Int. J.

of Human Resource Management 16:9 September 2005 1583 1599

Global virtual teams: a human resource

capital architecture

Michael Harvey, Milorad M. Novicevic and Garry Garrison

Abstract As organizations continue to globalize their operations, it will become evident
that most organizations do not have the resources to fully man operations throughout the
world. Therefore, management will be examining organizational options that reduce the
demand on an already depleted pool of global managers. One of the options being
examined by companies is the global virtual team (GVT). These complex teams are being
considered as a bridge mechanism to allow multinational organizations to expand rapidly
without taxing present global managerial skills. This paper uses a theoretical foundation
based upon competency theory as the motivation for the formation of GVTs and to explain
how they function. Four critical capitals (i.e. human, social, political and cross-cultural)
are deemed to be essential for effectiveness of GVT and are discussed in the paper. In
addition, a process for assessing the stock of capital in a GVT team is also developed in the
paper.
Keywords Global virtual teams; human capital; social capital; political capital; crosscultural capital; management of global virtual teams.

The growing popularity of inter-organizational alliances, combined with the growing tendency
to flatten organizational structures and globalization, has accelerated the need for firms to coordinate activities that span geographic, as well as, organizational boundaries through the use of
global virtual teams.

(Townsend et al., 1998)

Introduction
Rapid globalization, disruptive technological innovations and radical deregulation have
profiled a new competitive landscape in a global context (Lei et al., 1996). This novel
performance environment requires strategic flexibility of global organizations generally
and their management human resource systems in particular (Zander and Kogut, 1995).
Global strategic flexibility augments the importance of human resource heterogeneity,
their supporting HR systems, and their managing architecture (Lepak and Snell, 2002).
The development of such HR architecture and HR systems should be conducive to
the effectiveness of global virtual teams (GVTs) in terms of their contribution to the
intellectual capital base of the firm.
The HR systems and architecture enabling GVTs to function as a knowledge agent of
the firm allow the firm to maintain a degree of flexibility in its structure and permits

Michael Harvey, School of Business Administration, University of Mississippi, Mississippi 38766,

USA (tel: 662 915 5830; fax: 662 915 5820; e-mail: mharvey@bus.olemiss.edu).
The International Journal of Human Resource Management
ISSN 0958-5192 print/ISSN 1466-4399 online q 2005 Taylor & Francis
http://www.tandf.co.uk/journals
DOI: 10.1080/09585190500239119

1584 The International Journal of Human Resource Management

feasible restructuring of its interconnected relationships within and outside its global
networks on an on-going basis (Poppo, 1995). The unexamined issue this paper addresses
is what specific HR systems and architecture are needed not only to develop GVTs into
intelligent agents of knowledge creation and transfer across multiple projects within the
flexible global organization, but also to create an effective HR capital base capable of
contributing to the overall intellectual capital of the firm. Because such architecture
could be relevant to the firm dynamic capabilities derived from a GVT context, it is
imperative to determine the means to gain and maintain capital in a GVT.
The purpose of this paper is to examine the various types of HR capital that are
accumulated at a GVT level and to propose a programme of assessing HR capital in these
teams. First, a competency based view of HRM for GVTs is presented and related to the
HR architecture of the firm. Second, the four components of the HR capital (i.e. human,
social, political and cross-cultural) are discussed to explain how they are engendered by
the utilization of GVTs. Finally, a programme of assessing and improving the HR capital
architecture of GVTs is proposed.
Developing the concept of global virtual teams
Henry and Hartzler (1998: 78) define virtual teams as: Teams of people who work
closely together even though they are geographically separated and may reside in
different time zones throughout various parts of the world. Additionally, virtual teams
can be characterized as transitory structures, since membership is often temporary and
frequently requires members to participate in multiple teams when new tasks emerge
(Scott and Einstein, 2001). Virtual teams prove to be a viable asset in organizations as
they tend to increase productivity, flexibility, dynamism and can adapt to a wide variety
of task environments (Townsend et al., 1998). GVTs are teams that are used to impart
these advantages to organizations competing in a global context.
Although the potential for GVT appears to be promising, there are fundamental
socio-technical problems inherent within these teams, since they are characterized as
being comprised of both geographically and organizationally dispersed team members
who communicate primarily via computer-mediated communication (CMC) (Daft and
Lengel, 1986). Therefore, effective collaboration can be much more difficult to develop
and maintain than collaboration found in conventional team structures (Townsend et al.,
1998). In addition, the basic social foundation (i.e. social, political and cultural capital)
may be very difficult to develop in a GVT context and even more problematic to maintain
in the fluid context of GVTs.
The premise behind the development of GVTs is to tap the abilities and creativity of
people distributed throughout the organization and to culminate individual expertise that
spans organizational boundaries culminating in the efforts of a GVT (Townsend et al.,
1998). It is a commonly held belief that these temporary teams allow global managers to
handle a greater number of projects that may be more contextual and complex than other
organizational configurations without the costs and time associated with employee travel
(Nemiro, 2001; Potter et al., 2002). Fundamentally, the success of GVTs is similar to the
practices of conventional, face-to-face teams, but without the physicality associated with
conventional teams. In fact, GVTs dominant mode of communication may be through
the use of telecommunications and various information technologies used to accomplish
organizational goals (Townsend et al., 1996).
Although GVTs show enormous promise for global organizations, opportunities for
non-conformance and dysfunctional team activities/performance are always present.
Some of the complexities with this global collaboration effort are the difficulties working

