather than a
firm’s business, although the existing
literature in this area often makes an
underlying
contextual assumption that the project is
conducted under the governance of one
parent
firm/organization.
This area serves as a fundamental
basis for the advancement of the
research on project
business.
The management of a project-based
firm is an area which addressing the
managerial issues of a firm that
conducts a specific part of its activities
in a project
form. Conducting part of the firm’s
business through projects may involve
projects of
two types: external production or
customer delivery type projects, and
internal
development or capital investment
projects. For example, a system
supplier firm
typically runs external customer
delivery projects in what can be
considered its
“production line” of projects.
Furthermore, new product
development or process
development, or any other innovation
activity, are good examples of
activities that can
be organized in any company in the
form of internal development projects.
Some firms
may conduct just part of their
operations in project form even while
their primary
productive activity might be volume-
based or operations-oriented, while
some firms
may organize most of their internal
and external activities in projects
(Hobday, 2000).
The management of a project-based
firm area is a rather new research area
that
Project business
as a research
field
471
includes research primarily on a firm’s
management ability and consequently
the
capacity of the firm to initiate and
execute projects that either directly or
indirectly
benefit the firm’s business. Projects
are seen as the firm’s business
vehicles. The
management of the project-based firm
area includes research on the project
supplier
firm’s ability to sell and deliver
projects to its customers (Cova et al.,
2002),
management of innovation (Gann and
Salter, 2000), and research on project
portfolios
(Archer and Ghasemzadeh, 1999) and
development programs (Pellegrinelli
et al.,
2007).“The management of a project-
based firm area addresses managerial
activities of
a firm that are in place for
governing/managing multiple
simultaneous or sequential
projects for the firm’s business
purposes.”
The management of a project network
is a management area that covers a
network
including several firms and other
organizations from different
businesses and from
different institutional environments
that are participating in a project. The
network of
firms and other organizations
participating in a single project is
called a project
network (Hellgren and Stjernberg,
1995), a project-based enterprise
(DeFillippi and
Arthur, 1998), or a project coalition
(Winch, 2006). The management of a
project
network area represents an area of
novel research themes that relate to
interpreting a
project as a multi-organization
enterprise (Gru
¨
n, 2004) that involves a complex
network
of firms and other actors in its
execution. A project network has an
intentionally
constructed core of actors that
participate in the project (Williams,
2002), however, a
project network may also include
other actors that are the project’s
stakeholders
(Floricel and Miller, 2001). A project
network is a temporary endeavor
which includes
several phases, each of which are
different in nature (Morris and Hough,
1987; Slevin
and Pinto, 1987), and is a
continuously evolving constellation of
actors in
ever-changing roles (Eccles, 1981;
Dubois and Gadde, 2000). These
characteristics
make project networks highly
dynamic:
The management of a project network area
addresses the management of the
temporary
project across multiple participating firms
and other actors that each have their own
(and
obviously controversial) objectives,
interests and expectations from the project,
as based on
each actor’s different business objectives
in their permanent businesses.
The management of a business
network is another area which
includes novel research
themes that relate to several firms’
activities, where the firms engage
from time to time
in mutual projects. The actors in the
business network can have aims that
are
synergistic, and accordingly, there is
room for partnership and collaboration
(Davis,
2006; Arroyo and Walker, 2008;
Davis and Walker, 2008). It can also
be the case that
the aims of the actors in the business
network are contradictory and
conflicting, which
implies adverse relationships,
competition or rivalry. Networked
firms and their
business relationships affect the
selection of participating firms in a
project, and vice
versa, the projects have an impact on
the permanent businesses network
(Eccles, 1981;
Ha
˚
kansson et al., 1999). Firms may
participate in different projects in
different roles,
and each project may have different
set of actors (Eloranta, 2007). Project
supplier
firms may engage in several sequential
or parallel global projects through
different
delivery scopes (Cova et al., 2002).
The roles of the actors may change
from one project
to another, making a partner company
in one project a competitor in the next
project, or
the customer in one project a supplier
in the next project. Hellgren and
Stjernberg
(1995) argued that there is a dual
relationship between project network
actors, while
organizations have a simultaneous
mixture of opponent and partner
relationships: for
IJMPB
1,4
472
example, a short-term partner may
become a competitor in future
projects, and vice
versa. A business network includes,
for example, competitors, financiers,
customers
and their clients, contractors and their
subcontractors, suppliers, designers,
architects,
manufacturers, service providers,
integrators, and consultants (Davies,
2004). We
consider the concept of business
networks in a broad way by
recognizing that
non-business actors also belong to the
network; examples of such non-
business actors
are authorities, governments,
municipalities, politicians, labor
unions, public and
citizens’ assemblies, and
environmentalist groups:
The management of a business network
area includes activities in a rather open and
wide
business marketplace including several
firms and their business interests.
Furthermore, the
marketplace includes at any one point in
time multiple projects that serve as
temporary
business vehicles for several firms’
permanent businesses.
Based on the discussion above, Table I
concludes the basic characteristics and
the
distinctive contents of the four major
areas in the project business
framework.
