PORTFOLIO STRATEGIC C ONTROL AND PORTFOLIO MANAGEMENT ... ?· i Portfolio Strategic Control and Portfolio…

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  • i Portfolio Strategic Control and Portfolio Management Performance

    PORTFOLIO STRATEGIC CONTROL AND PORTFOLIO MANAGEMENT

    PERFORMANCE

    Reza Alimohammadi Bachelor of Science in Mechanical Engineering

    Submitted in fulfilment of the requirements for the degree of

    Master of Engineering (Research)

    School of Civil Engineering & Built Environment

    Faculty of Science and Engineering Faculty

    Queensland University of Technology

    2016

  • ii Portfolio Strategic Control and Portfolio Management Performance

    Keywords

    Portfolio Control; Portfolio Complexity; Portfolio Dynamic; Portfolio Management;

    Portfolio Strategic Control; Portfolio Performance; Premise Control; Special alert

    Control; Strategic Implementation Control; Strategic Control; Strategic Surveillance

    Control;

  • iii Portfolio Strategic Control and Portfolio Management Performance

    Abstract

    BACKGROUND: Todays business challenges, fierce global competition and

    the growing complexity of the business environment force organisations to gain

    efficiency through their existing management processes and improve

    competitiveness by implementing new management mechanisms. Project portfolio

    management as one of the major competitive drivers for gaining efficiency and

    effectiveness requires new methods of turning it into a powerful and competitive

    weapon in organisation. This new approach, called Portfolio Strategic Control,

    prepares portfolios for future environments by aligning portfolio objectives with

    organisational strategy, managing resources, risks and opportunities in an integrated

    fashion, and adding elements of flexibility and learning to the portfolios. Portfolio

    strategic control combines elements of the portfolio management process and

    functions of strategic control mechanism, in order to control portfolios in a strategic

    manner and improve the performance of portfolio management.

    THE PROBLEM: The main objective of this research was to investigate the

    implementation of strategic control mechanism in portfolio management

    environments and to assess the interaction between the use of four types of strategic

    control (premise control, implementation control, strategic surveillance and special

    alert control) and portfolio management performance in different contexts.

    METHOD: A sequential dual research approach was selected for this study,

    combining qualitative and quantitative techniques in order to obtain an optimum

    level of quality and credibility. The qualitative part of the study consisted of semi-

    structured interviews with ten individuals who hold key organisational positions in

    seven high-performance, market-leading organisations. The purpose of this

    qualitative part was to study the nature of using strategic control in portfolio

    environment and to obtain better understanding of the practices, tools and techniques

    that organisations use to apply strategic control mechanism in their portfolios. For

    the quantitative part of the study, a survey was administered within 48 organisations

    and 130 responses were collected and analysed by a series of statistical methods, in

    order to analyse the use of a strategic control mechanism in portfolios and to assess

    the relationship between strategic control and portfolio management performance in

  • iv Portfolio Strategic Control and Portfolio Management Performance

    different contexts. While quantitative data were used to provide accurate empirical

    results without bias, the qualitative part added richness to those findings.

    RESULTS: The research results indicated that organisational tendency to use a

    strategic control mechanism in portfolios increases when organisations experience a

    high level of portfolio complexity and high level of portfolio dynamic. Also, the

    results revealed that there is a positive and significant relationship between the use of

    a strategic control mechanism in portfolio and portfolio management performance.

    This direct relationship is moderated by contextual factors of portfolio size, portfolio

    interdependency, portfolio dynamic and organisational governance type.

  • v Portfolio Strategic Control and Portfolio Management Performance

    Table of Contents

    Keywords.............................................................................................................................ii

    Abstract ............................................................................................................................. iii

    Table of Contents ................................................................................................................. v

    List of Figures .................................................................................................................... vii

    List of Tables ...................................................................................................................... ix

    Statement of Original Authorship ........................................................................................ xi

    Acknowledgements ............................................................................................................ xii

    Chapter 1: Introduction .................................................................................... 1 1.1 Background ................................................................................................................ 1

    1.2 Research Problem ...................................................................................................... 2

    1.3 Purposes ..................................................................................................................... 4

    1.4 Significance and Scope............................................................................................... 6

    1.5 Definitions ................................................................................................................. 8

    1.6 Thesis Outline ............................................................................................................ 8

    Chapter 2: Literature Review......................................................................... 11 2.1 Historical Background .............................................................................................. 11

    2.2 Strategic Management: Control and Evaluation ........................................................ 12 2.2.1 Strategic Control ............................................................................................ 13 2.2.2 Theoretical Frameworks in Modern Strategic Control Literature ..................... 15 2.2.2.1 Schreygg and Steinmann Model (1987) ...................................................... 15 2.2.2.2 Goold and Quinn; the Paradox of Strategic Control (1992) ........................... 19 2.2.2.3 Preble Strategic Control Model (1992) ......................................................... 21 2.2.2.4 Strategic Control for Fast Moving Market (Muralidharan 1997) ................... 22 2.2.2.5 Strategic Control for in Triggering Strategic Changes (Julian and

