Execution Capabilities of Distributed Technology Projects: A Comparative Evaluation of Efficiency Using Stochastic Frontier Analysis

Efficiency of projects is a central concern in project management. Such concerns have only been exacerbated with projects being increasingly distributed across firm and country boundaries. This study has a two-fold research agenda: First, it provides an understanding of how the efficiency of projects varies across project organization types, namely, Insourcing, Outsourcing, Offshoring, and Offshore-Outsourcing. Second, it identifies the impact of project execution capabilities, namely, risk management planning, agile project management, face-to-face interaction, and employee turnover management, on the efficiency of projects. A stochastic frontier analysis (SFA) of primary data collected from a mix of 830 information technology and product development projects indicates that the efficiency of projects, measured as “technical efficiency,” varies with the type of project organization. Specifically, we find that distributed project organization types, particularly Offshoring and Offshore-Outsourcing, exhibit significantly lower efficiency compared to Insourcing project organization. A key insight that can be gleaned from this finding is that significant untapped gains in efficiency can be realized if the execution of Offshoring and Offshore-Outsourcing projects is actively managed. Toward this end, our study identifies and finds empirical support for the enabling role of project execution capabilities such as risk management planning, agile project management, face-to-face interaction, and employee turnover management on the efficiency of projects. Implication of the study findings, limitations, and directions for future research are discussed.