Research areas and themes in project
business
In the following sections, we analyze
relevant areas and themes of project
business in the
four major areas in the project
business framework. Our analysis
draws mainly from the
scientific project business research
conducted in Finland. Project-based
organizations
have played an important role in
Finland, where project business was
recognized as an
specific research field already in the
1990s. The following events are
examples of activities
of Finnish origin that have
increasingly brought the topic of
project business into
discussions in both contemporary
business life and in academic circles:
the establishment
of a professorship in the area of
Project Business since 1996 at the
Helsinki University of
Technology; the Global Project
Business national technology program
between 1998 and
2001, funded by the Finnish Funding
Agency for Technology and
Innovation; the
international Nordnet 1999 conference
on the theme of Managing Business
by Projects; the
international IRNOP 2004 project
research conference on Project
Business and related
themes; the article on “What is project
business” in 2005 by Artto and
Wikstro
¨
m (2005),
and; the book on Project Business in
2006 by Artto et al. (2006).
A special issue of Organization
Studies in 2004 focused on project-
based forms of
organizations and discussed
challenges related to various forms of
project networks
and project ecologies (Sydow et al.,
2004). Recently, the concept of project
business has
also arisen in many international
arenas; this is indicated, for example,
by the book
The Business of Projects by Davies
and Hobday (2005), since 2008 by
Emerald’s new
journal – the International Journal of
Managing Projects in Business, and by
the
Project Business symposium in the
Academy of Management annual
meeting in 2008.
In addition to these firm-management-
focused and business-focused
scientific
outcomes and events, the research
network for “rethinking project
management”
(Winter et al., 2006) and “critical
project research” (Hodgson and
Cicmil, 2006a, b; Clegg
et al., 2006) represent major attempts
to challenge traditional views to
projects and
their management. These “rethinking”
and “critical project research”
movements adopt
novel project-centric and
organizational views to understanding
projects and their
contexts in different ways. Our paper
could be also thought of to represent
an attempt
to complement this existing
“rethinking” and “critical” research
through its
firm-centric and business-centric
views contained in the concept of
project business.
Project business
as a research
field
473
Management of a project-based Management
of a project Management of a business
Management of a project firm network
network
Unit of analysis Management of a single
project
effectively in its environment
Management of a firm and its
multiple projects as a whole
Management of a project as an
enterprise through managing
multiple firms participating in
the project
Management of a network of
actors and their relationships
in an open and competitive
business marketplace
Management object A project A firm A
project as a multi-firm
network
A network of firms and their
relationships
Managerial
challenge
How to deliver the project on
time, in budget, and to
specification?
How to ensure that projects
support the strategy and
business objectives of the firm,
and how to allocate the firm’s
scarce resources to projects?
How to manage the project
enterprise by creating a
contractual arrangement that
enhances goal alignment and
coordination across multiple
firms participating to the
project?
How to maintain efficiency and
innovativeness in the network,
and how to position the firm in
the value network?
Measure of success Meeting of predefined
project
goals
Achievement of short-term and
long-term business objectives
of the firm
Meeting of project’s goals with
simultaneous achievement of
expectations and business
objectives of the firms
participating in the project
Competitiveness and capability
of individual firms and
networks to create and
implement new projects
Main actors and
decision makers
Project manager Business unit manager
Owner Focal firms in the business
network
Existing body of
knowledge
Project and program
management, temporary
organizations
Project portfolio management,
project-based operations,
make-to-order manufacturing,
project sales and marketing,
project-based innovation in
firms
Procurement and supply chain
management, systems
integration
Industrial networks,
partnerships, alliances, joint
ventures, value networks
Significant
contingency factors
Project uniqueness, novelty,
technology, complexity, pace
Discontinuity, interdependence
between projects, market and
technological uncertainty
Participating firms, asymmetry
of their objectives, interests
and identities
Norms and culture,
institutional issues, governance
schemes, relationship between
firms, role stability
Table I.
Characterizing the project
business research field:
distinctive contents of the
four major areas of the
project business
framework
IJMPB
1,4
474
Management of a project
Project management research focuses
on the problem of managing a single
project
effectively and successfully.
Management of a single project is an
extensively
researched area since the emergence
of the modern project and program
management which took place
between the 1930s and 1950s (Morris,
1994).
Organizational theories have been
widely used in project management
research since
the 1950s (Stinchcombe and Heimer,
1985; Morris, 1994). Projects have
been
increasingly defined and researched as
temporary organizations; for example,
see
“Project management and temporary
organizations” a special issue in the
Scandinavian Journal of Management
in 1995 (Lundin, 1995; Lundin and So
¨
derholm,
1995; Packendorff, 1995).
Management of risk and uncertainty
(Ka
¨
hko
¨
nen and Artto, 1997; Chapman and
Ward, 2002, 2003; Perminova et al.,
2008) has been a widely researched
and developed
area in contemporary project
management research since the 1980s.
However, so far
the focus on project risk management
has been on the internal processes of a
well-defined and often hierarchical
project management system, rather
than on the
governance mechanisms of a
networked, complex and dynamic
system that would rely
on an open system view on projects.
Contingency theory suggests that
project
management approaches should be
tailored to take into account different
situations
and different project contexts: Turner
and Cochrane (1993), Shenhar (2001)
and
Shenhar and Dvir (2004) are examples
of recent studies that compare
different effective
project management approaches in
different environments. The concept
of project
strategy – referring to the strategy of a
single project – is addressed in Morris
and
Jamieson (2004), Patanakul et al.
