Leadership Styles in Virtual Teams

Master Thesis Daan Kleijnen

Master Organization Studies — Tilburg University

Details of student:

Name: Daan Kleijnen

ANR: 942220

Name of the Supervisor(s):

Name supervisor 1: Marc Vermeulen & Kirsten de Ries

Name supervisor 2: Jeroen de Jong

Name MTO evaluator: Guy Moors

Title of the Master Thesis Circle: Leadership and coordination within virtual teams
Title of the Thesis: Leadership Styles In Virtual Teams
Abstract

This research examines the relation between

leadership style and team effectiveness. Team
effectiveness falls apart in this research in
satisfaction and performance of the team.
Different elements of complexity: geographic
distribution, national diversity and the life cycle of
the virtual team of a virtual team will be tested as a
moderator of this relation on this relation will be
examined. A cross-sectional survey was conducted
among virtual teams of two multinational
companies. This research will give an insight in the
way in which different leadership styles affect the
effectiveness of a virtual team. The effect of
different complexity elements on this relation are
also an important part of this research. The results
show that the different leadership styles included
in this research correlate with different aspects of

the effectiveness of a team.

Preface

Why are some teams more effective than others? What happens when team members are
not co
located anymore but spread over the world? What is the role and the impact of a
leader in such
teams? These questions were running through my mind when | was looking for a topic
for my
master thesis. The report that lies in front of you tries to answer these questions
to a greater or
lesser extent. Networks and leadership have attracted my attention during my study
Organisation
Studies at Tilburg University. The creation and maintenance of relations is a topic
that is often
described in network literature and distance leadership has to deal with this topic
as well. Unless the
data gathering was a real challenge | can say with certainty that writing this
thesis was a great

learning experience.

Finally, | would like to thank several persons who were involved in writing this
thesis. | would like to
start by thanking my supervisors, Joris de Rooij, who unfortunately had to leave
after finishing my
Individual Research Proposal (IRP), Marc Vermeulen who replaced Joris de Rooij and
Kirsten de Ries
for their guidance and the profound feedback throughout the whole process.
Furthermore | would
like to thank Jeroen de Jong for his comments and feedback. | would like my sister
Elvier for her
support during my study and the reviewing of this research, my girlfriend for her
support during the
last two years and last but certainly not least | would like to thank my parents
for their infinite

support and the opportunity they gave me to get everything out of student life.

Daan Kleijnen
Contents

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2 Theoretical Framework
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3.5.2 Transactional Leadership
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3.5.3 Team Effectiveness 2.
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3.6 Research quality indicators

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4.1 Team level analysis

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4.1.1 Intra Class Correlations
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4.2.1 Independent Samples t-test
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4.2.2 Correlation analysis on the individual level
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4.2.3 Hierarchical regression analyses on the individual level
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Appendix A: Operationalization
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Appendix B: QUESTIONMIAILE
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Appendix C: Introduction letter team l@aders
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Appendix D: The Haversine Formula

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1 Introduction

This introduction provides the context of the research and explains the research
problem. Besides
that the research question and the aim of this research will be discussed. Finally
the structure of this
thesis will be presented.

1.1 Research context

Virtual teams become more and more common in organizations (Martins, Gilson &
Maynard, 2004;
Bell & Kozlowski, 2002). Furst, Reeves, Rosen and Blackburn (2004) mention that in
the United
States, around 8.4 million employees work in virtual teams or groups. Due to rapid
globalization of
organizations, partnerships, and joint ventures these numbers are likely to grow in
the coming
decennia (Martins et al. 2004). The definition of virtual teams has been subject of
much debate over
the last decades. There are scholars who consider geographic dispersion as the core
characteristic
(Bell & Kozlowski, 2002), where others consider mediated communication as the core
of virtual
teams (Dubé & Paré, 2004). The definition that will be used in this thesis, is the
following: “Virtual
teams are teams of which members are geographically disributed and are therefore
working
predominantly via mediated communication means on an interdependent task and in
realizing a

joint goal (De Rooij, 2009 p.65).”

1.2 Research problem

As stated in prior research, leadership plays an important role in increasing team

effectiveness ina
virtual team (Kayworth & Leidner, 2000). Virtual teams have several advantages over
collocated
teams like a reduction of time and travel expenses, easier access to rare expertise
that is dispersed
over the world, and the opportunity to assign individuals to more than one team at
the same time
(Cascio & Shurygailo, 2002). On the other hand virtual team leaders experience
difficulties with the
coordination of those teams. Virtual teams work under special circumstances that
make
collaboration far more complex than a collocated team (Martins et al., 2004;
Kayworth & Leidner,
2002). Few studies try to combine a number of elements of complexity (Zigurs, 2003;
Schweitzer &
Duxbury, 2010) but most studies focus on the influence of one element of complexity
on an
outcome or process of a team. This research will, in contrast to most literature,
measure three
elements of complexity simultaneously and will focus on the effects of these
elements on the
relation between leadership style and team effectiveness. The elements of
complexity that are part
of this research are geographic distribution; how are the team members and the team
leader
distributed around the word, national diversity; how many different nationalities
are present in the
team, and the life cycle of the team; how long is the team expected to exist. These
are adapted from

Dubé & Paré, 2004; Bell & Kozlowski, 2002 and De Rooij, 2009.
1.3 Research Question

The aim of this research is to gain insight in the relation between leadership
styles and team
effectiveness in virtual teams. In the next chapters a number of characteristics of
virtual teams will
be introduced which increase the complexity of a virtual team compared to a
collocated team. This
research examines the effects of these elements of complexity on the relation
between leadership
styles and team effectiveness. Therefore this research attempts to answer the
following research

question:

“To what extent are transformational and transactional leadership styles related to
team
effectiveness of virtual teams and how is this relation moderated by elements of
complexity of a

virtual team ?”

1.4 Relevance
The last ten years the literature regarding virtual teams has grown extensively. As
mentioned before,

leadership has been an important factor for enhancing team effectiveness. Scholars
in this field state
that our knowledge about virtual teams and especially leadership in virtual teams
is still limited.
Therefore more research is required to better understand leadership within the
context of virtual
teams (Zigurs, 2003; Kahai et al., 2007). Most research in this field focuses on
one element of
complexity and the influence on team effectiveness. Saunders & Ahuja (2006) focus
only on the life
cycle of team and others focus solely on the use of mediated communication (Powell
et a/., 2006;
Kirkman et al,. 2004; Corbitt et a/., 2004; Mihhailova, 2009). In this research the
relation between
transformational and transactional leadership and team effectiveness will be
examined as well as
the moderating effects of three elements of complexity on this relation. This
combination of
relations will provide the audience with insight in the effectiveness of different
leadership styles in

virtual teams.

This theoretical relevance can be translated into some recommendations about

improving the
functioning of virtual teams in organizations. This will lead to the practical
relevance that these
recommendations can help managers to increase the effectiveness of the virtual
teams they are

leading.
1.5 Structure
This research consists of six chapters. In the next chapter the theoretical
foundation of this research

will be presented. In chapter three the methods used in this research will be
presented. Chapter four
starts with the empirical part of this research and will present the results of the
survey that was held
among members of virtual teams of two multi-national companies. In chapter five the
results will be

discussed and the final chapter will present the conclusions of this research.

: Theoretical
Introduction
framework
2 Theoretical Framework

The next chapter gives an overview of the current state of the literature about the
different variables
that are included in this research. First a general introduction about virtual
teams will be given.
After that team effectiveness and leadership styles will be elaborated on and the
theoretical

background of the moderating variables will be explained.

2.1 Virtual Teams

Virtual teams are defined as “teams whose members use technology to varying degrees
in working

across locational, temporal, and relational boundaries to accomplish an

interdependent task”
(Martins et al., 2004, p.808). Technology mediated communication is an important
factor for virtual
teams. The freedom of selecting team members is an advantage of working in virtual
teams. The
increased time, coordination and costs that are related to managing a
geographically dispersed team
have to be considered when managing a virtual team (Martins et al., 2004). Dube &
Robey (2008)
mention the challenges of working in or with a virtual team. Working across time
zones, the national
and organizational culture differences and differences in the use of technology are
some of the
challenges a virtual team faces. Traditional definitions of virtual teams have
focused on the contrast
between virtual and face-to-face teams, and thus particularly paying attention to
the physical
distance and technology mediated interaction. However, these definitions were used
in laboratory
research observing student teams. Nowadays research focus has shifted toward
organizational

settings, with real virtual teams.

The next paragraph will elaborate on the developments that have led to the
emergence and growth
of virtual teams in organizations. The developments that will be discussed are ICT
developments and

globalization, cost reduction and flexibility.

First, the most important facilitator of the emergence of virtual teams: ICT
developments and
globalization. Internet created an infrastructure that enabled many organizations
to launch
distributed teams (Duarte & Snyder, 2006; Hinds & Kiesler, 2002). The enormous
increase in
organizations and people who are connected to the internet combined with the
increasing
bandwidth and developments in communication tools made distant collaboration
available on a
large scale. Virtual teams can perform increasingly complex work over distance by
using
communication tools such as videoconferencing, electronic whiteboards and groupware
(Andriessen, 2002). The increasing possibilities mentioned above have made the
world “smaller”.
The result of this is a sharp increase in the international trade between Western
and upcoming
economies. Besides that a growing number of organizations work together with
supplier and

customer organizations worldwide. (De Rooij, 2009).