    Scifres 2002) .................................................................................................. 24 2.2.2.6 Summary of Strategic Control Theories and Frameworks ............................. 25 2.2.3 Role of Balanced Scorecard Methodologies and Critical Success Factors

    in Strategic Control ........................................................................................ 27

    2.3 Project Portfolio Management .................................................................................. 30 2.3.1 Strategic Portfolio Management...................................................................... 31 2.3.1.1 Portfolio Definition and Organisational Strategy .......................................... 31 2.3.1.2 Portfolio Control .......................................................................................... 36 2.3.2 Portfolio Management Success and Portfolio Performance.............................. 39

    2.4 Contextual Factors ................................................................................................... 41

    2.5 Summary and Implications ....................................................................................... 44

    2.6 Research Questions and Hypotheses ......................................................................... 46

    Chapter 3: Research Design ........................................................................... 50 3.1 Methodology and Research Design ........................................................................... 51

  • vi Portfolio Strategic Control and Portfolio Management Performance

    3.1.1 Methodology .................................................................................................. 51 3.1.2 Research Design............................................................................................. 52

    3.2 Data Source and Selection ........................................................................................ 61

    3.3 Instruments .............................................................................................................. 62

    3.4 Procedure and Timeline ........................................................................................... 64

    3.5 Analysis ................................................................................................................... 65

    3.6 Ethics and Limitations.............................................................................................. 66 3.6.1 Ethics ............................................................................................................. 66 3.6.2 Limitations ..................................................................................................... 67 3.6.3 Strengths and Weaknesses .............................................................................. 67

    3.7 Summary ................................................................................................................. 68

    Chapter 4: Results .......................................................................................... 69 4.1 Survey Demographics .............................................................................................. 69

    4.2 Descriptive Statistics of Variables ............................................................................ 72

    Reliability of Scales ........................................................................................................... 77

    4.3 Hypotheses Test Result ............................................................................................ 77 4.3.1 The Statistical Methods .................................................................................. 77 4.3.2 Hypotheses Testing ........................................................................................ 79

    4.4 Summary ................................................................................................................. 95

    Chapter 5: Analysis ........................................................................................ 97 5.1 Retracing Research Variables ................................................................................... 97

    5.2 Implementation of Strategic Control in Portfolio ...................................................... 98

    5.3 Strategic Control and Portfolio Performance .......................................................... 106

    5.4 Summary ............................................................................................................... 122

    Chapter 6: Conclusions ................................................................................ 125 6.1 Retracing Research Questions ................................................................................ 125

    6.2 Summary ............................................................................................................... 126

    6.3 Theoretical and Managerial Contribution ............................................................... 129

    6.4 Research Limitations.............................................................................................. 131

    6.5 Suggestions for Future Research ............................................................................ 131

    Bibliography ....................................................................................................... 135 Appendices .......................................................................................................... 144

  • vii Portfolio Strategic Control and Portfolio Management Performance

    List of Figures

    Figure 1: Strategic Control Model ........................................................................... 13

    Figure 2: Traditional Strategic Control Management ............................................... 14 Figure 3: Strategic Control Model (Schreygg and Steinmann 1987) ...................... 16

    Figure 4: Type and Characteristic of Strategic Control ............................................ 19 Figure 5: Strategic Control Model (Goold and Quinn 1990) .................................... 21

    Figure 6: Strategic Control Components in the Strategic Management Process ....... 21 Figure 7: Strategic Control Process (Julian and Scifres 2002, p. 144) ...................... 25

    Figure 8: Project Portfolio Process Overview (Bible, Bivins et al. 2011, p. 20) ...... 35 Figure 9: Control Model in Multi-project Organisation (Dahlgren, Soderlund et

    al. 2010, p. 18) .......................................................................................... 44 Figure 10: High-level Conceptual Research Model ................................................. 50

    Figure 11: Overall Research Methodology .............................................................. 52 Figure 12: Quantitative Study Demographic for Age ............................................... 69

    Figure 13: Quantitative Study Demographic for Years of Business Experience ....... 70 Figure 14: Quantitative Study Demographic for Years in Current Position .............. 70

    Figure 15: Quantitative Study Demographic for Geographic Dispersion.................. 71 Figure 16: Quantitative Study Demographic for Position of Respondents ................ 71

    Figure 17: Quantitative Study Demographic for Industry ........................................ 72 Figure 18: Quantitative Study Demographic for Portfolio Main Objective .............. 72

    Figure 19: Relationship between Use of Premise Control in Portfolio and Portfolio Complexity ................................................................................. 98

    Figure 20: Relationship between Use of Implementation Control in Portfolio and Portfolio Complexity ........................................................................ 100

    Figure 21: Relationship between Use of Strategic Surveillance in Portfolio and Portfolio Complexity ............................................................................... 100

    Figure 22: R...

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