(2006), Shenhar et al. (2007) and
Artto et al. (2008b, c).
Inside-out management of a project’s
interface to its context has been raised
in relation
to the discussion of moving power
towards the edge or towards the
project’s
boundaries effectively. An
organization’s –, e.g. a project
organization’s – relationship
with its context can be thought of in
terms of the “power to the edge”
philosophy
(Alberts and Hayes, 2003, 2007;
Moffat, 2003) which refers to a
network centric
organization and network enabled
capability for addressing mission
challenges in the
context. Project’s relation to its
context is also researched in terms of
the project’s
isolation from and integration with its
parent organization (Lundin and So
¨
derholm,
1995; Packendorff, 1995; Martinsuo
and Lehtonen, 2007b, c; Lehtonen and
Martinsuo,
2008).
Table II shows the relevant research
areas and their specific themes in the
major
area of “management of project”. The
common characteristics of all the
research areas
and themes displayed in Table II is
that they all put a significant emphasis
on the
challenge and requirements that the
project’s environment introduces as to
how a
single project can be managed
effectively.
Management of a project-based firm
Lindkvist (2004) argues that a project-
based firm is an organization that
conducts most
of its work in projects and/or has an
emphasis on the project dimension
rather than on
the functional dimension of its
organizational structure and processes.
Hobday (2000)
makes a distinction between project-
based and project-led organizations:
according to
Hobday, project-led organizations are
firms in all types of industries that are
undertaking projects as a growing part
of their operations even while their
primary
Project business
as a research
field
475
productive activity might be volume-
based or operations-oriented, while
project-based
organizations organize most of their
internal and external activities in
projects.
However, we adopt a broader
definition of project-based firm, by
assuming that the
definition also covers “project-led”
(Hobday, 2000) firms that undertake
projects only
as a part of their operations.
Conducting or enhancing the firm’s
business through its
projects involves projects of two
types: external production or customer
delivery type
projects, and internal development or
capital investment projects. There is
an emerging
research field addressing the
management of project-based firms
(Artto et al., 1998,
2006; Turner and Keegan, 2001;
Arenius et al., 2002; Artto and
Wikstro
¨
m, 2005;
Whitley, 2006). The conceptual
analysis by Artto (2001) provides an
overview of the
management of a project-based firm
and its central concepts and
applications by
addressing the following questions:
how is the project interrelated with
other
organizational structures such as other
projects and the line organization,
what roles
does a project play in fulfilling the
strategic objectives set by the firm’s
management,
and what are the appropriate
procedures for managing projects with
the purpose of
producing a profit. Kujala and Artto
(2000) address performance
management in
project-based firms by setting targets
for individual projects. Project
supplier firms
may engage in several sequential or
parallel global projects through
different delivery
scopes (Cova et al., 2002). Artto et al.
(1998) presented a study of global
project business
by examining Finnish global firms.
Recently, there is an increasing
amount of research
and managerial applications
concentrating on the management of
public organizations
as project-based “firms” (Hawk and
Artto, 1999; Artto and Dietrich, 2004;
Lindeman,
2007; Martinsuo and Lehtonen,
2007b, c).
Research area Examples of themes from
existing literature
Management of risk and
uncertainty
Risk-related knowledge, learning,
understanding and
sensemaking (Hawk and Artto, 1999; Artto et
al., 2000)
Networked projects with network-related
risks and network
modeling (Eloranta et al., 2007; Ka
¨
hko
¨
nen et al., 2007; Artto
et al., 2007, 2008a)
Contingency theory view and systems
view on projects
Different effective project management
approaches in
different environments (Turner and
Cochrane, 1993;
Shenhar, 2001; Shenhar and Dvir, 2004,
2007)
A project organization as a system (Cleland
and King, 1968;
Sayles and Chandler, 1971)
Project strategy Project strategy formulation,
project as an implementation
vehicle of higher level strategies (Morris and
Jamieson, 2004;
Jamieson and Morris, 2004; Shenhar et al.,
2005; Patanakul
et al., 2006)
Project’s autonomy and the complexity of
project’s
stakeholder environment as two important
determinants of
the strategy of a single project (Artto et al.,
2008b, c)
Inside-out management of project’s
interface to its context
Projects are purposefully isolated from their
parent
organization (Lundin and So
¨
derholm, 1995; Packendorff,
1995)
Project’s integration with and isolation from
the parent
organization (Martinsuo and Lehtonen,
2007b, c; Lehtonen
and Martinsuo, 2008)
Table II.
Research areas and
themes in the
“management of a
project” major area
IJMPB
1,4
476
Innovation in project-based firms is an
important research area (Gann and
Salter,
2000; Keegan and Turner, 2002).
Artto (2001) and Arenius et al. (2002)
discuss the
learning loop of a project firm, which
should in an ideal situation integrate
both
horizontal and vertical learning. Such
a learning scheme is probably the
most
important capability that a project-
based firm should have. Learning is
also associated
with innovation, the uniqueness of
each project, and the discontinuity
between
projects, all require that learning and
knowledge sharing have a central role
(Sydow
et al., 2004).
