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While project portfolio management (PPM) has increased its significance in various business contexts, research on effectiveness of PPM is still limited. In fact, PPM effectiveness has not been clearly defined; factors contributing to PPM effectiveness have not been thoroughly investigated; and measurement criteria for PPM effectiveness have not been proposed. The lack of such research has practitioners continuing with a PPM approach that has not been measured as to its effectiveness and impact on business results. As part of a major research initiative, the objective of this study is to develop a conceptual definition of PPM effectiveness. Based on extensive literature review and case study research with three market-leading organizations in the US, the author proposes a definition of PPM effectiveness. After understanding what PPM effectiveness is, practitioners should be able to create organizational conditions that promote PPM.