The Interplay Between Formal and Informal Institutions in Projects

In projects, various kinds of formal and informal institutions are crucial for imprinting and controlling behavior. The interplay and potential conflict between these two types of institutions have attracted increasing scholarly and managerial attention, but conventional institutional analyses are hampered by the lack of effective methodological instruments for understanding these institutions and examining their fit (or misfit). Underpinned by the theoretical argument that institutions governing projects are networks, this study employs the methodology of social network analysis (SNA) to capture and analyze institutional interplay. We use four construction projects to illustrate the interplay between formal and informal institutions in projects and to show how this interplay affects project performance. Our findings reveal that, in general, performance is better when there is a better fit—which indicates the extent of interplay—between a project’s formal and informal guiding institutions. We also show how project managers can use SNA to diagnose formal and informal institutions, enhancing their fit and thereby improving project performance. The results presented here have implications for the role of these two institutional types and for how the fit between them can be improved through conscious effort.

[1]  Todd R. Zenger,et al.  Informal and Formal Organization in New Institutional Economics , 2002 .

[2]  Charles M. Eastman,et al.  BIM Handbook: A Guide to Building Information Modeling for Owners, Managers, Designers, Engineers and Contractors , 2008 .

[3]  P. Berger,et al.  The Social Construction of Reality , 1966 .

[4]  Christopher Lettl,et al.  Balancing Creativity and Time Efficiency in Multi-Team R&D Projects: The Alignment of Formal and Informal Networks , 2008 .

[5]  Ronald Tebogo Keikotlhaile,et al.  Formalising the Informal? – Finding a Balance between Formal Teams and Communities of Practice in a Project-based Organisation☆ , 2015 .

[6]  Michael Ivor Reed,et al.  Organization, Trust and Control: A Realist Analysis , 2001 .

[7]  W. Scott.  Institutions and organizations : ideas, interests and identities , 2014 .

[8]  Stephen Pryke,et al.  Social Network Analysis in Construction: Pryke/Social Network Analysis in Construction , 2012 .

[9]  Martin Fischer,et al.  An ethnographic method to collect input data for formal social network analyses of project teams , 2009 .

[10]  Jonas Söderlund,et al.  Managing inter-firm industrial projects — on pacing and matching hierarchies , 2001 .

[11]  Keith D. Brouthers,et al.  The Influence of International Risk on Entry Mode Strategy in the Computer Software Industry , 1995 .

[12]  Paul Chinowsky,et al.  Project Organizations as Social Networks , 2010 .

[13]  Suzanne Wilkinson,et al.  Validation of a team integration assessment tool in road infrastructure alliance projects , 2017 .

[14]  P. John,et al.  From plan to network: Urban elites and the post-communist organisational state in Russia , 2002 .

[15]  R. Leiringer.  Policy, Management and Finance for Public‐Private Partnerships , 2009 .

[16]  Raymond E. Levitt,et al.  – Global Projects : Institutional and Political Challenges , 2015 .

[17]  J. Sydow,et al.  Project Networks and Changing Industry Practices Collaborative Content Production in the German Television Industry , 2001 .

[18]  D. Gann,et al.  Innovation in project-based, service-enhanced firms: the construction of complex products and systems , 2000 .

[19]  L. Donaldson.  The Contingency Theory of Organizations , 2001 .

[20]  Sundeep Sahay,et al.  An Institutional Perspective on Health Sector Reforms and the Process of Reframing Health Information Systems , 2006 .

[21]  S. Pryke.  Towards a social network theory of project governance , 2005 .

[22]  Quasan Shaw,et al.  Public-Private Partnerships , 2008 .

[23]  J. Winiecki.  Determinants of catching up or falling behind: interaction of formal and informal institutions , 2004 .

[24]  Estelle Brodman,et al.  Managing the Flow of Technology: Technology Transfer and the Dissemination of Technological Information Within the R&D Organization (Book Review) , 1978 .

[25]  Graham Winch,et al.  The construction firm and the construction project: a transaction cost approach , 1989 .

[26]  Martin Loosemore,et al.  Social network analysis: using a quantitative tool within an interpretative context to explore the management of construction crises , 1998 .

[27]  Henry Chesbrough,et al.  The Logic of Open Innovation , 2003 .

[28]  N. Venkatraman,et al.  The Concept of Fit in Strategy Research: Towards Verbal and Statistical Correspondence , 2018 .

[29]  A. Akintoye,et al.  POLICY, MANAGEMENT AND FINANCE OF PUBLIC-PRIVATE PARTNERSHIPS , 2010 .

[30]  Stephen P. Mead.  Using Social Network Analysis to Visualize Project Teams , 2001 .

[31]  Charles M. Eastman,et al.  BIM Handbook , 2018 .

[32]  Gretchen Helmke,et al.  Informal Institutions and Comparative Politics: A Research Agenda , 2004, Perspectives on Politics.

[33]  C. Butts.  Social network analysis: A methodological introduction , 2008 .

[34]  Michael C.H. Yam,et al.  Contractor Key Competitiveness Indicators: A China Study , 2006 .

[35]  M. Engwall.  No project is an island: linking projects to history and context , 2003 .

[36]  D. North.  Institutions, Institutional Change and Economic Performance: Economic performance , 1990 .

[37]  K. Eisenhardt.  Building theories from case study research , 1989, STUDI ORGANIZZATIVI.

[38]  Timo Braun,et al.  Projects as temporary organizations: An agenda for further theorizing the interorganizational dimension , 2018 .

[39]  Christine Nadel,et al.  Case Study Research Design And Methods , 2016 .