The business of a project-based firm
can be addressed through its business
model.
Kujala et al. (2007) analyze
contingency factors affecting both the
choice of a business
model for a project-based firm and the
performance of its business model. A
business
model can be considered a statement
of how the company makes money
(Stewart and
Zhao, 2000) or how technological
inputs are transformed into economic
outputs
(Chesbrough and Rosenbloom, 2002).
A business model with a strategic
focus is
defined in terms of the logic of profit
generation. An operationally-focused
business
model concentrates on the internal
processes that enable the firm to create
value, such
as production or service delivery
methods, administrative processes,
resource flows,
knowledge management, and
logistical streams (Morris et al., 2005).
The integration of
project sales and execution in a global
project supplier firm is challenging:
the sales
organization may be distributed into
several local sales offices, whereas the
organization responsible for delivery
project execution may be more
centralized,
situated in few locations as specialized
project execution units (Lampenius,
2006;
Dietrich et al., 2007). The discourse of
project marketing identifies central
features of
the business of a project-based firm.
These central features are: the
uniqueness of
individual projects, the complexity of
the project offering and business
network, the
discontinuity of demand and business
relationships between projects, and the
considerable extent of financial
commitment of the parties (Cova et
al., 2002; Mandja
´
k
and Veres, 1998; Tikkanen, 1998).
The broad project marketing discourse
can be
identified in the industrial marketing
and purchasing (IMP) research group
related
studies on relationships and networks
in project marketing (Cova et al.,
1996; Owusu,
2003; Skaates and Tikkanen, 2003;
Skaates, 2000). Murtoaro and Kujala
(2007) and
Kujala et al. (2007) address various
negotiation strategies and joint
decision making
between project customer and supplier
during the sales and delivery process.
Procurement and supplier network
management is important due to the
trend of
increased subcontracting and focus on
a firm’s core capabilities. Indeed,
firms and
projects are more and more dependent
on their suppliers (Walker and
Rowlinson,
2008), and therefore the relational
focus in subcontractor selection
criteria is relevant
(Eloranta, 2007).
Meklin et al. (1999a, b) introduce a
product-oriented approach towards
project
supplier firms. There is a clear
distinction between the concepts of
project product and
company product (Meklin et al.,
1999a, b; Hellstro
¨
m, 2005). Hellstro
¨
m (2005) studies
modularity in the business of
delivering projects. Hellstro
¨
m argues that the products
and their modularity do not only apply
to physical products, but also to
project
processes and project organization that
represent the ultimate capability to
create the
desired solution as the outcome of the
project. Goods or services produced in
a project
are often credited with the attribute of
complexity as they consist of a large
number of
interacting parts. The interaction often
creates great interdependency, not
only from an
Project business
as a research
field
477
engineering design perspective, but
also in an organizational sense
(Hobday, 1998; Sosa
et al., 2003). The choice of product
structure and organizational
architecture interacts
(Henderson and Clark, 1990;
Oosterman, 2001). One key issue is
how to align service and
project processes with the overall
business processes in a project-based
firm (Gann and
Salter, 2000). Research on services
provided by a system supplier firm is
focused mainly
on customer value of post delivery
services for major system deliveries
(Oliva and
Kallenberg, 2003; Helander, 2004).
Artto et al. (2008e) adopt a project
supplier view and
analyze how services influence the
performance of project business.
Project portfolio management research
includes a wealth of decision-oriented
generic process models for strategy
implementation with multiple projects
(Cooper
et al., 1997a, b, 1998a, b; Archer and
Ghasemzadeh, 1999; Artto, 2001;
Aalto et al. , 2003).
Recent research focuses on portfolio
management performance,
contextuality of project
portfolio management, and the
interface between management of
individual projects
and management of portfolios
(Martinsuo and Lehtonen, 2007a; Mu
¨
ller et al., 2008).
Aaltonen (2008) analyzes co-selection
in project portfolio prioritization
through a
population ecological view on top
management’s activities with
innovation project
portfolios.
Table III shows the relevant research
areas and their specific themes in the
major
area of “management of a project-
based firm”. From the contents of
Table III we can
draw the conclusion that the
management of a project-based firm
that is specialized in
project operations differs considerably
from the management of a firm that
conducts
repetitive production or routine
activities in its business.
Management of a project network
A project typically involves several
organizations for its execution.
Therefore, the
network perspective when considering
a project as a network of multiple
firms or
organizations is most relevant
(Hellgren and Stjernberg, 1995;
DeFillippi and Arthur,
1998; Floricel and Miller, 2001;
Windeler and Sydow, 2001; Sydow
and Staber, 2002;
Eloranta et al., 2006, 2007). Several
actors participating in a project
network causes
uncertainties that are often due to:
network effects such as dependence on
other actors;
interest asymmetries; different
identities; missing information;
information asymmetry
within the network; social and
institutional risks, network risks;
trying to behave
rationally, and; risk management
procedures that do not fit into a
networked context
(Hellgren and Stjernberg, 1995;
Eloranta et al., 2006; Klemetti, 2006;
Artto et al., 2008a).
