How environment risks moderate the effect of control on performance in information technology projects: Perspectives of project managers and user liaisons

• Internal environment risk (IR) negatively moderates the effectiveness of controls.
• External environment risk (ER) positively moderates the effectiveness of controls.
• The moderating effect of IR is stronger than that of ER for project managers.
• The moderating effect of ER is stronger than that of IR for user liaisons.

Successful management of information technology (IT) projects is a primary concern of project managers (PMs) and user liaisons (ULs). Prior studies have indicated that high risks result in low performance in IT projects, whereas effective enforcement of formal and informal controls enhances performance. These two streams have been integrated by examining the interactions between environment risks and control. However, contradictory findings have been presented given that environment risks can positively or negatively moderate the effect of control on performance. Furthermore, the collective effects of environment risks and controls across different stakeholders remain unknown. Quantitative analysis of data from 128 completed IT projects in China indicates that internal environment risk negatively moderates the effect of formal and informal controls on the product performance of IT projects from the perspectives of PMs and ULs. By contrast, external environment risk positively moderates the effectiveness of controls, thereby indicating the significant and diverse moderating roles of various environment risks in the relationship of control and performance. Environment risks can be threats to or facilitators of the success of IT projects. In addition, external environment risk moderates the effect of formal control on product performance for ULs more than internal environment risk, whereas the moderating effect of internal environment risk for PMs is stronger than that of external environment risk. This finding provides additional evidence that the moderating effects of internal and external environment risks differ among various stakeholders.