THE IMPACT OF STRATEGY DIFFUSION ON ORGANISATIONAL PERFORMANCE OF PROJECT-BASED ORGANISATIONS: A STRUCTURAL EQUATION MODELLING APPROACH

Abstract

This study investigating the utilization of top-down and bottom-up techniques in spreading an organisation’s strategy and getting back the performance. Additionally, project-based organizations may not have yet examined the use of one of the diffusion theories (such as Rogers' Theory of Innovation Diffusion) in contexts related to strategy or projects. Therefore, it was important and essential within project-based organizations to comprehend and use a strategy diffusion (top-down) and report its performance (bottom-up); to fulfil the entire drive of the strategy and increase the competitive advantage of firms. This study included a thorough examination of strategic management, diffusion theory, and project management facets. The strategy spreading techniques were based on Rogers' five well-known skills of diffusion theory; to diffuse the strategy (top-down) and reveal performance results (bottom-up) to feed each level of the project-based organization hierarchy structure, taking advantage of the interactions that exist among the strategy, the portfolio, and the project management facets. Additionally, since it is well known that organizational culture has a significant impact on business outcomes, mediation effects for the organizational culture related to the four organizational levels were considered throughout the relationship's examination between all the research variables. The research framework was therefore adopted and created. A questionnaire was designed and administered to strategy, portfolio, program and project professionals and data was analysed by using structural equation modelling (SEM) to assess the strength of the relationship between the strategy diffusion (top-down) variables, performance feedback (bottom-up) variables at all project-based organizational levels and the organizational performance variables, as well as, considering the mediation effects of the organizational culture. In addition, the direct and indirect causal influence of strategy diffusion influencing factors at all the levels of strategy, portfolio, program, and project and the organizational performance were evaluated. The findings indicate that strategy diffusion has a strong impact on organizational performance within project-based organisations. Whereas significant positive influences on the relationships were found between the research variables. In recent years, many studies have examined topics about relationships amongst strategy management, portfolio management, program management, and project management. However, those studies investigating the traditional one-way cascading of the organizational strategy. Furthermore, a few studies have been conducted to investigate the usage of top-down and bottom-up strategies to propagate an organization's strategy and improve performance. Furthermore, in project-based organizations, the prospect of applying one of the diffusion theories (e.g., Rogers' Theory of Innovation Diffusion) inside strategy or project contexts has not yet been investigated. As a result, this study added value in terms of the application of Structural Equation Modelling (SEM) to comprehend and apply strategy dissemination (top-down) and report its performance (bottom-up) within project-based organizations.