[40]  Ray Reagans,et al.  Bridging the Knowledge Gap: The Influence of Strong Ties, Network Cohesion, and Network Range on the Transfer of Knowledge Between Organizational Units , 2012 .

[41]  N. Chorn.  The “Alignment” Theory: Creating Strategic Fit , 1991 .

[42]  J. Swan,et al.  Embedding New Management Knowledge in Project-Based Organizations , 2004 .

[43]  Albert P.C. Chan,et al.  Review of the application of social network analysis (SNA) in construction project management research , 2016 .

[44]  Stewart Clegg,et al.  Applying institutional theories to managing megaprojects , 2018 .

[45]  Jonas Söderlund,et al.  Theoretical foundations of project management : suggestions for a pluralistic understanding , 2011 .

[46]  Weisheng Lu,et al.  Rethinking project management and exploring virtual design and construction as a potential solution , 2009 .

[47]  Katharina Burger,et al.  Organizations Rational Natural And Open Systems , 2016 .

[48]  Weisheng Xu,et al.  Evolutionary analysis of the collaboration networks within National Quality Award Projects of China , 2015 .

[49]  Benyamin B. Lichtenstein,et al.  Temporary Inter‐organizational Projects , 2008 .

[50]  A. Shenhar,et al.  Project Success: A Multidimensional Strategic Concept , 2001 .

[51]  Yun Le,et al.  Social network analysis and organizational control in complex projects: construction of EXPO 2010 in China , 2011 .

[52]  Diane M. Strong,et al.  Understanding Organization-Enterprise System Fit: A Path to Theorizing the Information Technology Artifact , 2010, MIS Q..

[53]  R. Müller,et al.  Knowledge Governance Strategies in Project-based Organizations , 2016 .

[54]  A. Swärd,et al.  Trust, Reciprocity, and Actions: The Development of Trust in Temporary Inter-organizational Relations , 2016 .

[55]  Timo Braun,et al.  Project citizenship behavior? – An explorative analysis at the project-network-nexus , 2012 .

[56]  Henry A. Davidson,et al.  The Sociometry Reader , 1962 .

[57]  Laura B. Cardinal,et al.  Strategic Planning and Firm Performance: A Synthesis of More Than Two Decades of Research , 1994 .

[58]  R. Bakker.  Taking Stock of Temporary Organizational Forms : A Systematic Review and Research , 2010 .

[59]  Peter A. Bamberger,et al.  New Technology as Organizational Innovation: The Development and Diffusion of Microelectronics. , 1988 .

[60]  Ke Chen,et al.  Bridging BIM and building: From a literature review to an integrated conceptual framework , 2015 .

[61]  Hans Solli-Sæther,et al.  Strategic and Cultural Misalignment: Knowledge Sharing Barriers in Project Networks , 2015 .

[62]  Henry Chesbrough,et al.  The Logic of Open Innovation: Managing Intellectual Property , 2003 .

[63]  J. Werbel,et al.  Universalistic and Contingency Predictions of Employee Satisfaction and Conflict. , 1979 .

[64]  George Ofori,et al.  Chinese culture and successful implementation of partnering in Singapore's construction industry , 2001 .

[65]  Risto Rajala,et al.  Managing inter-organizational networks for value creation in the front-end of projects , 2016 .

[66]  Torbjörn Stjernberg,et al.  Design and implementation in major investments -- A project network approach , 1995 .

[67]  Andrew W Gale,et al.  Factors affecting construction joint ventures in China , 2004 .

[68]  A. Kadefors.  Trust in project relationships-inside the black box , 2004 .

[69]  M. Tushman.  Work Characteristics and Subunit Communication Structure: A Contingency Analysis. , 1979 .

[70]  Weisheng Lu,et al.  A System for Assessing and Communicating Contractors' Competitiveness , 2009 .

[71]  H. Ansoff,et al.  Critique of Henry Mintzberg's ‘The design school: Reconsidering the basic premises of strategic management’ , 1991 .

[72]  Ruha Benjamin,et al.  The rise of the platform economy , 2016 .

[73]  Jonas Söderlund,et al.  Managing inter-institutional projects: The significance of isochronism, timing norms and temporal misfits , 2011 .

[74]  A. Akintoye,et al.  Public Private Partnerships: Managing Risks and Opportunities , 2003 .

[75]  Gernot Grabher.  Cool Projects, Boring Institutions: Temporary Collaboration in Social Context , 2002 .

[76]  Weisheng Lu,et al.  Improved SWOT Approach for Conducting Strategic Planning in the Construction Industry , 2010 .

[77]  J. Armstrong,et al.  The value of formal planning for strategic decisions: Review of empirical research , 1982 .

[78]  Jonas Söderlund,et al.  The Oxford Handbook of Project Management , 2011 .

[79]  Fabrice Lumineau,et al.  How Coordination Trajectories Influence the Performance of Interorganizational Project Networks , 2017, Organ. Sci..

[80]  Paul Chinowsky,et al.  Social Network Model of Construction , 2008 .

[81]  Geoffrey G. Parker,et al.  Pipelines, platforms, and the new rules of strategy , 2016 .

[82]  Weisheng Lu,et al.  Sharpening Competitive Edge through Procurement Innovation: Perspectives from Chinese International Construction Companies , 2013 .

[83]  Tom A. B. Snijders,et al.  Social Network Analysis , 2011, International Encyclopedia of Statistical Science.

[84]  John H. Grant.  Advances and Challenges in Strategic Management , 2008 .

[85]  Andreas Wald,et al.  Relational competence in complex temporary organizations: The case of a French hospital construction project network , 2013 .