The research on large projects and
global projects typically capture the
idea that the
project is a network of several firms
and other organizations from different
businesses
and from different institutional
environments participating to the
project (Morris and
Hough, 1987; Kharbanda and Pinto,
1996; Miller and Lessard, 2001a, b;
Williams, 2002;
Horii et al., 2004; Orr, 2005;
Mahalingam and Levitt, 2007; Ruuska
et al., 2008; Scott,
2008). A project can also be
considered an enterprise that engages
several firms and
other organizations that relate to its
business purpose (Morris, 1983; Gru
¨
n, 2004;
Murtoaro, 2006).
From the supply chain perspective, a
project delivery chain is defined as a
network
entity formed by several projects built
in a hierarchical fashion where the
supply
relationship is depicted with respect to
the customer’s (or buyer’s) project
above and
the buyer-subcontractor relationship to
the subcontractor’s project below
(Artto et al.,
1998; Ka
¨
rkka
¨
inen et al., 2002). Stakeholder
management studies in project
research
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478
Research area Examples of themes from
existing literature
Theory of project-based firm and
the firm’s business model
The business model of a project-based firm
addressed through
the concept and content of business models
(Kujala et al., 2007)
Marketing strategy of a project supplier firm
(Tikkanen et al.,
2007)
Learning, capabilities and
competencies
Learning and knowledge sharing as the most
important
capability that a project-based firm should
have (Hawk and
Artto, 1999; Prencipe and Tell, 2001; Ruuska,
2005; Maqsood
et al., 2006)
Management of flexibility in engineering-
construction-
procurement (EPC) firms through four distinct
groups of core
competences: entrepreneurial, technical,
evaluative, and
relational (Lampel, 2001)
Selling and delivering projects Integration of
project sales and execution in a global project
supplier firm (Lampenius, 2006; Dietrich et
al., 2007)
Project sales and implementation as an
integrative negotiation
process (Murtoaro and Kujala, 2007; Kujala
et al., 2007)
Procurement and supplier
network management
A project contractor’s supplier network and
the contractor’s
relationships with its suppliers as an important
resource that
contribute to the contractor’s competitive
advantage with
customers (Kelly, 2006; Tikkanen et al., 2007;
Artto
et al., 2008a)
Influence of customer’s purchasing strategy
on customer’s
value creation (Eloranta, 2007; Laitinen,
2007; Ahola
et al., 2008)
The role and management
of products in the business
of a project-based firm
Modularity in the business of delivering
projects, and
modular project organization (So
¨
derlund, 2002;
Hellstro
¨
m, 2005)
The nature of the product and the project as a
determinant
shaping the project supplier firm’s
organization (Hobday,
1998; Wikstro
¨
m et al., 2008)
The role of services in the business
of a project-based firm
Systems integration and “integrated solutions”
for combining
system products and services into vast and
long-lasting
deliverables from a supplier to its customer
(Davies, 2004;
Hobday et al., 2005)
The role of services in the business model of
project-based firm
(Artto et al., 2007, 2008e; Kujala et al., 2008)
Portfolio and program
management
Co-selection in top management’s project
portfolio prioritization
(Aaltonen, 2007, 2008; Aaltonen and
Martinsuo, 2008)
Programs as large multi-organizational
maneuvres that relate
to large industrial or public sector
developments/investments
(Pellegrinelli et al., 2007; Dietrich, 2007;
Lehtonen and
Martinsuo, 2008; Nieminen and Lehtonen,
2008); distinctive
features and differences between projects and
programs and
their management (Artto et al., 2008d)
Resource management in a
project-based firm
Resource allocation in multi-project
organizations (Engwall
and Jerbrant, 2003; Elonen and Artto, 2003;
Dammer and
Gemu
¨
nden, 2007)
People working in multi-project organizations
perceiving
fragmentation, disruption and inefficiency
(Zika-Viktorsson
et al., 2006; Allvin et al., 2007)
Table III.
Research areas and
themes in the
“management of a
project-based firm”
major area
Project business
as a research
field
479
adopt a partial network view of the
project network around a focal
firm/organization.
Winch and Bonke (2002) and Winch
(2004) distinguish between proponents
and
opponents among project’s
stakeholders. Walker et al. (2008)
discuss stakeholder
management in a supply chain type
network of actors. Many project
stakeholder
management studies focus on analysis
tools such as the power/interest matrix
(Johnson and Scholes, 1999),
stakeholder mapping tools (Winch,
2004), stakeholder
categorization and visualization tools
(Bourne and Walker, 2006). The
recent research
of Aaltonen et al. (2008), Aaltonen
and Kujala (2008) and Aaltonen and
Sivonen (2008)
widen the project stakeholder
management perspective significantly
by analyzing
different types of influence strategies
of stakeholders and of the focal
company (for
general stakeholder research, see
Freeman, 1984; Donaldson and
Preston, 1995;
Mitchell et al., 1997).
Governance in project networks relate
to the management of relationships
between
the various parties that are
engaged i n t h e p r o j e
c t t h a t i s a t e m p o
r a r y
multi-organization grouping (Cherns
and Bryant, 1984; Winch, 2006). The
meaning
of governance is derived from the
literature on institutional economics.
The early work
of Coase (1937) identified the market
and the firm modes of allocating
resources in a
market economy, which insight has
developed by Williamson (1985) and
others in
what has become transaction cost
economics as one branch of
institutional economics.
