The impact of capabilities on performance

Abstract

Purpose

The research finds how much the different types of capabilities influence the performance outcome of a company. A special focus is put on companies that use projects in their daily work; project-orientation is an expanding field, but their capabilities and influence on performance are not enough investigated. The paper aims to discuss these issues.

Design/methodology/approach

Quantitative research setting was applied in EU member country Estonia. Survey was carried out with 189 responses.

Findings

Interestingly, project-related capabilities are singly more significant to performance than business capabilities. Capabilities mostly influence financial performance and less project performance (PP). Traditional project time/scope/cost management (iron triangle) and project delivery capabilities significantly influence the variance of outcome indicators. Surprisingly, companies should be careful in aligning projects with strategy and pay great attention to teamwork threats, as these present the most negative influence on the outcome in circumstances where they have been conventional benefit factors.

Research limitations/implications

Estonia is a small and innovative country, which makes results generalizable for similar types of countries worldwide and/or neighboring countries with geographical and cultural proximity.

Practical implications

Companies behave in isomorphic environments (e.g. high competition, short new product development cycle, full of imitations, standardized business models), and therefore companies look for ways how to differentiate. Usually, findings that describe a 5 percent variance of outcome gain attention, variables used in this research provide much higher variance (48-83 percent). Due to constant environmental changes, companies should put more focus on project-related capabilities due to their high impact on performance.

Originality/value

Capabilities are complex and not widely researched empirically from different angles, such as project management. This research takes a comprehensive base by involving a large variety of capabilities, including project-specific capabilities, not only a few common large companies' specific capabilities. The capabilities impact on PP is not yet investigated, also the influence from project capabilities on performance is not thoroughly researched.

Citation

Rungi, M. (2014), "The impact of capabilities on performance", Industrial Management & Data Systems, Vol. 114 No. 2, pp. 241-257. https://doi.org/10.1108/IMDS-04-2013-0202