Harvey et al.: Global virtual teams 1585

with others not only from differing cultures, but also, with others from differing
functional backgrounds (Jarvenpaa et al., 1998; Townsend et al., 1998). Second, the
transitory nature of virtual teams means that members can participate in multiple teams
simultaneously. This reduces the ability for GVT members to have the opportunity to
build social/cultural capital within the team. These temporary situations make the reward
system and maintenance of the social operating procedures increasingly difficult,
especially since virtual teams are short-lived, which is recognized by the members prior
to entering the team (Hatch, 1997). Third, the ability to measure individual effort or job
performance is likely to be difficult to assess in GVTs because hierarchical and
bureaucratic controls may be non-existent or lack the ability to monitor these situations
effectively (Bal and Foster, 2000). Finally, virtual meetings lack the physical cues
present in face-to-face meetings, making it difficult if not nearly impossible for GVT
members to observe those behaviours used to establish informal rules or norms, thereby
increasing the opportunities for misunderstanding and non-conformance within the
confounds of the team (Finholt and Sproull, 1990).
A competency based view of HRM for global virtual teams
A competency based view of organizations competing on innovative teamwork in a global
context posits that multiple competencies at different phases of value creation process operate
interdependently, thus creating the potential to generate a sustained competitive advantage
(Lado and Wilson, 1994). This perspective explicitly suggests that the organizational set of
competencies should be renewed by the development of new competencies based on prior
assessment of existing competency set and the appropriate means of augmenting this set. The
renewal involves the need to discover and develop new competencies of employees and teams
that are complementary to the firm technological and organizational competencies and
supplementary to those possessed in the past (Eisenhardt and Martin, 2000). Specific to
global virtual teams (i.e. GVTs) and their members, the value-creating competencies of
include the following:
The base skills and innate characteristics of GVT members
that are attributable to the individuals themselves (e.g. intellect, experience base,
education, emotional stability, etc.). These individual competencies also include not only
specific characteristics that make a GVT member more socially appealing for
collaboration to other members, but also skills that help in increasing the ability of a GVT
member to address complex problems and ill-structured problems. To address and solve
such problems, specific interpersonal skills that enable a GVT member to learn and share
knowledge, as well as to gain recognition and influence over others are critical (Lado and
Wilson, 1994).

Self-related competencies

Team context-related competencies The ability and skills of GVT to exhibit the capacity
for cognitive and social differentiation and integration of task-relevant variables in the
context of innovation in the organization (i.e. including specific knowledge and human
capital of GVT members to build informal (cross) cultural networks that result in
social/cultural capital, as well as political skill to promote a culture of trust and to suppress
conflict in accomplishing the task of the GVT). These contextual competencies of GVTs are
particularly valuable to provide institutional bridges across the cultural, social, and political
divide between the headquarters and foreign subsidiaries that is associated with various
knowledge management initiatives in the firm (Novicevic and Harvey, 2001). Such
competencies may reshape the thinking and actions about globally distributed knowledge