Newer forms of relationships are
considered hybrid forms of the
hierarchy-market
dimension (Spina and Zotteri, 2000).
Based on the above, Winch (2006)
defines project’s
management as the commercial
function of selecting and maintaining
the appropriate
governance arrangements between
independent firms. A project network
is a part of a
broader governance framework that
includes the context of incentive
systems and
distribution of risks and resources in
the market (Winch, 2006).
Incentivization through
contracts is emphasized, which
implies that contractual relationships
and contract
organization for a project play central
roles (Levitt and March, 1995; Turner
and
Simister, 2001). Related to this
definition, Jones et al. (1997)
introduce what they call a
general theory of network governance.
Furthermore, Klakegg et al. (2007)
discuss
characteristics of innovative
governance frameworks for public
investment projects. In
addition to transaction cost economics,
agency theory (Eisenhardt, 1989) as
another
conceptualization of the institutional
economics has been suggested as the
theoretical
foundation for the governance in
project networks (Turner and Mu
¨
ller, 2003; Winch,
2006). Important suggestions about
the governance of large projects are as
follows.
Organizational structure of a project
with the use of contractors, the
shaping of the
project, the project’s institutional
framework and the capacity of
governance and
self-regulation are essential (Miller
and Lessard, 2001a, b; Miller, 2006).
The owner’s
competences and interests in putting
resources into the process and carrying
the
responsibilities are crucial (Morris and
Hough, 1987; Gru
¨
n, 2004; Miller, 2006). It is the
responsibility of project owners to
establish the project management
structure (Miller,
2006). For example, based on an
empirical evidence from an analysis of
a large project,
Brady (2007, 2008; Brady et al., 2007)
argued that effective principles of
governance in
the researched megaproject included
the following: the owner accepted all
relevant
risks in the framework agreement (the
owner also agreed to partially bear
contractors’
risks/concerns as to future projects),
incentive-based contracts, and interest
alignment
and identity building of the core
integrated team. The financing party’s
involvement in
an early phase is vital, as this helps to
shape the project right from the start
and the
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480
financier’s commitment to objectives
would guarantee their support when
financing
the later phases of the project
(Flyvbjerg et al., 2003; Samset, 2003).
Extensive use of
contractors release the owner’s
capacity and enable the owner to
concentrate on core
tasks (Gru
¨
n, 2004). However, the owner should
not mix firm prices and reimbursable
contract forms, i.e. the owner must not
allocate such risks to the contractor
that relate
more naturally to the owner’s business
and are therefore more appropriate to
keep
under the owner’s responsibility
(Morris and Hough, 1987). There
should be balanced
authority and responsibility among the
different stakeholders (Morris and
Hough,
1987; Gru
¨
n, 2004).
Table IV shows the relevant research
areas and their specific themes in the
“management of a project network”
major area. Based on the analysis of
the
contents of Table IV, it is obvious that
the management of a project network
with
multiple firms introduces a setting that
can be considered opposite to the
traditional
expectations of the mutual roles of
projects and firms. This means that
traditionally,
the firm is considered the focal
enterprise and management across its
projects with
a portfolio view is expected to
represent a typical managerial setting.
Concerning
“management of a project network”
area in Table IV, the situation is the
opposite:
the project (network) is the focal
enterprise, and from the viewpoint of
this project
enterprise, the challenge is in
managing the entire portfolio of firms
that are
participating in its business scheme.
Management of a business network
In general, the increase of networks of
organizations is due to: increased
outsourcing, liberalization and de-
regulation, the challenge of
complexity and
scattering of various special
capabilities to several organizations,
technological
convergence, solutions in information
and communication technologies, and
digitization. The business
relationships in the permanent
business network of
firms affect the composition of those
firms that are selected to participate in
a
project, and vice versa, the projects
and their temporary networks have an
impact
on the permanent business network
(Eccles, 1981; Hellgren and
Stjernberg, 1995;
Ha
˚
kansson et al., 1999; Dubois and
Gadde, 2000; Beach et al., 2005;
Ahola et al.,
2006; Arroyo and Walker, 2008; Artto
et al., 2008a). Also facilitating
government or
institutional agencies may serve in the
central role of business incubators that
affect
the project constellations (Doz and
Hamel, 1998; Porter, 1998). Grabher
(2002, 2004)
acknowledges the importance of
project ecologies or regional
agglomerations of
project based organizational and
institutional participants; the “project
ecologies”
arena is where economic geographers
are contributing to understanding of
project
business as an inter-organizational
phenomena. The firms may participate
in
different projects in different roles,
and each project may have separate set
of actors
(Eloranta et al., 2006; Eloranta, 2007).
Furthermore, a project supplier firm’s
delivery
scopes vary in those several sequential
or parallel projects that the supplier
firm
engages in Cova et al. (2002).
Interests and goals between business
actors or
non-business actors in the business
network can be controversial,
conflicting or
competitive, which may introduce
barriers to a project’s activities, or
political
behavior that complicates the
execution of a project in a setting
where different
parties try to use their power to impact
the project so that it will be in
accordance
to their business interests (Lamberg et
al., 2008).