10
Cost reduction is an important theme in most organizations. Costs of operation
increased with the
earlier mentioned globalization due to higher travel expenses and coordination
costs. Coordination
costs include the costs for the use of mediated communication tools like video
conferencing and
regular telephone costs. On the other hand the use of technology to decrease the
need of face-to-
face communication decreases these travel expenses. Virtual teams enable
organizations to reduce
cost by off shoring, i.e. moving activities to a different continent, where labor
costs are lower.
Outsourcing is another way in which organizations can reduce costs. Outsourcing,
this means that
some activities will take place outside the boundaries of the organization.
Examples of activities that
are outsourced by organizations are payroll, administration or IT support. To
coordinate the

activities at off shoring or outsourcing locations a virtual team is often created.

Although some of these developments are not recent, they stimulate the interaction
between
organizations and teams within organizations and the interdependence of work around
the world.
Work across distance will become more and more important in the future. Therefore
it is important

to gain insight in the way virtual teams can be managed effectively.

2.2 Team Effectiveness

Leadership influences the level of effectiveness of virtual teams (Huang, Jestice
and Kahai, 2010).

Scholars found a positive relationship between planning and social leadership

skills and team
performance, which is a part of the variable team effectiveness (Marta, Leritz and
Mumford, 2005;
Mumford, et al., 2007; Mumford, et al., 2000). Performance and satisfaction are two
commonly used
concepts to measure the effectiveness of a virtual team (Lurey & Raisinghani, 2001;
Lin, Standing &
Liu, 2008). Powel, Piccoli and Ives (2004, p362) define team effectiveness as
“group-produced
outputs and the consequences a group has for its members”. The first part of this
definition “group-
produced outputs” refers to the performance dimension and the second part “the
consequences a
group has for its member” refers to the satisfaction dimension. Performance can be
described as
the extent to which the output of a team meets the standards set by the
organization or the team
leader (Lurey & Raisinghani, 2001). Satisfaction refers to the perception of
decision and agreements
with the earlier mentioned output (Chidambaram, 1996). These two concepts together
determine

the team effectiveness as a whole.

11
2.3 Leadership Style
Leadership is defined by Avolio, Kahai and Dodge (2001, p.617) as follows: “a
social influence

process mediated by advanced information technologies to produce a change in

attitudes, feelings,
thinking, behavior, and/or performance with individuals, groups, and/or
organizations”. In the field
of research concerning leadership of virtual teams a widely accepted
conceptualization of leadership
style is the distinction between transformational and transactional leadership. The
leadership style is
seen as an important determinant for successful leadership, which will lead to
positive team
outcomes like high team effectiveness. (De Rooij, 2009; Hambley et al., 2007). The
discussion that
rises is whether these leadership styles are conflicting approaches or
complementary approaches. In
this thesis the line of Avolio and Bass (2004) and De Rooij (2009) will be followed
which implies that
transactional and transformational leadership are considered to be complementary
approaches for

leadership in virtual teams.

2.3.1 Transactional Leadership

Transactional leadership describes the leadership style in which a leader enables

his team to be
effective using the following three aspects: first creating clear structures for
subordinates, second
clarifying what is expected of them and third rewarding them accordingly. Three
behaviors defined

by Bass and Avolio (1990) are used by transactional leaders.

° Contingent reward. These leaders give rewards for performance and effort and
recognize accomplishments.

° Management by exception active (MBEA). These leaders monitors the processes of

his
team and acts when problems occur to make sure that the team produces what is
expected of them.

° Management by exception passive (MBEP). These leaders do not intervene in the

team

process until non-compliance of standards occurs.

Transactional leaders motivate and monitor their team members in order to get the
most out of

them and make the team perform well (De Rooij, 2009).

Leaders who perform a transactional leadership style create clear structures and
clarify what is
expected of the team and by rewarding them accordingly. As mentioned before
transactional
leaders enable their team to be effective by using three transactional leadership
behaviors
Contingent reward, management by exception active and management by exception
passive. By
displaying these behaviors leaders reinforce their team members to contribute to
their team in a
way that the team effectiveness will be improved. The transactional leadership
style is therefore

expected to be positively associated with team effectiveness. This leads to the

following hypothesis.

12
Hypothesis 1: The transactional leadership style in virtual teams is positively
related with team

effectiveness.

This hypothesis implies that the higher a leader scores on the transactional
leadership

measurements, the higher the effectiveness of the virtual team will be.

2.3.2 Transformational Leadership

Transformational leaders apply a different approach when comparing to transactional

leaders.
Where transactional leaders monitor and manage structures and transactions,
transformational
leaders help their team members to see what lies ahead and display them a clear
vision and mission
(De Rooij, 2009). A transformational leader is a coach to his team members on an
individual level
and will encourage all of his team members to reflect on their own actions in order
to grow
personally (Avolio & Bass, 2004). This leadership style is expected to motivate the
team members
individually and therefore can generate a positive effect on team effectiveness.
There are four

behaviors that are used by transformational leaders as described by Bass, Avolio,

Jung and Berson

(2003).

e Idealized influence. These leaders consider team members’ needs over their own
needs,
share risks with team members and are consistent in conduct with underlying ethics,
principles and values.

° Inspirational motivation. These leaders motivate and stimulate a positive team

spirit.
With optimism, enthusiasm and encouragement are future visions presented to
stimulate the team members.

° Intellectual stimulation. These leaders stimulate members to be innovative and

creative.
They question assumptions and like new approaches to old situations. Team members
are actively involved in new ideas and finding solutions.

° Individualized consideration. Next to the goal of the team this leaders also
invest in the

individual development of their team members. These leaders stimulate team members
to develop to successively higher levels of potential. Individual approaches are
common

to these leaders.

Transformational leaders show a high degree of power, integrity and concern for
their team
members. They show their team members a compelling vision and a clear mission. They
communicate high expectations and are confident that goals will be achieved by the
team. High
performance of the team is facilitated by the team leader by challenging the team
members to

approach problems from different angles and to propose solutions to problems. These
behaviors,

13
and therefore the transformational leadership style, are expected to have a
positive effect on the

effectiveness of a virtual team. This leads to the following hypothesis:

Hypothesis 2: The transformational leadership style in virtual teams is positively

related with team

effectiveness.

This hypothesis implies that the higher a leader scores on the transformational
leadership

measurements the higher the effectiveness of the virtual team will be.

2.4 Elements of Complexity

As mentioned in the introductory chapter this research will focus on the
measurement of the

influence of three elements of complexity on the relation between leadership style

and team
effectiveness simultaneously. They are measured individually to explore the
moderating effect of
these elements on the main relation of this research and the correlation between
them. The three
elements that are included in this research are chosen based on the discussion
about what elements
make a virtual team actually virtual. As mentioned before some researchers took
geographic
dispersion and mediated communication as the core characteristic (Bell & Kozlowski,
2002; Dubé &
Paré, 2004). Geographic distribution is therefore included as one of the elements
of complexity.
Other research focuses solely on global distributed teams (Maznevski & Chudoba,
2000), thereby
adding differences in nationality to the definition of such teams. This connects
with the second
element of complexity included in this research; national diversity. The team life
cycle element of
complexity is added following the reasoning of De Rooij (2009). He states that the
earlier mentioned
elements can be influenced by the life cycle of a team and that the effect of a
leadership style often

needs a certain amount of time to evolve.

First the way in which these elements of complexity moderate the relation between
leadership style

and team effectiveness will be explained. After that the different elements will be
further explained.

2.4.1 The moderating effect of the elements of complexity.

There are two strong mechanisms that come forward when examining the negative
effects of
elements of complexity on team effectiveness. The first mechanism is about relation
building in
virtual teams. Relation building has a positive effect on team effectiveness in
collocated teams
because these relations connect individuals to their tasks and each other (Cramton
& Webber,
2005). This is different for virtual teams where it is more difficult to develop a
sense of loyalty and
commitment to the team when the team members are separated. (Powell, A., Galvin, J.
& Piccoli, G.

(2006). When this relation building component is difficult to achieve or even

absent in a team this

14
will negatively affect team effectiveness (Cramton & Webber, 2005; Maznevski &
Chudoba, 2000;

Powell et al., 2006); Lurey & Raisinghani, 2001).

Nonetheless trust building is strongly connected to building relationships. This is

the second
mechanism that is often mentioned in the literature about virtual teams. The
characteristics and
effects on team effectiveness are different. As mentioned by Jarvenpaa & Leidner
(1999, p.809):”
Communication that rallies around the project and task appears to be necessary to
maintain trust.
Social communication that complements rather than substitutes for task
communication may
strengthen trust.” This quote indicates that communication which is not focused on
the task or the
organization is important in trust building. This kind of communication is often
absent in virtual
teams. On the other hand there are scholars who also mention the lack of trust
building in virtual
teams but emphasize that this lack of trust does not result in less team
effectiveness (Corbitt et al.,
2004; Aubert & Kelsey, 2003). One cannot say that the lack of trust has a positive
effect on team
effectiveness but at least this relation does not differ from collocated teams in
these researches.
The two mechanisms mentioned above are strongly connected with the elements of
complexity that
are mentioned above and will be further explained in the following paragraphs.
Since relation and
trust building appears to be an important predictor in the effectiveness of a
virtual team the effect
of the leadership styles is likely to have a smaller effect on team effectiveness
when these
complexity elements are strongly present. In other words the elements of complexity
will negatively

moderate the relation between leadership style and team effectiveness.