1586 The International Journal of Human Resource Management

management initiatives to influence the worldview of the top management of the global
organization, providing it ultimately with a global mindset (Kafelas, 1998; Poole, 1998).
Vision-related competencies The GVT competencies to transform symbolically the
vision of its goals into the reality of its actions, which underscore collective adaptability
and learning capacity of GVT members to envision new commons for organizational
members and other stakeholders (Bluedorn, 2002; Harvey et al., 1999).
These
transformational competencies reflect the capacity of GVT to develop a vision of
innovations and shape the decisions and actions necessary to blend the patience of the
collaboration with the passion of realizing that vision (Lado et al., 1992). Such a broad
set of competencies may also include the capacity to engage in alliance-based
innovations that facilitate new product and customer relationship development (Lado
et al., 1992). Similarly, these competencies also include the capacity to create a learning
experience and/or support for customers by enacting a context of collaborative culture
conducive to learning and sharing knowledge. As such culture is socially complex it is
difficult for competitors to replicate and therefore can be the source to create a relative
competitive advantage over global rivals (Roth and ODonnell, 1996; Taylor et al.,
1996).
These three types of distinct competencies should be bundled in order to be valuable
for organizations fostering global virtual teamwork and innovations in todays
hypercompetitive global markets (DAveni, 1994, 1997, 1999). Given the increase in
intense rivalries among firms that is based on integrating globally distributed innovation
through teamwork, it is necessary to explore if HR architecture may positively influence
this competency set of GVTs and GVT members (i.e. self, contextual and vision-related)
and contribute to an organizations dynamic capabilities in innovative undertakings
(Desouza and Evaristo, 2003; Peterson and Cheng, 1998; Zander and Kogut, 1995).
Figure 1 illustrates how HR architecture may facilitate timely transfer and sharing of
knowledge to increase the global organizations dynamic capabilities to compete
effectively against the increasing complexity of global competitors.
The architectural conceptualization of HR capital for GVTs is a useful vehicle in the
analysis of how the management of corporate HR architecture can add value in balancing
two competing demands: (1) the development of a firm knowledge base; and (2) the
knowledge sharing by collaborating GVT members (see Figure 1).

Figure 1 HR systems and capital architecture in global virtual teams

Harvey et al.: Global virtual teams 1587

Human capital viewed in the context of GVT competency
The essence of competitive advantage emanating from the unique bundling of human
resources embedded in GVTs rests on the global organizations investments in human
capital through the training and development of globally competent managers and teams.
As GVTs add value to the global organization, the skills and knowledge captured in the
GVTs enhance productivity (Snell and Dean, 1992). As more organizations evolve into a
global strategic orientation and expand into emerging markets, the integration and
sharing of knowledge about under-served emerging markets (Garten, 1997) become
essential (Harvey and Buckley, 1997). The success of a global organization will be
predicated on its ability to develop efficient GVT capital across the network of
relationships that is strategically aligned and at the same time, may develop independent
effective initiatives for local competitive positioning via GVTs (e.g. thinking globally
and acting locally) (Amin and Cohendet, 1999; Kefalas, 1998; Woolcock, 1998).
It is important to recognize that the radical change in the competitive environment
from developed to emerging markets may necessitate a re-examination of the profile of
talent to be used on GVTs. As has been documented by strategy researchers, a radical
change in environment may require more appropriate competencies of team members
collaborating in the new environment (Guthrie et al., 1991; Pfeffer and Salanick, 1978).
The renewed interest in measuring the value/quality of human capital and its impact on
organizational performance that has occurred over the last several years (Beatty et al.,
forthcoming; Becker and Huselid, 1999; Huselid and Barnes, 2002) highlights these
issues. The intent of these and other studies is to cast HRM into a strategic rather than a
tactical role in the competitive posture of global organizations. These authors identify the
characteristics of an environment where human capital measurement systems (HCMSs)
are of most importance, they are: (1) uncertain and rapidly changing environments; (2)
knowledge intense industries; (3) when human capital is used to differentiate the
organization from the competition (i.e. unique intangible resource); (4) complex
product/service offerings; (5) divisionalized or network organization structure; (6)
lengthy time to introduce new products; and (7) where competent human capital is
depleted (Huselid and Barnes, 2002). It should be noted that these environments often
require the use of GVTs.
In addition to explicitly measuring the value of human capital it is significant to note that
the perceived value or importance of human capital can vary between employees and
management (see Figure 2). The perspective on augmenting human capital is consistent in
the upper left-side box and the lower right-side of the matrix. The disagreements over the
enhancement or reduction in human capital occur in the two other cells in the matrix.
Management expectations can augment human capital by expanding the pool of GVT
candidates and by limiting the membership from any one pool of employees. While at the
same time, the employees want to gain/maintain their level of importance and value to
the organization by remaining critical to the success of the organization. Human capital has
become so important for the dynamic capabilities of global organizations that HR managers
need to develop dynamic means to measure the value of their organizations human capital.
Recent findings suggest one specific approach to measuring the implicit impact of human
capital that is divided into six steps. HR managers must first focus on the impact and/or
productive results of human capital rather than the process oriented cost perspective of
managing the HR process. Second, they must develop an awareness of human capital
alchemy or recognizing that measuring historic measures of the value of human
capital are somewhat flawed in that they focus attention on the input nature rather than the
output impact of human resources. Third, both the human capital value and relationships