Project business
as a research
field
481
Research area Examples of themes from
existing literature
Large projects
research
A global project with resources from more
than one socio-cultural system
and/or geographical setting (Horii et al.,
2004; Orr, 2005; Mahalingam,
2005; Mahalingam and Levitt, 2007; Scott,
2008)
Managing the project by coordinating the
activities of various actors
across this complex network of organizations
and firms (Morris and
Hough, 1987; Williams, 2002; Evaristo et al.,
2004; Ruuska et al., 2008)
Project as network
of firms
Projects are temporary networks consisting
of several organizations or
actors (Eccles, 1981; Hellgren and
Stjernberg, 1995; Dubois and Gadde,
2000; Eloranta et al., 2006; Eloranta, 2007)
Risk management procedures in project
networks (Klemetti, 2006; Artto
et al., 2008a; Ka
¨
hko
¨
nen et al., 2007)
Project as
multi-organization
enterprise
A project as multi-organization enterprise
(Gru
¨
n, 2004) with institutional,
strategic, and tactical levels of management
(Parsons, 1960; Morris, 1983)
A project organization constructed through
contracts between
participating firms (Walker and Smith, 1995;
Akintoye et al., 2003; Davies
and Hobday, 2006; Murtoaro, 2006) for
creating a cooperative system
(Levitt and March, 1995; Flyvbjerg et al.,
2003)
Dynamism in
project network
The dynamism in project network due to new
actors joining the project in
different phases of the project, and
continuous change of roles of actors
during the project (Ha
¨
gg and Johansson, 1987; Powell, 1987, 1990;
Eloranta, 2007)
System dynamism in a project as related to
causes to disruption and delay,
feedback dynamics with vicious circles
(Williams et al., 1995; Eden et al.,
2000; Williams et al., 2003)
Learning within the
project network
A project capability-building model based on
the learning scheme within
the project (Brady and Davies, 2004);
discovery-oriented project
management scheme for intra-project
learning (McGrath and MacMillan,
2000)
Collective competence (Sandberg and
Targama, 1998; Hansson, 1998;
Ruuska, 2005); projects as learning chain
opportunities (Maqsood et al., 2 0 0 7 )
Stakeholder
management
Project stakeholder management practices
(Winch and Bonke, 2002;
Winch, 2004; Bourne and Walker, 2006)
Project stakeholders’ influence strategies
(Aaltonen et al., 2008; Aaltonen
and Kujala, 2008); focal project
organization’s strategies to manage its
stakeholders (Aaltonen and Sivonen, 2008)
Systems integration Systems integration as a
project management capability (Hobday et
al.,
2005)
Technical team interaction in product
development (McCord and
Eppinger, 1993; Pimmler and Eppinger,
1994; Sosa et al., 2003)
Project delivery
chain and supply
chain management
within a project
Project delivery chains composed of
contractors’ delivery projects to
their customers, the owner’s investment
project being the ultimate
downstream end point of the delivery chain
(Artto et al., 1998; Ka
¨
rkka
¨
inen
et al., 2002)
Members of the supply chain (tier 1, tier 2,
. . . , etc. suppliers) receiving the
client’s value system and contributing to
client’s value chain (Kelly, 2006)
Governance in
project network
Governance in project network relating to the
management of
relationships between the various parties
engaged in the
multi-organization project (Cherns and
Bryant, 1984; Winch, 2006)
Governability (Floricel and Miller, 2001) as a
group of properties that
enables the project to react to unexpected
events; governability
complements the notion of flexibility (Bettis
and Hitt, 1995)
Table IV.
Research areas and
themes in the
“management of a project
network” major area
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482
There are several business strategies
that the project firm can use for
effectively
competing in the global projects
marketplace (Mintzberg et al., 1995;
Floricel and
Miller, 2001; Walker et al., 2008).
Performance measurement in multi-
firm supply
network is relevant for obtaining a
perspective across several firms about
their
collaborative and competitive
positions in the business network;
Kujala et al. (2007)
introduce a performance measurement
system design that also includes
performance
measurement at the business network
level in multi-firm supply networks.
Project
delivery business is characterized by
discontinuity, which means that
between two
active sales and delivery projects there
is a “no project” phase – or “sleeping
phase” –
that introduces discontinuity to the
relationships between the project
customer and the
project supplier (Hadjikhani, 1996;
Cova et al., 2002). Many project
supplier firms have
included a wide set of services in their
offerings in order to overcome the
challenges
caused by discontinuity. One purpose
of such wide service offering is to
make the
firm’s activities and business
relationships with other parties in the
wide business
network more continuous (Artto et al.,
2008e). A significant strategic
question for
companies involved in project
activities in the business network is,
where in the value
stream does the company want to
concentrate its value-adding activities
(Davies, 2004;
Davies and Hobday, 2006)? A firm’s
search for its position in the value
stream with
potential downstream moves relates to
the discussion of the role of services in
the
business of a project-based firm.
Table V shows the relevant research
areas and their specific themes in the
“management of business network”
major area. Based on the content of
Table V, we
can conclude that the business
network represents a dynamic context
for firms and
projects that are characterized by
various parties and their various
business interests.
In this dynamic environment both
competition and collaboration, and
both conflicting
and synergistic interests and activities
occur simultaneously at the level of
projects,
firms, and their partial networks.