2.4.2 Geographic Distribution

As mentioned by De Rooij (2009) there can be enormous differences between virtual

teams
concerning geographic distribution. The amount of geographic distribution within a
virtual team
influences the likelihood of face-to-face communication. When a team consisting of
6 members is
distributed around the globe, all 6 working at a different location, the likelihood
of face-to-face
communication is considerably low. To capture the geographic distribution as well
as the number of
team members per location, two of the dimensions defined by O’Leary and Cummings
(2007) are
used in this research. These dimensions are spatial and configurational dispersion.
To take all these
aspects into account, this element of complexity consists of the amount of
geographic distance on
the one hand and the number of locations and member distribution on the other hand.
(Dubé and

Paré, 2004; Bell and Kozlowski, 2002; O’leary and Cummings, 2007).

O’Leary and Cummings (2007) developed a Spatial Distance Index (SDI). The SDI is a
measure that
indicates the geographic distance between the locations of a virtual team. Besides
that it also takes

into account the number of team members per location controlling for the overall
team size. This is

15
an important factor because the increase of geographic distance decreases the
likelihood of
spontaneous (face-to-face) communication (O’ leary and Cummings, 2007). A third
important factor
of geographic distribution is the distribution of the team members among the
different locations. A
collocated team that works together with a virtual consultant for a given problem
is fundamentally

different from a virtual team of which all members are equally distributed over
four locations.

The two mechanisms mentioned in the previous paragraph are strongly applicable to
the concept of
geographic distribution. Geographic distribution reduces the opportunities to build
trust and
relations because team members as well as team leaders are not collocated. Face-to-
face contact is
often used in trust- and relation building. Besides that are the informal talks
important for relation
building among the team members. As described in the previous paragraph, this can
lead to a
diminished effect of leadership style on the effectiveness of a team. Therefore the
following

hypothesis can be stated:

Hypothesis 3: The relation between (a) transactional and (b) transformational

leadership behavior
and team effectiveness will be negatively moderated by the amount of geographic
distribution

within a virtual team.

This means that the higher distance between members of a virtual team and the more
distributed
they are among different locations the smaller the effect of leadership style on
team effectiveness

will be.

2.4.3 National Diversity

An important part of the complexity of virtual teams is rooted in the differences

in the cultural and
national background of the team members. The role of culture within virtual teams
and the effects
on virtual team outcomes are under exposed in the literature (Connaughton &
Shuffler, 2007).
Cultural diversity can be defined in numerous ways. The extensive literature review
of Connaughton
& Shuffler (2007) discerns two major streams in the literature. One follows the
dimensions of
Hofstede (1980) and then especially the individualism-collectivism dimension. The
other focuses
more on the diversity of nationalities within a team. This research will follow the
second stream by
emphasizing the heterogeneity of virtual team with respect to nationality. Paul,
Samarah and
Seetharaman (2005) included nationality in their research to examine team
diversity. They found
that teams with greater national diversity tend to have a more collaborative
conflict management
style and a lot of in-depth discussions were needed before decisions were made.
This was a result of
the time it took to understand all of the diverse contributing perspectives.
National diversity actually

adds another element to the complexity of working geographical distributed. Leading

and

16
collaborating with different nationalities while working geographical distributed,
is expected to
results in a diminished effect of the leadership style on team effectiveness.
Therefore the following

hypothesis can be stated:

Hypothesis 4: The relation between (a) transactional and (b) transformational

leadership behavior
and team effectiveness will be negatively moderated by the level of national
diversity within a

virtual team.

This means that the more different nationalities are present in a virtual team the
smaller the effect

of leadership style on team effectiveness will be.

2.4.4 Team Life Cycle

The team life cycle is included as a moderating variable because the life cycle of
a team can influence

the relation between a leadership style and team effectiveness.

The team life cycle of a virtual team discriminates between continuous and discrete
life cycles. A
discrete life cycle is a project with a clear beginning and a clear end. Teams with
a continuous life
cycle work on a continuous task. A team develops over time; it often goes through
stages like
orientation, norm development, strategy choice and execution (De Rooij, 2009). In
these stages a
number of group maintaining activities take place. Virtual teams are more focused
on the task then
on group maintaining activities (Bell & Kozlowski, 2002). Since virtual teams more
often work on
discrete tasks there is less time for group maintaining activities. Especially the
informal
communication is often absent in virtual teams with a discrete life cycle, this can
affect the trust and
cohesion development (Dubé & Paré, 2004). This can lead through the mechanisms
explained earlier
in this research to a lower effect of leadership style on team effectiveness.
Therefore the following

hypothesis can be stated:

Hypothesis 5: The relation between (a) transactional and (b) transformational

leadership behavior

and team effectiveness will be negatively moderated by the length of a virtual

teams’ life cycle.

This implies that the shorter the period is a virtual team is expected to exist the
smaller the effect of

leadership style on team effectiveness will be.

17
2.5 Overview of elements of complexity

Element of complexity Description Degree of Complexity

Low <——> High

1. Geographic Distribution The amount of geographic distance

,number of locations and member
distribution

2. Team Member National Diversity [RMNeaaWlelime) Relics

Nationalities present in the team Low High

emt MACRO (0 (1 Team life cycle Continuous Discrete

Table 1 Elements of complexity (adapted from De Rooij, 2009)

2.6 Conceptual Model

The conceptual model provided below shows the relation that are subject of this
research. The main

relation between leadership style and team effectiveness and the moderating
variables are

presented.
Complexity
- Geographic Distribution
- Team member National Diversity
- Team Life Cycle
Leadership Style Team effectiveness
- Transformational >) Performance
- Transactional - Satisfaction

Figure 1: Conceptual model

18
3 Methodology

3.1 Research design

The research has a cross-sectional design and is of quantitative deductive nature,
it is performed at a

single point in time and tests presumed relations between the concepts of
attention. This design
gives insight in the presence and strength of the relations examined in this
research in a descriptive
way. Since the research field of virtual teams is relatively young, qualitative
research suits better in a
later stadium to examine the presumed relations in depth. In order to test the
hypotheses stated in
the previous chapter a questionnaire is used to gather the data. The unit of
analysis is the virtual
team to the extent where this is possible. If the data is not suitable for team
level analysis, the
individual team member will become the unit of analysis. In the results section
this will be further
explained. The unit of observation is the individual virtual team member who
participated in this

research.

3.2 Data collection

For the selection of the respondents the method of convenience sampling is used,
which means that

the sample of the study depends on the accessibility of the researcher (Bryman,
2008). For each
organization a personal contact of the researchers introduced us to the
organization. By using the
networks of these contact persons the data is collected in both organizations. In
order to include a

sufficient amount of virtual teams two organizations are involved in this research.

Data were collected from members of 27 virtual teams, who worked for one of the two
organizations involved in this research. Unfortunately the response rate of some of
the teams was
considerably low. In 8 teams only 1 team member responded to the questionnaire. The
minimum
number of respondents from a team to include the team in the team level analyses
was two.
Therefore only 19 teams are used for analysis on team level. The 8 respondents of a
team with only
one respondent were included in the analysis on the individual level. The teams in
this study are
involved with diverse activities, such as research on medical equipment, developing
new fabrics and
account management. Characteristics like size, member distribution, available
communication
technologies and the cultural backgrounds of team members were gathered from the
team leaders
and the team members using the questionnaire. There was variation in the level of
geographic
distribution of team members, the amount of team members at each location, and the
overall size of
teams which varied from 2 up to 17 team members. All teams were working
geographically
distributed but unfortunately not all team members from each team responded. The
team leaders
received a different questionnaire with the same items but questions wereformulated
differently.
The leadership scores are treated with caution. More details about this can be
found in the results

section

19
3.3 The Sample
A total of 27 leaders were contacted, of which 18 were willing to participate in
this study with their

teams, a response rate of 67%. Of a total of 138 team members involved in this
study, 74 team
members responded by filling out the on-line questionnaire, a response rate of 54%.

Team leaders invited their team members personally to participate in the study.
Participation was
voluntary and responses remained anonymous. 75% of the respondents were male, 63%
of the
respondents are based in the Netherlands. The remaining 27% is based in countries
around Europe,
The United States and Asia. The average team size in this study is 4,42 members
(only including

teams with two or more members).

Organization N (members) N (leaders) N(teams) Response rate Response rate

members (%) leaders (%)

Table 2 Sample Statistics

3.4 Characteristics of the organizations

DSM: “Royal DSM N.V. is a global science-based company active in health, nutrition
and materials.

DSM delivers innovative solutions that nourish, protect and improve performance in
global markets
such as food and dietary supplements, personal care, feed, pharmaceuticals, medical
devices,
automotive, paints, electrical and electronics, life protection, alternative energy
and bio-based
materials. DSM’s 22,000 employees deliver annual net sales of around 9 billion.“
(DSM Annual
Report, 2010). As DSM is an international high performance company, diversity is a
key driver of the
company, and is one of the fundamental values. At DSM, diversity is centered on
gender balance and
nationality, underpinned by a clear link to the company’s new strategy. The company
fosters a
stimulating environment in terms of inclusion of different behaviors and styles.
All DSM executives
and management levels have a critical leadership role to play here. Additionally, 9
% are women in
executive positions (DSM Annual Report, 2010). In total 16 teams with a designated
team leader
received the questionnaires. The teams had members within Europe, Asia and America.
However,

most of the respondents were from the Netherlands.

