Purpose: The purpose of the paper is to shed light on the output of project management (PM) dynamic capabilities Specifically, the study investigates what effect PM dynamic capabilities have on company performance, both directly and indirectly, through the mediation effect of project and portfolio performance. Additionally, it tests whether program performance might also mediate the relationship.Design/methodology/approach: The hypotheses were tested using partial least squares with a sample of 63 international firms that engage in projects globally.Findings: The main finding of this research is that PM dynamic capabilities do not influence firm performance directly but do so indirectly by increasing firms' performance in projects, programs and portfolios. Both project and portfolio performance have a mediation effect on the relationship between dynamic capabilities and firm performance, but portfolio performance absorbs all this effect when the two performances are in the model.Originality/value: This paper sheds light on the link between dynamic capabilities and firm performance. It tests the real outcome of dynamic capabilities by making an explicit distinction between firm performance at three intermediate levels (project, program and portfolio) and overall firm performance. Moreover, it opens the black box of dynamic capabilities and empirically operationalizes the theoretical model of sensing-seizing-transforming as the three constituting routines of dynamic capabilities.

The problem of achieving individual project performance has been replaced by the problem of achieving organizational goals through project performance. Only project-based firms able to learn and build project capabilities can successfully compete in today’s dynamic environments. The purpose of this paper is to present a dynamic capability-based framework that sheds light on how project and organizational dynamic capabilities are built and how these dynamic capabilities allow project-based firms to perform in dynamic environments. Our theoretical framework unpacks the processes of building dynamic capabilities inside a project-based firm, discussing the routines and procedures that are useful to manage projects in unstable and dynamic environments and to build and reconfigure organizational capabilities from project-led knowledge.