Effects of Contractual Governance on IT Project Performance under the Mediating Role of Project Management Risk: An Emerging Market Context

Abstract

In this study, we explore the impact of contractual governance (CG) on project performance (PP) under the mediation of project management risk (PMR). Contractual governance influences favorably IT projects performance in an emerging market context where the IT sector is growing. The principal-agent theory is used to build a research model that schedules project governance and IT project risk management. Data were collected from 295 IT professionals and the response rate was 73.75%. Smart PLS was employed to test proposed relationships. The findings postulate a strong causal relationship between the CG, PP and PMR. Fundamental elements (FE), change elements (CE), and governance elements (GE) have a significant positive relationship with project management risk (PMR), and PMR positively affects PP. Additionally, PMR mediates the relationship of FE, CE and GE with PP. Overall, the results of the study provide pragmatic visions for IT industry practitioners and experts, but the unscheduled risk to the IT industry may bring enormous harm. Consequently, effective and well-structured governance in a strategic way tends to improve the project performance by monitoring and managing both project risk and quality. In addition, the study empirically supports the significant impacts of project governance dimensions i.e., fundamental elements, change elements and governance elements on project management risk and project performance. It also guides researchers and adds value to the project performance-related literature by filling the gap.