Organization X: The company is a global leader in medical technology. They provide

products to
medical professionals in more than 120 countries. Primary products include those
for heart and

vascular disease, diabetes, neurological disorders, and spinal conditions. The

company employs

20
38,000 people worldwide. Organization X has a diverse workforce reflecting the
diverse nature of
the company’s global marketplace, customers, and patients. In total 13 teams with a
designated
team leader received the questionnaires. The teams mostly had team members and —
leaders from
the Netherlands (49 % of the respondents) and US (29%), but there were also
participants from

Germany, Switzerland, France, Italy, Israel and Belgium.

3.5 Measurements
For this research only pre-existed measurements are used. This chapter explains the
different

measurements used in this research. The exact items used in this research can be
found in the

questionnaire which is included in appendix B.

3.5.1 Transformational Leadership

Transformational leadership is assessed with the English version of the Multifactor

Leadership
Questionnaire (MLQ, Avolio & Bass, 2004). The full MLQ contains 45 items. For
transformational
leadership five constructs were used (1) intellectual stimulation; (2)
inspirational motivation; (3)
idealized influence attributed; (4) idealized influence behavior and (5)
individualized consideration.
These measures contained all twenty original items of the MLQ5X. These items are
not displayed
here or in appendices, because of copyright. The items are measured using a 5-point
Liker scale
ranging from ‘strongly disagree’ to ‘strongly agree’. These items were part of the
leader and the
member questionnaire. The data of the leaders are handled with care, this will be
elaborated on in

the results section of this research.

To determine the factor structure of transformational leadership, a confirmative

factor analysis was
performed. The analysis involved the 20 items measuring transformational
leadership. Where some
authors recommend a 10 to 1 ratio, this means ten cases for each item to be factor
analyzed
(Nunnally, 1978), others recommend a 5 to 1 ratio (Pallant, 2007). Despite the
limited amount of
respondents (n=92) a factor analysis is performed since the 5 to 1 ratio is
practically met. Based on
the analysis the five underlying constructs could not be distinguished and further
analysis (principal
components analysis with Oblimin rotation) showed that the 20 items of
transformational leadership
are strongly correlated and all load on 1 factor with a KMO of 0.783. KMO is the
Kaiser Meyer-Olkin
measure of sampling adequacy and ranges from 0 to 1, with .6 suggested as the
minimum value for a
good factor analysis (Tabachnick & Fidell, 2007). The scree-plot also suggested a
one factor solution.
Therefore, in line with an earlier study (Kearney, 2008) the 20 items of
transformational leadership
form the scale to measure transformational leadership. Cronbach’s alpha for this
scale is 0.875

(n=92).

21
3.5.2 Transactional Leadership

Transactional leadership is measured using 10 original items of the MLQ5X. The 10

items measure
three constructs of transactional leadership: (1) contingent reward; (2) management
by exception
active and (3) management by exception passive. Contingent reward (CR) and
management by
exception active (MBEA) consist of four items and management by exception passive
(MBEP) exists
of two items. All items are measured using a 5 point Likert scale ranging from
‘strongly disagree’ to
‘strongly agree’ and are part of the leader and the member questionnaire. As
mentioned before the

data of the leaders are handled with care.

For transactional leadership also a confirmative factor analysis was performed with
four items
measuring contingent reward, four items measuring management by exception active
and two items
measuring management by exception passive. Analysis with these 10 items resulted in
a 3 factor
solution. A principal components analysis with Oblimin rotation indicated a clear 3
factor solution
with a KMO of 0.762. The scree-plot suggested a three factor solution as well. The
three scales that
are used are MBEA (management by exception active), MBEP (management by exception
passive)
and CR (contingent reward). The Cronbach’s alphas which indicates the reliability
of the scales was
as follows; MBEA (0.832), MBEP (0,774), CR (0.624). The Cronbach’s alpha of the
Contingent Reward
scale is not sufficient, according to DeVellis (2003) it should be at least 0.70.

A reliability analysis of the three scales mentioned above indicated that the
reliability of a number of
items was not sufficient. The Corrected Item-Total correlation was low {< .30) for
the MBEP items
and two of the CR items (transactional_CR1 and transactional_CR4). A closer look at
the factor
analysis indicates that the MBEA items and two items of the CR scale are loading on
1 component.
The “corrected item-total correlation” and the “Cronbach’s Alpha if item deleted”
for the items of
MBEP and the two items of CR indicate that these items can be dropped for further
analysis. The
corrected item-total correlation is below .30 and the “Cronbach’s Alpha if item
deleted” is larger
than the initial Cronbach’s Alpha of the scale.

The items of MBEA and two items of CR (transactional_CR2 and transactional_CR3)

will be used as

one scale for transactional leadership in the analysis. Cronbach’s alpha for this
scale is 0,80.

3.5.3 Team Effectiveness

Two measurements are often used for the main components of team effectiveness, team
performance and team member satisfaction. This research also uses these two
components. The
items that have been used in the questionnaire are derived from Lurey and
Raisinghani (2001). In
their research these two measurements show a high correlation to each other which
confirms

validity of both indicators measuring effectiveness. Team performance has been

measured with four

22
items and member satisfaction with five items using a five point Likert scale
ranging from ‘strongly
disagree’ to ‘strongly agree’. A confirmative factor analysis was performed on all
9 items of team
effectiveness. The Varimax as well as the Oblimin rotation clearly indicate a two
factor solution
(KMO: 0.746). The scree-plot also indicates a two factor solution. The items of
satisfaction and the
items of performance each load on different components. These two scales will be
used in the

analysis.

Satisfaction

The initial Cronbach’s alpha for the satisfaction scale is 0.735. The item
Effectiveness_satisfS has a
“Cronbach’s alpha if item deleted” larger than the initial Cronbach’s alpha. The
interpretation of this
item (“In the future, | would be interested in participating in another virtual
team”) can be
ambiguous since it can be positive to work in a virtual team in the future but it
can also be
interpreted as a tendency of leaving the team you are working in. Because of this
ambiguous
interpretation and the high “Cronbachs’alpha if item deleted” score, this item will
be dropped for
further analyses, the scale for satisfaction will consist of 4 items. The
Cronbach’s alpha for this

adjusted scale is 0.757.

Performance

The initial Cronbach’s alpha for the performance scale is 0.777. The item
Effectiveness_perf4 has an
“alpha if item deleted” larger than the initial Cronbach’s alpha. The Corrected
Item total correlation
of this item is also relatively low (.385) and will therefore be dropped for
further analysis. The scale

for performance will consists of 3 items. The Cronbach’s alpha for the adjusted
scale is 0.800.

Initial Items dropped Final scale Cronbach’s alpha

ica) Items
1. Transformational Leadership
2. Transactional Leadership

Brera hy
3. Satisfaction

4. Performance
Table 3: Results of the factor analyses

3.5.4 Geographic Distribution

The variable for geographic distribution is calculated, this variable reflects the
amount of geographic
distribution of team members in miles, and also takes the number of team members
per location
into consideration while controlling for the overall team size. O'Leary and
Cummings (2007)

developed this measure. The index is based on the distance between all non
redundant pairs of

23
locations used in a team. The index for a team with team members geographically
virtual over three

locations K, Land M is calculated as follows:

(TKL*nK*nL) + (TKM*nK*nM) + (TLM*nL*nM)]/ [(n2-n)/2].

Were T is the distance and n is the number of team members.

Two types of information are needed to calculate this index. First the location of
the team members
is important. The zip code of the location where the team member regularly works
was asked.
Besides that the distance {T) between all combinations of locations within a team
was needed. The
symbol T represents the geographic distance between two locations, for instance
locations K and L.
The information about geographic locations and number of members working at each
location was
derived from the dataset. By using an online tool (www.gpscoordinaten.nl) the
global positioning
system coordinates were specified. The distances between coordinates were
calculated by means of
the ‘great circle distance’. The great circle distance is the distance between two
locations on the
earth’s surface. The following formula, which is based on a spherical model of the
earth, calculates
the great circle distance by means of latitude and longitude coordinates of two
locations. A Great
Circle Distance is calculated by finding the interior spherical angle between the
two points and then
multiplying that angle by the radius of the Earth. These numbers are calculated
using and excel sheet
which included the Haversine Formula (see appendix D for the exact formula). These
numbers were
multiplied by the radius of the earth (6371,10 km) yields the Great Circle Distance
between two
locations. The index that is found for a team is included in the dataset for all
members of that team.
Unfortunately not all respondents were part of team in the dataset so here some
missing values are
present. Since the dispersion of team members around the globe was only present in
the east-west
direction the time zone index is not taken into account in the analysis. Also the
other indexes were
dropped from further analysis due to the small size of the teams and the lack of
sufficient diverse
teams in the sample. In the analysis with team level variables only respondents
that are part of a

team in the dataset are taken into account.