1588 The International Journal of Human Resource Management

Figure 2 GVT and employee perceptions of human capital development

(i.e. recognizing the impact of human capital on the drivers of an organizations financial
performance) need to be explored to insure that measures illustrate the value of human
capital on business results. Fourth, to recognize the limitations of using historic
benchmarking methods to determine the value of human capital, in that human capital has a
unique impact on results based upon the firms strategy and the influence of the blend of
human capital on results. Fifth, assessing the value of human capital should not start with the
measures themselves but rather measuring the contribution of the human capital in
accomplishing the strategy of the organization. Sixth, metrics of human capital should be
placed in an overarching human capital architecture or examining the impact in a systemic
manner rather than looking at human capital as an entity in and of itself (Becker and Huselid,
1999).
In sum, human capital is no longer a simple task of counting the number of
employees and their backgrounds. Rather, human capital has become both a strategic tool
of management that can directly influence dynamic capabilities of the global
organization as human capital can play a significant role in the superior performance
of the organization (Becker et al., 2001; Hitt et al., 2001; Huselid, 1995).
Social capital viewed in the context of GVT competency
Social capital is defined as an asset that is engendered via social relations that can be
employed to facilitate action and achieve above-normal rents (Adler and Kwon, 2002;
Baker, 1990; Hunt, 2000; Hunt and Morgan, 1995; Leana and Van Buren, 1999). In a global
management context, social capital has been primarily conceptualized as a resource
reflecting the character of social relations within a firm (Hunt, 2000; Kostava and Roth,
2003) that extends beyond firm boundaries providing a basis for inter-firm action.
Although the term social capital has received considerable attention in the literature,
consensus on its theoretical domain and tenets have yet to be achieved (Leana and Van
Buren, 1999). In a review of the social capital literature, Leana and Van Buren (1999)
note that the literature presents a variety of perspectives on the levels of analysis
and the dimensions of this concept. They further indicate that two productive
underlying dimensions are common to existing conceptualizations of social
capital: associability and trust.
Associability is defined as the willingness and ability of participants to subordinate
individual level goals and associated actions to collective goals and actions (Leana and Van
Buren, 1999). The inherent subornation of individual goals through participation in the
collective however is not a relinquishment of individual goals, but rather an active mechanism