Conclusion and further research
In this paper, we introduced a project
business framework, which was
applied to
describe project business as a research
field. The project business research
field
includes several specific research
areas and themes that are relevant for
future research
(Figure 2). These research areas also
reflect practical management areas
that should be
the developmental focus for future
management applications in today’s
industries and
in the public sector.
We welcome future studies that will
expand both the scientific and
practice-oriented
foundations of project business.
Especially, we suggest three areas for
further research.
First, we suggest that future research
should elaborate on the content of the
project
business framework, by analyzing
recent relevant research content not
only within
each of the four major areas (as we did
in this paper), but also within each of
the four
interfaces in between the four major
areas (the four interfaces are marked
in Figure 2).
Second, further research should also
seek various scientific foundations for
each
research area in the project business
framework. Third, new knowledge is
needed
about the inherent system dynamism,
cause-effect chains, feedback loop
dynamics,
vicious or virtuous circles, and the
relationships between various
parameters within
the areas and interfaces of the project
business framework.
Project business
as a research
field
483
Research area Examples of themes from
existing literature
Interplay between temporary
project networks and the
permanent business network
Two-way impacts between the permanent
business network and
the temporary project networks (Ahola et al.,
2006; Eloranta et al.,
2006; Eloranta, 2007; Artto et al., 2008a)
Discontinuity of customer relationship due to
a “sleeping phase”
between project deliveries (Hadjikhani, 1996;
Cova et al., 2002);
overcoming the challenges caused by
discontinuity through
services (Artto et al., 2008e; Kujala et al.,
2008)
Measurement of performance
in business network
Measurement of elements contributing to
value and destroying
value of network actors (Laitinen, 2007;
Ahola et al., 2008)
Performance measurement system for project
business networks
(Kujala et al., 2007)
Analysis of networked business
environment and design
of the firm’s strategy
Milieu analysis as a tool for the company to
acquire information
about the functioning of the network of
business and non-business
actors related to the project’s business
environment (Cova et al.,
1996, 2002)
Constructivistic marketing approach for
shaping the business
network and positioning the firm in the
network (Cova and
Hoskins, 1997; Tikkanen et al., 2007)
Ever-changing roles of the
network’s players
Different roles of the actors from one project
to another: one’s
partner company in a project may be a
competitor in the next
project, or one’s customer in one project may
become one’s supplier
in the next project (Hellgren and Stjernberg,
1995; Eloranta, 2007;
Artto et al., 2008a)
Projectized innovation in complex products
and systems requires a
unique constellation of business players
participating to each
project (Miller et al., 1995; Hobday, 1998)
Multiple conflicting interests and
fragmented entities even within
one single firm
Conflicting managerial objectives at the
project level and at the
business level in a project-based firm affect in
a controversial
manner the management of business
relationships with external
network partners (Artto et al., 2008a)
Different objectives at the project and
business levels concerning
open information sharing with partners in the
supplier network
(Hirvonen, 2005)
Embedded innovation in business
activities in the network
Major systems deliveries are innovations that
are conducted
in a project form jointly with a network of
several firms
and organizations (Davies and Hobday, 2005;
Shenhar and
Dvir, 2007)
Project and business networks are ideal
platforms when enhancing
the power of the network by adopting the
principles
of open innovation (Chesbrough, 2003;
Dahlander and Wallin, 2006;
Chesbrough et al., 2006), open source
(Haefliger et al., 2008), or open
business models (Chesbrough, 2006)
Moving base in the value stream Companies
are moving downstream in the value chain
towards services, to where the money is (Wise
and
Baumgartner, 1999)
Buyers of capital goods are entering into long-
term partnerships
with their suppliers to ensure that providers of
solutions share the
responsibility and risks of performing
outsourced activities
(Davies, 2004; Davies and Hobday, 2006)
Companies completely re-aligning and
reconfiguring their
relationships on jointly delivered streams of
projects (Davis, 2006;
Arroyo and Walker, 2008; Davis and Walker,
2008)
Table V.
Research areas and
themes in the
“management of a
business network” major
area
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484
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Figure 2.
Project business
framework with specific
research areas and themes
1. Management of a project 3. Management of a
project network
2. Management of a project-based firm
4. Managementof a business network
Interface 1-2
Interface 3-4
Interface 1-3
Interface 2-4
• management of risk and uncertainty
• contingency theory view and systems view on projects
• project strategy
• inside-out management of project’s interface to its context
• theory of project-based firm and the firm’s business model
• learning, capabilities and competencies
• selling and delivering projects
• procurement and supplier network management
• the role and management of products in the business of a
project-based firm
• the role of services in the business of a project-based firm
• portfolio and program management
• resource management in a project-based firm
• large projects research
• project as network of firms
• project as multi-organization enterprise
• dynamism in project network
• learning within the project network
• stakeholder management
• systems integration
• project deliverychain and supply chain management
within a project
• governance in project network
• interplay between temporary project networks and
the permanent business network
• measurement of performance in business network
• analysis of networked business environment and
design of the firm’s strategy
• ever-changing roles of the network’s players
• multiple conflicting interests and fragmented entities
even within one single firm
• embedded innovation in business activities in the network
• moving base in the value stream

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