3.5.5 Team National Diversity

Team national diversity is a team variable that is computed using the nationalities
of the team
members. The number of nationalities in a team is divided by the total number of
team members
present in the team. This index with a range from 0 to 1 is included in the dataset
for all members of
team. An example from the dataset: team 1 consists out of five team members. Three
members are
from The Netherlands and two team members are from the United States of America.
The national

diversity index is then: 2/5 = 0.40

24
3.5.6 Team Life Cycle

The team life cycle is measured asking for the planned end date of the team.
Unfortunately almost
all respondents answered “not applicable” or “unknown” to this question. All teams
are likely to be
teams with a continuous life cycle. Apparently there are no project teams or other
teams with a
discrete life cycle part of the sample so this variable will be dropped for further
analysis. This data

collection problem will be further explained in the discussion part of this

research.

3.6 Research quality indicators

The reliability of this research is taken into account by extensively describing
the data collection,

sample method and measurements. The way in which the research will be conducted is
extensively
described; this will increase the possibility of repeatability. The internal
validity will be high in this
research since already individual proven relations will be examined and tested in
this research. The
construct validity is guaranteed by using already tested and earlier used items to
measure the
different concepts. The external validity is not guaranteed in this research since
the survey is
conducted in only two organizations. This decreases the extent to which the results
of this research
can be generalized to other industries or sectors. Because only 18 teams were
involved in this
research, a Type Il error: “we fail to reject a null hypothesis when it is in fact
false” (Pallant, 2007, p.
205) is likely to occur. Therefore, the regression analyses have also been
conducted on individual

level to provide an indication of the results when the sample size would be larger.

25
4 Results

4.1 Team level analysis

4.1.1 Intra Class Correlations

Since all respondents in this research are part of a virtual team, the individual
level observations can
be grouped based on the team they are a member of. To check whether it was
appropriate to
aggregate the individual level data to team level data the intra-class correlations
were computed for
each individual variable. There are two forms of the Intra-class Correlation
Coefficients {ICC’s), ICC(1)
and ICC(2) (Bliese, 2000), were calculated to decide upon the appropriateness of
the data to be
aggregated. ICC(1) deals with the within-group agreement whereas the ICC(2) deals
with the
between-group agreement. Since the within-group agreement is most important for
this research
ICC1 will be used as an indicator for aggregating the individual level data. As a
criterion for ICC1,
James (1982) reported a median ICC1 of 0.12 as acceptable for the organizational
literature. This
value, which reflects the value most often found in organizational research is
accepted and widely
used as a minimum criterion for ICC1. Furthermore, independent-samples t-tests were
conducted to
decide upon the inclusion of the scores of the leaders in the aggregated mean.
Finally, the

correlation matrix has been checked.

The ICC statistics provide information about the balance of within and between
group variability for
each variable. The statistics are computed from Mean Squares Between (MSB) , which
is defined as
the partition of the Sum of Squares (SS) that represents differences between groups
and Mean
Squares Within (MSW), which is defined as the partition of Sum of Squares (SS)
within groups. Mean
Squares Within is an unbiased estimate of the error variance within groups (Hays,
1994). Since this
analysis examines whether individual data can be aggregated to team level, only
those respondents
who are part of a team in the dataset are taken into account in this analysis.
Single respondents are
not considered as being representative for the team they are part of. The variables
that are
computed on team level (geographic distribution and national diversity) are also
not taken into
account in this analysis. Table 4 will present the ICC1 and ICC2 scores for the
different variables in
the sample. The variability in team size in the sample is considerable (ranging
from 2 to 17), since
ICC2 is dependent on the size of teams in the sample ICC1 will be used for the
analysis of the intra-

class correlations.
26
Variable

1. Transformational Leadership . ; 1.87 (0.035)

2. Transactional Leadership 0.45 0.20 1.76 (0.057) 0.25 0.55

3. Effectiveness (Performance) 0.65 0.24 2.147 (0.013) 0.34 0.64

4. Effectiveness (Satisfaction) 0.24 0.16 1.191 (0.294) 0.11 0.34

Table 4: Intra-class correlations of variables in the sample.

ICCs were calculated using the following formulae (see Bliese, 2000)

MSB = SS between/(J-1)*

MSW = SS within/(N-J)*

ICC1 = [MSB - MSW] / [MSB + (k-1) x MSW]

ICC2 = [MSB — MSW// MSB

Average team size k= 4.4 (k was computed as the average number of responses per
team)
“With the number of groups J and the number of respondents in the sample N.

Table 4 shows that only one variable does not meet the criterion stated above,
namely the
Satisfaction variable of team effectiveness. This measure should therefore not be
aggregated to the
team level. This is not that surprising since satisfaction is a subjective feeling
of the individuals that
are working in a virtual team. The higher ICC1 scores for the other variables
justify the aggregation
to the team level. For the performance variable this is less surprising but for the
leadership styles
this indicates that there is a shared feeling among the team members about the
leadership style in
their team. The two moderating variables geographic distribution and national
diversity are initial
team variables and will be taken into account in the team level analysis. The
following paragraph

will elaborate on the team level analysis.

4.1.2 Correlation analysis on team level

A dataset was created with the 19 teams that were valid to use for the team level
analysis. The
single respondents without other team members in the dataset were dropped for this
analysis since
these respondents cannot be considered as representative for their team. The other
data is
aggregated to the team level by computing a weighted average of the team members’
scores.
Unfortunately there were a number of missing values in the geographic distribution
part because of
an asymmetric response rate between the different locations of a team. For these
teams the
average score on this variable is used in order to be able to take these teams into
account for this

analysis. The results are shown in table 5.

27
Variable

1. Transformational Leadership . 0.26

2. Transactional Leadership 2.85 0.38 0.471* -

3. Effectiveness (Performance) 2.16 0.54 0.250 0.500* -

4. Geographic Distribution 1010.60 974.78 -.183 0.157 -.206 -

5. National Diversity 0.56 0.42 035 0.193 .018 .376

Table 5: Descriptive statistics and correlation on team level (N=19, *= p<0.05

**=p<0.01)

As can be seen in table 5 transactional leadership and transformational leadership

are significantly
correlated. The satisfaction part of team effectiveness was not appropriate for
aggregation to the
team level so only the performance part is taken into account in this analysis.
There is a strong and
significant correlation between performance and transactional leadership style
visible which
indicates a relation between these two variables. Whether this is a causal relation
will be examined

in the next paragraph in which a hierarchical regression analysis on team level

will be elaborated.

4.1.3 Hierarchical regression analysis on team level

To examine whether the correlations mentioned above are based on a causal relation
a hierarchical
regression analysis is performed. First the direct relations of transformational
and transactional
leadership style on team effectiveness are examined. In the second model the direct
relations of the
moderating variables are added and in the third model the moderating effects are
tested using a
interaction variable computed with the dependent and moderating variables.
Unfortunately the
results of this regressions analysis are not significant .The models as such are
not significant and
neither are the relations. Since the data on team level is quite limited these
results could be

expected. In the next paragraph the data will be examined on the individual level.

Modeli Model 2 Model 3

[eels ye: ah 107 -387 -2.335
. Transformational Leadership (TRF) .039 -.183 -.560
. Transactional Leadership (TRS) .690 823 2.069
. Geographic Distribution (GD) -000 -000
. National Diversity (ND) .039 4.880
ay Pais -0.35
may Pants) -1.591
. GD x TRF -000
. GD x TRS -000
-500 -582 -661
-250 -339 436

Table 6: Hierarchical regression analysis on performance on the team level (*=p

<.05 **=p<0.01)

28
4.2 Individual level analysis
This paragraph starts with an independent samples t-test on all variables to see
whether the scores

provided by the team members and the team leaders do significantly differ from each
other. After
that the results of the correlation analysis on the individual level are presented.
The causal relations
between leadership style and team effectiveness and the moderating effects of
geographic
distribution and national diversity will be examined using a hierarchical
regression analyses. First the
performance measure of team effectiveness is examined and second the satisfaction
part is

examined.

4.2.1 Independent samples t-test

To decide whether to include the data provided by the team leaders with the data of
the team
members in the analyses a independent samples t-test is executed. The result of
this test is shown in
table 7 below:

Variable Levene’s Test for Equality

of Variances Sig. (2-

Tim tailed)
1. Transformational Leadership 6.567 .012* 1.382 44.021 174

2. Transactional Leadership 3.317 -072 -1.938 90 -056

3. Effectiveness (Performance) 704 404 453 90 651
4. Effectiveness (Satisfaction) 1.368 245 535 90 594
5. Geographic Distribution 2.508 117 -.279 82 781

6. National Diversity 3.764 -057 -1.071 66 -288

Table 7: Independent Samples Test / Levene’s Test for Equality of Variances / t-

test for Equality of Means (*= p<0.05)

The results of the independent samples test show that for “transformational
leadership style” the
Levene’s Test for Equality of Variances is significant. This means that the
variance of the
transformational leadership style differs significantly for the team leaders and
the team members.
The independent samples t-test provides two results: results when equal variances
are assumed and
the results when equal variances not assumed. This last category data is used when
the variances of
two groups are significantly different. The presented results for the
transformational leadership style
are the results of the “Equal variances not assumed” part of the results of the
test. The other
variables do not show a significant result on Levene’s Test and therefore the
results of the t-test with

equal variances assumed is used for these variables.

Since there are no significant results in the independent samples test it can be
concluded that there
are no significant differences between the groups: team members and team leaders.
Therefore they

will both be included in the further analyses in this chapter.