Harvey et al.: Global virtual teams 1589

that individuals employ to pursue individual goals (Leana and Van Buren, 1999). Through
participation in efforts to meet group objectives, the individual is able to achieve his/her
individual goals. This is not to imply a self-serving purpose, but rather through identification
with the group the individual works toward the group objective, and residually toward his/her
own goals (Leana and Van Buren, 1999). Given the nature of associability, it has both affective
(i.e. collectivist feelings) and skill-based components (e.g. ability to co-ordinate activities).
A second component of social capital is trust. Trust is evident when one has
confidence in anothers reliability and integrity (Das and Teng, 1998; Leana and Van
Buren, 1999; Morgan and Hunt, 1994). It has been asserted that co-operative, long-term
relationships are dependent upon the fostering of trust (Das and Teng, 1998; Morgan and
Hunt, 1994). Researchers have proposed that trust can be considered in terms of a risk
reward relationship (Mayer, 1995; Williamson, 1993), where predictable actions by one
party allow the relationship to operate more effectively. The value of trust is derived
from a reduction in risk of opportunistic behaviour on the part of ones exchange partner
thus reducing the costs of the relationship (Williamson, 1993). Further, when someone is
trusted, others are more willing to commit (Das and Teng, 1998; Leana and Van Buren,
1999; Morgan and Hunt, 1994). Through the development of trust in the relationship,
repetitive transaction sequences occur, thereby reducing transaction costs.
Trust extends beyond dyadic relations via generalization through affiliation and reputation
(Leana and Van Buren, 1999). Putnam (1993) argues that trust can reside at the generalized
level via the development and adherence to generally accepted norms and behaviours. Thus,
an individual or firm that adheres to the generally accepted norms and behaviours embedded
within set social relations can be trusted even though a member joining the firms associations
does not have personal knowledge of, or interaction with, the firm.
The dimensions of associability and trust are both attributes of the group as well as
the individual. Therefore, social capital can be conceptualized as an attribute of a
collective, as well as the sum of the individual relations. Leana and Van Buren (1999)
argue that acts that enhance individual social capital benefit the collective directly and
the individual indirectly, thus tying individual level social capital to team and firm level
capital.
Political capital viewed in the context of GVT competency
The concept of political capital relates to the capacity of GVT members to develop
political skill during their global assignments. The dimensions of political capital
include: (1) reputational capital (i.e. the GVT members that are known in the global
network as having the political skill for getting things done expediently); and
(2) representative capital (i.e. reflecting the constituent support and/or legitimacy the
GVT members may be granted for discretionary initiatives) (Lopez, 2002). Political
capital is not the same as the social grease attributed to social capital but is a capacity
that rests among some GVT members to exhibit leadership in removing co-operative
barriers and build political goodwill by creating a shared team-first mentality.
The six leadership behaviours of GVT members that can influence the formation of
political capital are:
. social approximation: the degree of interaction synchronicity between the leader and
those in the GVT and the organization with whom the leader has developed political
capital;
. level/type of interaction: access to the leader and the type of interaction (i.e. face-toface, electronic or other) between the leader and GVT members;

1590 The International Journal of Human Resource Management

. scope and reach: the breadth of the network of members who perceive the leader as
having political capital;
. dispersion of knowledge: the knowledge level within the leaders political network;
. durability: the leaders lasting or residual capacity of political capital; and
. degree of formality: the degree to which the leaders political capital is legitimized in
the GVT and in the organization via position or formal authority.
Therefore, it is important to recognize these individual behaviours when attempting to
formalize development programmes for global leaders and augment political capital at
the firm level.
Political capital of GVT members, accumulated in global relationships internally as
well as externally to the organization, can reduce the level of conflict and dysfunctional
consequences between the GVT and its interacting parties/entities within the global
environment. With an adequate level of political capital, others (i.e. peers, subordinates,
and even superiors) in the global network organization will tend to acquiesce to the
GVT leader who has demonstrated political skill (i.e. established bankable political
capital). Once political capital has been established for the GVT leader, it reflects his/her
reputation to represent diverse interests within the global organization.
However, given the lack of portability of some social capital and social networks
across national borders and organizational boundaries, GVT members political and
social ties may be of limited across some settings (Burt, 1992; Brass, 1995; Coleman,
1998). The composite effect of an alien setting and the temporary nature of GVTs
interactions can dramatically reduce the teams self-efficacy and the ability of the GVT
leader to effectively leverage his/her reputation (Bandura, 1982, 1995; Litt, 1988,
Wooldridge and Maddox, 1995). Therefore, organizational settings can reduce the
political effectiveness of the GVT leader, particularly in the short term (Ogbonna and
Harris, 2000; Reichers and Schneider, 1990; Schein, 1996).
In many settings, GVTs have to operate at the interface between two organizational
levels (i.e. headquarters and regional centres) (Florin, 1997; Gomes-Casseres, 1996;
Lorange and Roos, 1992). Thus, the political skill and capital of GVTs need to be attuned
to both the organizations levels and their distinct knowledge management initiatives
(Parkhe, 1993; Sagrero and Schrader, 1998). The internal cultures at the two levels may
sometimes be dramatically different, thus increasing the complexity of the political skill
set needed in the GVT. In addition, given the limited time to build social capital at these
two levels, GVTs often need to rely on the political skill or capital of their leaders to
effectively reach their goals. Otherwise, the absence of trust between the GVT members
and other managers in the network of organizations reduces the teams capabilities and
the overall effectiveness of the GVT (Aulakh et al., 1997; Inkpen and Currall, 1997;
Sarkar et al., 1997).
Another issue that must be taken into consideration when assessing/developing the
political capital of GVT members is the limitation on the teams decision-making
discretion in settings of foreign joint venture organizations. Moreover, when overseas
operations are jointly owned by a number of organizations (i.e. strategic alliances) from
different countries and, therefore, the limit of a GVT and its leader to exercise control
and/or influence is shaped by the relative ownership positions of the participants (Florin,
1997; Casmir, 1999). Because these confederations of organizations typically have very
complex operating cultures, they require specific political agility that can be exhibited by
few GVTs and their leaders (Harvey and Lusch, 1995). Therefore, the GVT leaders
political skill is critical in a shared ownership position of the various foreign
organizations (Hamel, 1991).

