Software development risk and project performance measurement: Evidence in Korea

As more US companies outsource their software projects overseas, they find that it is more challenging to control software development risk in countries with dissimilar IT capabilities. Using data collected from software projects developed in Korea, we investigate the impacts of specific risk management strategies and residual performance risk on objective performance measures such as cost and schedule overrun. Our results indicate that, unlike subjective performance measures, our objective cost and schedule overrun performance measures are positively associated with residual performance risk in Korea. We also investigate the impact of two alternative conceptualization of software development risk on both objective performance and subjective performance. Finally, we discuss relevant policy implications for software development and outsourcing.