29
4.2.2 Correlation analysis on the individual level

Variable

1. Transformational Leadership 0.26

2. Transactional Leadership 2.89 0.38 -481** -

3. Effectiveness (Performance) 2.32 0.54 .330** -463** -

4. Effectiveness (Satisfaction) 1.95 0.45 .526** .345** .356** -

5. Geographic Distribution 986.45 938.10 -.089 .142 -.126 -.007

6. National Diversity 0.46 0.36 -.009 -035 -109 .025 .379**

Table 8: Descriptive statistics and correlation on individual level (N=92, *=

p<0.05 **=p<0.01)

In the table above the descriptive statistics and correlation of all variables
included in this research
are presented. The significant positive correlation between national diversity and
geographic
distribution has to be handled with care since this is an indication for multi-
colinearity. This will be
further explored using the colinearity statistics during the hierarchical
regression analysis in the

following paragraph.

There are no significant correlations between the moderating variables and the
dependent variables.
This will also be further explored in the following paragraph that will provide an
overview of (1)
direct associations between leadership and team effectiveness and (2) moderation
analyses. A
hierarchical regression analyses is executed on both dependent variables of team
effectiveness
(performance and satisfaction). The hierarchical regression analyses will exist of
3 models. The first
model includes the direct relations of the independent and the dependent variable.
In the second
model the direct relations of the moderating variables will be added and in the
third model the
interaction effects will be added. The first hierarchical regression analyses will
be executed with
performance as the dependent variable and the second analyses will be executed with
satisfaction

as the dependent variable.

4.2.3 Hierarchical regression analyses on the individual level

In the following paragraphs the hierarchical regression analyses are described and
analyzed. First the
analyses of the performance part of team effectiveness are presented and after that
the analyses of

the satisfaction part of team effectiveness will be presented.

4.2.3.1 Leadership style and Performance

As can be seen in table 8 there are significant correlations between the leadership
styles and the two

components of team effectiveness: performance and satisfaction. In order to examine

which
leadership style explains which amount of variation in the team effectiveness
components, a
hierarchical regression analysis was performed. The significant correlation that is
shown in table 8

between national diversity and geographic distribution is not very surprising. When
team members

30
are working at different geographical locations, it is likely that there are
multiple nationalities
involved in this team. Nevertheless this is a signal for the effect of
multicolinearity, which implies
that multiple variables explain the same variance in the dependent variable. A
first hierarchical
regression analysis with the direct relations of leadership style on performance in
model 1, the direct
relations of the moderating variables in model 2 and the interaction effect (the
moderators) in
model 3 showed some serious multicolinearity problems. The direct effects of the
moderators on
performance and the interaction did not show any significant results at all. The
models as such were
also not significant. The direct effect of the moderators and the interaction
effects scored very low
on the colinearity statistics Tolerance and very high on VIF; geographic
distribution score: 43.753.
The other scores are included in table 8 and 9. Tolerance is an indicator of how
much of the
variability of that independent variable is not explained by the other independent
variables in the
model. VIF is the inverse of Tolerance and is measured by dividing 1 by the
tolerance. When
multicolinearity occurs, it is recommended to drop one of the variables that are
causing the
multicolinearity for further analysis (Pallant, 2007). Combining the two variables,
national diversity
and geographic distribution is not the best option because the geographic
distribution variable has a
serious amount of missing values. National diversity has less missing values in the
dataset and
therefore this variable is included in the hierarchical regression analyses. The
geographic distribution
variable is dropped for further analysis. The first model includes the direct
effects, the second model

the direct effects of the moderating variables and the third model the interaction
effects.

Modeli Model 2 Model 3 ig

Constant 5/7 -667 -486
1. Transformational Leadership (TRF) .217 211 .236 5.684
2. Transactional Leadership (TRS) .432** .439** .479* 4.983
3. National Diversity -.208 181 55.014
4. National Diversity x TRF -.051 54.684
5. National Diversity x TRS -.092 49.529

-A79** -494** -495**

.229** .244** .245**

Table 8: Hierarchical regression analysis on performance (*=p <.05 **=p<0.01)

Table 8 gives an overview of the regression analysis on team performance. The
models are
significant but the R’ value is relatively low. This indicates that there are other
factors explaining a
major part of the variance in satisfaction. Nevertheless it is clearly shown that
the transactional
leadership style has a positive and significant effect on team performance
(b=.432). Opposed to that

transformational leadership does not show a significant effect on team performance.

The team

31
effectiveness concept used in this research is derived from Lurey and Raisinghani
(2001). They state
that the performance and satisfaction measures are highly correlated and that both
measures
together measure the concept of team effectiveness. In this research the factor
analysis and the
regression analysis indicated a relatively strong difference between the
performance and the
satisfaction part of team effectiveness. Hypothesis 1 and 2 can be partly confirmed
for transactional
leadership and the performance part of team effectiveness at this stage. Hypothesis
3, 4 and 5 have
to be partly rejected because there are no significant effects of these variables
on the performance

part of team effectiveness.

4.2.3.2 Leadership style and Satisfaction

The second hierarchical regression analysis was executed with the other measure of
team

effectiveness; satisfaction. To see which independent variable explains the

variation in this measure
of team effectiveness a second hierarchical regression analysis was executed. In
the first model the
two leadership styles are included, in the second model the direct effect of the
moderator was
added and in the third model the interaction variables were added. Due to a
situation of
multicolinearity as explained in the previous paragraph it was decided to exclude
the other
moderating variable (geographic distribution) in this analysis. Also the
interaction effects of this

variable were dropped for further analysis.

Modeli Model 2 Model 3 ig

[eels ye: ah 479 -465 1.081
1. Transformational Leadership (TRF) .529** .530** .513* 5.684
2. Transactional Leadership (TRS) .095 .094 -.100 4.983
3. National Diversity .032 -1,318 55.014
4. National Diversity x TRF -016 54.684
5. National Diversity x TRS 439 49.529

-536** .537** -566**

.288** .288** -302**

Table 9: Hierarchical regression analysis on satisfaction (*=p <.05 **=p<0.01)

Table 9 shows the results of the hierarchical regression analysis on the

satisfaction measure of team
effectiveness. The models as such are significant but show a relatively low R’.
This implies that also
these models do not explain the majority of the variance in the dependent variable.
A significant and
positive effect of transformational leadership style on the satisfaction measure of
team effectiveness
(b=.259) was found. Transactional leadership does not show this effect. Besides
that the direct effect

and the interaction effect of the moderating variable are not significant in this
regression analysis.

32
Hypothesis 1 and 2 can be confirmed for the part of the transactional leadership
style and the
satisfaction part of team effectiveness. Hypothesis 3, 4 and 5 must be rejected
completely at this

stage since there are no significant effects of these variables in the hierarchical
regression analysis

on satisfaction as well.

33
5 Conclusion

This chapter elaborates on the main findings of the research. Some limitations
around the data

collection and the measurements will be further explained in the following chapter;
the discussion.

5.1 Team level

The data shows us that it is difficult to find a moderating effect of the

complexity variables included
in this research. Both moderating variables that are included in the analyses:
geographic distribution
and national diversity should be analyzed on the team level. The limited amount of
complete and
diverse teams in the dataset did not lead to any significant results in the
analysis. Besides the limited
amount of data there was also no significant correlation between the moderating
variables and
team effectiveness. The correlations of the team level variables however show some
interesting
results. On the one hand the correlation between transactional and transformational
leadership
which was expected to be found since these two leadership styles are often strongly
correlated in
the literature. An interesting correlation on the other hand is the significant and
relative high
correlation between the transactional leadership style and the performance measure
of team
effectiveness. The satisfaction measure of team effectiveness did not exceed the
ICC level of 0.12 so
this variable could not be included in the team level analyses. Concerning the team
level analysis it is
not possible to see whether this correlation is also present between the
transformational leadership
style and the satisfaction measure of team effectiveness. Although the hierarchical
regression
analysis did show any significant results one should be careful about drawing
conclusions on this
because the data collected for the teams was not sufficient to get any significant
results on the team

level. This case will be further examined in the discussion part of this research.

5.2 Individual level

At the individual level the analysis showed some interesting results. Also on the
individual level there
were no significant effects found for the moderating variables. Since the
geographic distribution and
the national diversity are translated into team scores this is probably the result
of the division of
respondents among the different virtual teams. The low number of complete teams
obstruct the
analysis of the moderating variables which are computed as a team variable but
measured on the
individual level. In the correlation matrix there are a number of significant
correlations. First there is
a significant correlation between the transformational and the transactional
leadership style. These
two leadership styles are treated as complementary styles in this research. This
means that both
styles can be executed by one leader. The high correlation between these two styles
imply that if a
leader scores high on transformational leadership style he will also score high on
transactional
leadership style. Although both styles focus on different aspects of leadership it
turns out that if a

leader executes elements of one style he is likely to execute elements of the other
style. The

34
significant correlation between performance and satisfaction is a result of both
measures being part
of the overall concept “team effectiveness”. The correlation between national
diversity and
geographic distribution was the first signal of multicolinearity between these
moderating variables.
After the hierarchical regression analysis the multicolinearity was confirmed using
the colinearity
statistic VIF. This is the reason why geographic distribution was dropped for
further analysis. A
hierarchical regression analyses is executed in order to determine the causal
relations between the

two leadership styles and both measures of team effectiveness.

