This research explores the complex phenomenon of innovation in projects. Studies on the relationship between organizational performance and innovation have produced useful, but conflicting results. I attempt to examine the effect of predictors from firm-level, project-level, and individual-level on the innovative behaviour in projects. An extensive body of literature proposes that poor performance in a declining firm is needed to catalyze the search for new ideas or practices. Another body of literature views the availability of slack resources resulting from exceptional performance as the facilitator of innovation. The theoretical propositions and the framework presented in this study were based on these two domains of study.
The findings of this study suggested that certain types of innovation were predominant in over-performing projects, while other types of innovation were only present in under-performing projects. There were statistically significant differences between innovation in over-performing projects and those in under-performing ones. The study found the difference was related to neither the types of innovation between the two groups, nor whether the innovation occurs under one condition or the other.
Finally, the results showed that the expected effect of innovation in over-performing projects was found to be contributing to the effectiveness-related measures of project performance (i.e., social and environmental measures) only under both levels of performance. In under-performing projects, however, neither efficiency nor effectiveness measures of project performance were affected by innovative actions.