Harvey et al.: Global virtual teams 1591

Cross-cultural capital viewed in the context of GVT competency
Recently, there has been renewed interest in cross-cultural research in organizations
with respect to the impact of individual managers and team members on how to
effectively manage in a cross-cultural manner (Early and Ang, 2002; Earley and
Gibson, 2001; Earley and Mosakowski, 2000; Earley and Singh, 2000). The
key concept coming from this stream of research is cultural intelligence of individuals
(i.e. individual capability to adapt effectively to new cultural context and/or to be
able to effectively bridge issues and activities between two cultures) (Early and
Ang, 2002). Cross-cultural intelligence can influence the cultural capital of GVT
members in terms of the teams ability to implement knowledge initiatives in the global
marketplace.
Envisioning cross-cultural competence, Earley and Ang (2002) have identified three
interrelated facets of cultural intelligence, which are relevant for GVT members:
. cognitive dimension: self-awareness, external scanning, inductive reasoning and the
resulting cultural strategy developed by the individual;
. motivational dimension: self-efficacy, persistence, enhancement of self and/or face
and values; and
. behavioural dimension: repertoire (i.e. past cross-cultural experiences), practice or
level of interaction cross-culturally, habits (i.e. culturally related reading, study,
and knowledge development), and mimicry of varying observable cultural
habits/nuisances.
Applying these facets or dimensions to cross-cultural intelligence, one can identify the
key resources needed by GVT members to build cross-cultural capital. This competence
is of importance because of the very nature of the GVTs on-going function, that being
interfacing and building cultural bridges between the global organization and its
internal and external constituents. The accumulated (cross) cultural capital allows
the GVT members to gather and interpret information and to enact response to the
multitude of cultures in which the team may interact. This cultural capital becomes an
important stock when the leaders of the GVT are attempting to have a strategic impact
on entities in the foreign country and the team must adapt to the cultural nuisances of
the local country (Kayworth and Leidner, 2002; Pauleen, 2003). While cross-cultural
capital may have a common foundation, the GVT members must develop and maintain
cultural competence in each of the unique environments that the GVT faces during its
various assignments.
Cross-cultural capital emanates from the composite cultural intelligences of GVT
members and their ability to store the capital for future use by the team. The teams
ability to discern the typical patterns from the cultural settings in which the GVT may
operate and the GVT members experience in addressing later similar situations can be
construed as a quick measure of cultural intelligence in a GVT context. In addition, the
teams self-efficacy determines its willingness (i.e. motivation) to effectively engage
in new cultures and process the novelty found in each culture (Earley and Ang, 2002).
The inherent motivation to succeed and reach the GVT goals provides the impetus for
the formation of cross-cultural capital. The repertory breadth and past experience thus
serve as the cross-cultural skill of the GVT to adapt to individual cultural
settings (Earley and Gibson, 2001; Gibson et al., 2000). In general, cross-cultural
capital grows in importance as the global organization becomes more dependent on
GVTs to open new frontiers of knowledge management as the web of organizations
relationships expands.