First a hierarchical regression analyses was executed with performance as the

dependent variable.
The models as such were significant. The only variable that explained the variance
in performance in
a significant way was the transactional leadership style in all three models. The
reason for this effect
can be found in the main aspects of transactional leadership that are taken into
account in the scale
of measurement in this research. These are the contingent reward and the MBEA
(management by
exception active) items. When the leader gives rewards for performance and
recognizes
accomplishment this refers to the contingent reward part of the transactional
leadership style and
when the leader monitors the processes of his team and acts when problems occur to
make sure
that the team produces what is expected of them this refers to the MBEA part of the
transactional

leadership style.

The second hierarchical regression analysis was executed to examine the effects of
the variables on
the satisfaction measure of team effectiveness. This analysis did also show no
significant results for
the moderating variables but indicated an interesting addition to the findings of
the first regression
analysis. In this second regression analysis the dependent variable is the
satisfaction measure of
team effectiveness and the results show that the transformational leadership style
explains most of
the variance in the dependent variable in all three models. The transformational
leadership style is
more concerned with the motivation and stimulation of team members. Apparently this
leads to
higher levels of satisfaction within the team. Hypothesis 1 predicts the effect of
leadership style on
team effectiveness. As became clear in the previous paragraphs this relation
between these two
concepts is more complicated. There is a clear distinction between the leadership
style and the way
in which they affect the team effectiveness. Opposed to Lurey and Raisinghani
(2001) can be stated
that both measures of team effectiveness can be influenced separately. Hypothesis 1
and 2 can be
confirmed but with the remarks mentioned before taken into account. Unfortunately
hypothesis 3, 4
and 5 cannot be confirmed or rejected since the data collected in this research is
not sufficient to

draw conclusions on this hypothesis.

35
Since there are no significant results found for the moderating variables the
conclusion will focus on
the direct relation between leadership style and team effectiveness. This research
indicated that
both leadership styles have an effect on the effectiveness of a virtual team. The
transactional
leadership style has a positive effect on team performance and the transformational
leadership style

has a positive effect on team satisfaction. The research question is stated as

follows:

“To what extent are transformational and transactional leadership styles related to
team
effectiveness of virtual teams, and to what extent is this relation moderated by
elements of

complexity of a virtual team?”

The research question can only be partly answered using the empirical results of
this research. The
results of the moderating relations are not adequate enough to reject the
formulated hypothesis. In
the discussion part of this research these relations are examined in a theoretical
way. About the
relation between leadership style and team effectiveness the following can be
stated. The
transactional leadership style has a positive effect on the performance measure of
team
effectiveness and the transformational leadership style had a positive effect on
the satisfaction
measure of team effectiveness. The interpretation of these effects found in the
analysis will be

elaborated in the following chapter; the discussion.

5.3 Managerial Recommendations

The main goal of this research was to examine the effect of different complexity
measures on the
relation between leadership style on team effectiveness. Unfortunately it was not
possible to
provide these results. The results of this thesis are nevertheless interesting. Be
it in another way
than was planned up front. The results of this thesis give some interesting
insights in the effect of
leadership styles on team effectiveness. Especially the difference between the two
leadership styles
in their effect on team effectiveness can be used in corporate situations. This
research made clear
which leadership style affects which part of team effectiveness. If a manager wants
to improve the
satisfaction of his team he or she should focus on the behaviors mentioned in
chapter two under
transformational leadership style and if a manager wants to improve the performance
of his team he
or she should focus on the behaviors mentioned under transactional leadership style
in chapter two.
A team leader can take the information of this research into account when managing
his virtual

team.

5.4 Recommendations for further research

unfortunately this research did not give a satisfying answer to the research
question. Further

research should still focus on the measurement of multiple complexity measures in

virtual teams at

36
the same time. To do this in a proper way it is important to get access to a solid
set of data in which

the different aspects you want to examine are present.

This research more or less indicates that the differences between non-virtual and
virtual teams are
not that big as sometimes mentioned in the literature. The use of modern
communication tools
apparently diminish the negative side effects of working in virtual teams.
Therefore it should be
interesting to compare virtual and non-virtual teams in one study to see what the
effects are of

working in a virtual team opposed to working in a collocated team.

37
6 Discussion
This part of the thesis will exaggerate on the results found in this research, the
mechanisms behind it

and the reasons for the absence of presence of expected effects.

6.1 Transformational leadership style

The analyses on transformational leadership style show that this leadership style
has a positive
effect on the effectiveness of a virtual team. It is not surprising that a
leadership style has a positive
effect on team effectiveness but the following distinction has to be made. The
variable team
effectiveness was considered as one variable in this research but the factor
analysis showed that
there was clear difference between the performance and the satisfaction of a team.
Although these
two measures were highly correlated the effect of transformational leadership
differs for both
measures of team effectiveness. The effect of transformational leadership is higher
for the
satisfaction than for the performance of a team. The reason for this can be found
in the
characteristics of both transformational leadership style and team satisfaction. A
transformational
leader is a coach to his team members on an individual level and will encourage all
of his team
members to reflect on their own actions in order to grow personally (Avolio & Bass,
2004).
Satisfaction refers to the perception of decision and agreements with the output of
a team
(Chidambaram, 1996). These are two very brief descriptions of transformational
leadership style and
team satisfaction as mentioned in chapter two. Relation building, what is actually
the core of
transformational leadership has a positive effect on team effectiveness in
collocated teams because
these relations connect individuals to their tasks and each other (Cramton &
Webber, 2005). The
absence of these relations in virtual teams is to a greater or lesser extent
compensated by the
transformational leadership style. This leads to an increase in team effectiveness
through the

satisfaction part when the transformational leadership style is executed by the

team leader.

6.2 Transactional leadership style

The analyses on transactional leadership style show that this leadership style has
a positive effect on
team performance. Contrary to the transformational leadership style the effect of
the transactional
leadership style is higher for team performance than for team satisfaction. This
can be explained by
the way in which a leader who executes the transactional leadership style leads his
team. Leaders
who perform a transactional leadership style create clear structures and clarify
what is expected of
the team and by rewarding them accordingly. This leadership style is expected to
increase the
performance of a team rather than the satisfaction. Since the transactional
leadership style is less
focused on trust and relation building but more on the actual output of a team it
can be explained
that the transactional leadership style has a greater effect on team performance
than on team

satisfaction.

38
6.3 The moderating variables

The lack of data to conduct a grounded analysis on the moderator variables in

mentioned several
times before in this research. The reason for the lack of data is hard to grasp.
The two organizations
involved in this research and the researchers did their best to gather more data
and to complete the
data of teams involved in this research. Due to the absence of most of the analysis
on the
moderating variables it was almost impossible to make a judgment about hypotheses
three, four
and five. The effect of the moderating variables will now be examined from a
theoretical point of

view with the results of the analyses on the leadership styles taken into account.

The moderating variables were expected to negatively influence the relation between
leadership
style and team effectiveness. The two leadership style included in this research
are just as any other
leadership style focused on the relation between the team leader and the team
members. These
relations are hard to maintain when leading virtual teams because team members are
not collocated
and face-to-face meetings are rare. The moderating variables increase these
difficulties by means of

teams which are further spread around the world or which are more diverse of
nature.

The analyses of the leadership styles on team effectiveness show that the relation
and trust building
is more important for the satisfaction of a team than for the performance.
Combining this with the
theoretical explanation of the moderating variables it could be expected that the
moderating
variables have a stronger effect on the relation between transformational
leadership style and team

effectiveness than on the relation between transactional leadership style and team
effectiveness.

Further research should be performed to test these expectations in an empirical

setting.

6.4 Reflection

Data collection

Despite the fact that the data collection was a combined effort of two students it
was still a
challenge to collect sufficient data for this research. The teams were selected and
motivated by
influential people in the organizations but still the response fell short. A
reminder did increase the
response rate of one organization but the other organization provided even after a
second reminder
not the amount of data we were expecting. Due to time limits it was not possible to
increase the
response rate. This was especially for the team level variables a disadvantage.
Only a small amount
of teams met the expectations, namely geographical virtual, national diverse teams.
In a number of
cases only the Dutch members of a virtual team responded which made the team
useless for team

level analysis. Since the moderating variables were team level variables which
needed the teams to

39
be geographically virtual and national diverse these variables did not show any
significant results on

team level and individual level.

Measures

As mentioned in the previous paragraph some team level measures were hard to
compute due to
the lack of respondents that met the criteria. Another problem that was faced was
the problem with
the items about the team life cycle. Unfortunately this question was too difficult
to answer or the
members of the teams were simply not aware of an end-date of the team. Another
possibility is that
all teams that responded were continuous teams and therefore did not fill in an end
date of the
team. In the future it would be better to ask these questions face-to-face to the
team leader in order
to explain the question a little further when the purpose of that question is not
clear. In the
literature of Lurey & Raisinghani (2001) the two measures of team effectiveness,
performance and
satisfaction are evaluated as strongly inter-correlated and they indicate that
these two measures are
measuring the same concept. In this research the differences between performance
and satisfaction
are clearly visible in the factor analysis and the regression analyses. The
hypotheses were
formulated assuming this concept was being measured with one scale. In the future
it is better to

create hypotheses for each of these dimensions of team effectiveness separately.

Learning process

Writing this master thesis was a great learning experience for me. The profound
feedback from the
supervisors and my fellow students created an opportunity to gain insight in the
way in which a
master thesis should be written. The theoretical foundation which was created
during the IRP stage
was sometimes hard to demarcate and to formulate in a solid way. Another insight |
got during the
research process was the fact that a theoretical plan and hypotheses are one thing
but the empirical
prove is another. It was very hard to collect enough data of complete teams to
actually perform the
analyses that were planned to be performed. Also the amount of time it costs to
collect sufficient
data has been undervalued. Nevertheless it was very nice to get some empirical
results out of my
own data. Maybe it would have been better to synchronize the theoretical model with
the data

gathering opportunities.

Limitations
The lack of data on team level is the most important limitation of this research.
Future research
should focus even more on data gathering of complete teams instead of individuals.
Beside that no
multilevel analysis was performed to evaluate the model. For future research this
analysis is
recommended because it is a better approach to the conceptual model with two levels
of analysis

and individual control variables could be included. The absence of data on the
question about team

40
life cycle could have been solved by asking the team leaders. The initial contact
with the organization
guaranteed that the teams differed in continuous and discrete life cycles.
Nonetheless the data

showed that this was not the case.

41
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44
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Appendix B: Questionnaire

Questionnaire Leadership within virtual teams

General questions

1. Team name

2. Gender 1.Male 2.Female

3. Age
4. Nationality

5. How many team members including

you and the leader does your team
have?

6. How long have you been working in

this team: year(s) and month(s)?

7. How long has your team existed?

8. What (if specified) is the planned life

cycle of your team?

Leadership
Strongly | Agree Neutral | Disagre | Strongly
agree e Disagree

9. The leader identifies situations that 1 2 3 4 5

call for planning.

10. The leader of the team is able to scan | 1 2 3 4 5

the environment for events that can
influence the organization.

11. The leader uses relevant planning 1 2 3 4 5

skills in cases calling for application.

12. The planning made by the leader are | 1 2 3 4 5

not always followed.

13. The team members agree with the 1 2 3 4 5

planning of the leader.

14. The planning made by the leader is 1 2 3 4 5

always workable.

15. The planning made by the leader 1 2 3 4 5

changes a lot during the time span of
the project.

16. The leader involves staff in the 1 2 3 4 5

planning process for achieving a
shared vision.

17. The leader of the team 1 2 3 4 5

communicates openly with all the
team members.

18. The leader of the team is an active 1 2 3 4 5

listener.
48
19.

The leader has the ability to motivate

team members.

20.

The leader understand the social

fabric {informal relations) of the
team.

21.

The leader does not respond directly

to people’s requests and concerns.

22.

The leader informs his or her team

about what they want to know.

23.

The leader relates to his or her

charges- team members feel that the
leader understands them.

24.

The leader tries to understand every

individual of the group.

Transformational leadership

25.

Instills pride in me for being

associated with him/her

26.
Goes beyond self-interest for the
good of the group

27.

Acts in ways that builds my respect

28.

Displays a sense of power and

influence

29.

Talks about his/her most important

values and beliefs

30.

Specifies the importance of having a

strong sense of purpose

31.

Considers the moral and ethical

consequences of

32.

Emphasizes the importance of having

a collective sense of mission

33.

Talks optimistically about the future

34,

Talks enthusiastically about what

need to be accomplished
35.

Articulates a compelling vision of the

future

36.

Expresses confidence that goals will

be achieved ({IM4)

49
37.

Re-examines critical assumptions to

question whether they are
appropriate (IS1)

38.

Seeks differing perspectives when

solving problems (IS2)

39.

Gets me to look at problems from

many different angles (IS3)

40.

Suggests new ways of looking at how

to complete assignments (IS4)

41.

Spends time teaching and coaching

(IC1)

42.

Treats me as an individual rather than

just as a member of a group (IC2)

43.

Considers me as having different

needs, abilities, and aspirations from
others (IC3)

44.

Helps me to develop my strengths

Transactional leadership

45.

Provides me with assistance in

exchange for my efforts

46.

Discusses in specific terms who is

responsible for achieving
performance targets

47.

Makes clear what one can expect to

receive when performance goals are
achieved

48.

Expresses satisfaction when | meet

expectations

50
49.

Focuses attention on irregularities,

mistakes, exceptions, and deviations
from standards

50.

Concentrates his/her full attention on

dealing with mistakes, complaints
and failures

51.

Keeps track of all mistakes

52.

Directs my attention toward failures

to meet standards

53.

Waits for things to go wrong before

taking action

54.

Demonstrates that problems must

become chronic before taking action

Trust

55.

| am comfortable accepting
procedural suggestions from other
team members

56.
| trust that other members’
knowledge about the project is
credible

57.

| am confident relying on the

information that other team
members bring to the discussion

58.

| accept the information provided by

other team members without a doubt

59.

| have a lot of faith in other members’

expertise

60.

My team colleagues are reliable

61.

In my team people tell the truth

62.

In my team people keep their word

63.

In my team some people take

advantage of others who are ina
vulnerable position

Rl ]RP[R

NIT NINN
Qo | Wo] Oo | Oo

P/HA]

Uj orfourjur

Empowerment

51
64. The work | dois very important to me | 1 2 3 4 5
(meaning1)
65. My job activities are personally 1 2 3 4 5
meaningful to me (meaning2)

66. The work | dois meaningful to me 1 2 3 4 5

(meaning3)

67. |am confident about my ability todo | 1 2 3 4 5

my job (competence1)

68. | am self-assured about my 1 2 3 4 5

capabilities to perform my work
activities (competence2)

69. | have mastered the skills necessary 1 2 3 4 5

for my job (competence3)

70. | have significant autonomy in 1 2 3 4 5

determining how | do my job (self-
determination1)

71. | can decide on my own how to go 1 2 3 4 5

about doing my work (self-
determination2)

72. | have considerable opportunity for 1 2 3 4 5

independence and freedom in how |
do my job (self-determination3)

73. My impact on what happens in my 1 2 3 4 5

department is large (impact1)

74. | have a great deal of control over 1 2 3 4 5

what happens in my department
(impact2)

75. | have significant influence over what | 1 2 3 4 5

happens in my department ({impact3)
Team effectiveness

Strongly | Agree Neutral | Disagre | Strongly

agree e disagree

76. In the past, the team has been 1 2 3 4 5

effective in reaching its goals.

77. The team is currently meeting its 1 2 3 4 5

business objectives.

78. When the team completes its work, it | 1 2 3 4 5

is generally on time.

79. When the team completes its work, it | 1 2 3 4 5

is generally within the budget.

80. There is respect for individuals inthe | 1 2 3 4 5

team.

81. | feel my input is valued by the 1 2 3 4 5

members of the team.
82. Team members morale is highinthe | 1 2 3 4 5
team.

83. | enjoy being a member of this team 1 2 3 4 5

84. In the future, | would be interestedin | 1 2 3 4 5

participating in another virtual team.

Geographical distance between the team members

52
85.

In which country are you regularly

based?

86.

What is the zip code of the location

you are regularly based?

Communication

87.

The leader of my team organises 1

face-to-face meetings between
distant members when necessary

88. | have access to all of the information | 1

| need to perform my work.
89. The team is equipped with the 1

adequate tools and technologies to

perform our tasks.

90.

Team members are in contact with 1

one another on a regular basis in
order to conduct routine business

91.

Team members are in contact with 1

one another on a regular basis for
social, or non-business, purposes.
92. The electronic methods we use to 1
communicate with one another are
effective
93. Please indicate the frequency with which you use the following tools for
exchanging routine

business information with fellow team members.

53
O= Never /N.A.

1= Less than once a month

2= Once a month

3= Once a week

4= A few times a week

5= Daily

__ Face-to-face interaction

__ Personal telephone call

__ Voicemail

__Fax

__E-mail

__ Group telephone conference

__ Video Conference

__ Shared databases / Groupware

__Standard / Express mail delivery

__ Other (please specify)

54
Appendix C: Introduction letter team leaders

Dear technology/expertise team leader,

Also on behalf of Henk Noorman and Vikas Sonak, we approach you with a request.

We are three students from Tilburg University: Daan Kleijen, Mette Skattebo and
Meike Daniels.

We are writing our master thesis for the master Organization Studies about virtual
teams and
leadership within DSM/Organization 2. Throughout the years virtual teams have
become important
for DSM/Organization 2 and other organizations. However, not much research has been
devoted to
virtual teams and the factors that influence the effectiveness of such teams. With
this research we
want to clarify what the relationship is between leadership and virtual team
effectiveness and how
factors as team diversity, geographical distance between the team members, trust,
empowerment and
communication tools influence this relationship. To study this relationship a
questionnaire will be send
to different functional units in DSM/Organization 2, and the competence Bioprocess
Development is
one of them. Within a few days you will receive the questionnaire.

We have two questions:

1. Could you send me the email addresses of the members of your

technology/expertise team, so the
questionnaire can be spread as soon as possible.

2. Could you and your team members please fill in this questionnaire so we can
execute the study,
before 21st of April.

This questionnaire is anonymous. The inputs will be analyzed and used for writing
our master thesis.
Afterwards we will hopefully have a clear picture on working globally in virtual
teams, and give advice
how to make them more valuable.

Best regards,

Daan Kleijnen, Mette Skattebo and Meike Daniel s

55
Appendix D: The Haversine Formula

A@ = 2arcsin , sin? (=) + Cos@, Cos @ sin? (

AX

56