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Assessment programme for HR capital architecture of GVTs
It becomes imperative that human resource managers recognize that GVTs are a unique
organizational configuration and to have them function effectively, various types of
capital must be generated and then built over time. The process for developing and
monitoring the successful development/maintenance capital in GVTs is outlined in this
section (see Figure 3).
Establishment of GVT capital assessment process
The initial stage in the assessment process for monitoring capital in GVT is to formalize the
process and to institutionalize it, so that it becomes a standard operating procedure (SOP).
This stage enables management to identify the basic infrastructure, resources and timetable
of the assessment process. The infrastructure entails detailing who is going to conduct the
process, when the process is going to be evaluated and a full delineation of the precise steps
to be taken in each stage of the assessment process.
The resources are the managers who will be involved as well as the cost of collecting
the information to make a clear assessment of the condition of capital in each GVT. It is
important to note that there will/could be a number of GVTs in a company that may have
different stocks of capital. The next step is to determine who is going to conduct the
assessment (to be discussed in more detail in stage two of the assessment process) and
what training/background the assessment group needs. Ideally, the assessment group
should match the importance/complexity/diversity of the types of GVTs. The last step in
this stage of the assessment process is to have a standardized set of milestones that are

Figure 3 Step-by-step GVT capital assessment

Harvey et al.: Global virtual teams 1593

agreed upon by the top management of the organization to report the information related
to the capital maintained in each GVT.
Establishment of monitoring assessment team
In this stage, the number of assessment group members is determined and the diversity
desired on the assessment group identified. The number of group members is contingent
to a degree on the number of GVTs that the company is using in its knowledge
management initiatives. The complexity of the assessment process is compounded by the
number and diversity of the GVTs. In addition, the functional expertise and experience in
the measurement of intangible assets, such as GVT capital, is ultimately a determining
factor in the size of the assessment team. Therefore, it is envisioned that the group
assessing the GVT capital will have to incorporate at times more ad hoc members to
augment professional skills needed in the assessment group.
The issue of additional skills needed in the assessment group should be addressed once
the demands for the level of expertise and experience are determined. However, it is
imperative to have a diverse set of auditing skills represented on the assessment group.
The domains of specific expertise would include: accounting, logistics and legal areas.
In sum, the skill set and experience should be the driving factors in the selection of the
assessment team members.
Establishing of effective monitoring metrics for GVT capital
Developing an appropriate set of measurements for monitoring GVT capital will require
extensive knowledge of the GVT and the assessment of intangible assets. The metrics should
be based upon the following principles relative to the capital within each GVT: (1) imitability
(i.e. the difficulty of competitors to duplicate the capital of an organizations GVT) increases
the sustainability of the income stream gained from the capital; (2) durability, the expected
resource life of the capital, its length of usefulness to the GVT; (3) appropriability, the flow of
value from the capital held in the GVT; (4) substitutability, uniqueness of the capital to sustain
value with key global stakeholders; and (5) superiority, relative value of the capital source
among other assets of the GVT (Collins and Montgomery, 1995; Harvey and Lusch, 1995).
There are two primary dimensions of GVT capital measurement. First is the value
assignment aspect, which reflects the need to assign value to GVT capitals and their
potential impact/benefits on the performance of the GVT. Second would be to determine
what causes value of the capital and how much value is derived from each of the capitals
contained in the GVT. Given these two considerations it is possible to start developing
the specific metrics for each type of GVT capital.
There appears to be no shortage of metrics to be used to measure knowledge and/or
intellectual capital that could be converted to be used in the measurement of GVT
capital (Barsky and Marchant, 2000; Bontis et al., 1999; Boudreau, 1991, 1996, 2002;
Low and Seisfeld, 1998; Roos and Von Krogh, 1996). Two metrics that appear to be
adaptable to measuring the GVT capital stocks are: (1) economics value added (EVA)
can provide a fundamental GTV performance measure which is computed by the spread
between the return on capital and the cost of capital, and multiplying by the capital
outstanding (i.e. the value of the capital the pervious year) at the beginning of the year;
and (2) market value added (MVA), the difference between a GTV market value of
capital and the capital that was contained in the GVT when operationalized. MVA is the
measure of the value that the GVT has created in excess of the tangible resources already
committed to the team (Stewart, 1997a, 1997b). If the MVA is positive, it suggests that
superior returns on existing GVT capital are being earned (Harvey and Lusch, 1997).

1594 The International Journal of Human Resource Management

Developing contingency strategies for protecting GVT capital
If not formally attended to by the GVT, the capital stock of the team can be depleted.
Therefore, a capital security programme/plan must be instituted to project the intangible
core of capital in the GVT. It is easy to ignore the security of this fragile intangible
capital because: (1) traditional lack of attention by corporate control/auditing personnel
(i.e. lacks GAAP accounting value); (2) historic difficulty in establishing monetary value
of intangible assets like GVT capital; (3) frequently, a lack of formal monitoring/control
mechanism in GVT teams or foreign subsidiaries, for that matter, to account for
intangible assets; (4) intangible assets such as GVT capital are not germane to
management appraisal and compensation; and (5) when capital is depleted or lost there is
no immediate economic impact (i.e. loss of capital impacts the GVT over time due to
lack of team effectiveness) (Harvey and Lusch, 1997).
There are four elements in developing a security programme to protect capital stocks
in GVT. First, identification of the various capital stocks (levels) and their importance to
the GVT accomplishing its goals/strategies. Second, the location (i.e. which team
members possess the capital that is accumulated into the team level) of the capital in the
team. Third, a security posture for the GVT team needs to be developed, that being either
proactive or reactive to attacks (or potential attacks) on the capital of the team. Fourth, an
assessment is to be performed relative to the previous attempts to protect capital stocks
from various threats. The protection of GVT capital will need to be a co-ordinated effort
using multiple prevention means.
Strategic development of means to build/maintain GVT capital
Protection of GVT capital provides the team with a means to account for existing capital
but does not address the means to build the various capitals in the GVT. Proactive
strategies for developing the stock of GVT will need to be developed. Each of the
strategies will need to be fashioned to the particular capital stock and the capabilities of
the members of the GVT. Given the constraints of this research effort it is not possible to
develop the logic for the building of GVT capital but team members should be made
aware of the need for not only monitoring but also building GVT capital.
Monitoring and auditing GVT capital over time
The final step in the capital assessment process is to institutionalize the need for monitoring
and accounting for the various capitals contained in the GVT. This removes the tendency for
management of the GVT to take its capital stocks for granted. In addition, capital is
transformed into a team asset and not just a human resource characteristic. This distinction is
very important in that managers come and go (i.e. ergo attributed capital to individual
managers who be mobile and attributed to the manager) but the GVT must maintain a
reservoir of capital within the GVT. Therefore, parallel sources of critical capital must be
identified and/or built to maintain the capabilities and competencies of the team as a whole.
In addition, the bundling of resources into complexes of related capital should also be
undertaken to elevate the capital to a team resource and help improve the performance of the
GVT.
Conclusion
As the global environment becomes more hyper-competitive, many organizations will
have to develop teamwork-grounded business models in order to address the new
competitive landscape (Bettis and Hitt, 1995). Such performance landscape, replete in

Harvey et al.: Global virtual teams 1595

disruptive technological advancements, has lead to the rise of innovation-based
competition. The complexity and dynamism of the new economy means organizations
need innovative ways to cultivate and manage human and technological resources.
In particular, the growing importance of global virtual teamwork illuminates the need for
the assessment of the HR capital architecture within the organization to allow the firm to
renew and reconfigure its core competencies within the competitive flux of the global
arena. In order to stay innovative and ahead of competition, global organizations must
pursue a strategic vision addressing the dynamic and complex issues of global virtual
teamwork by tapping those HR capital bases that are vital in maintaining or creating a
competitive heterogeneity.
Global organizations increasingly pursue the implementation of GVTs as a strategic
tool in the hyper-competitive environment, since these teams have the potential to
increase the speed and efficiency in the creation and transfer of knowledge in various
knowledge management initiatives pursued by the headquarters and regional centres of a
global organization (Kogut and Zander, 1996). The contribution of a GVT to the
relationship between organizational knowledge and its competitive advantage lies in its
ability to integrate knowledge in a productive manner (Nahapiet and Ghoshal, 1998).
Ultimately, the success of a global organization will be predicated on its ability to
develop rich HR capital bases across the network of its GVTs and their members.
The design of HR capital architecture is needed to expedite the stock and flow of
knowledge as a resource, in a manner that is conducive to relating the effectiveness of to
the intellectual capital base of the firm. Such HR capital architecture should enable GVTs
to function as knowledge agents allowing the global organization to renew and
reconfigure its dynamic capabilities, while enriching its overall intellectual capital base.
In terms of the role of GVTs within the relationship between the HR capital architecture
and the intellectual capital of the firm, it is critical to maintain and enhance the
heterogeneity of human, social, political and cross-cultural capital components through a
continuous assessment and reassessment programme.
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