Trust, commitment and team working:

the paradox of virtual organizations

1
ALF CROSSMAN AND LIZ LEE-KELLEY

Abstract In this article we take an agent-centred approach to explore the role of

trust and commitment in the virtual organization. The findings of a case study in an
international information technology consultancy indicate that multiple relationships
arising from the alliance-based structure require clear commitment to enable the
development of trust as a basis for longer-term partnership. Paradoxically, the
perceived low level of commitment from the organization does not engender the high
level of trust and commitment required from virtual teams to maximize their per-
formance. However, over time and with extended exchanges, the commitment level
and form may evolve, thus necessitating a realignment of existing psychological
understanding and trust between the actors. If there is general agreement that an
upward shift from short-term to long-term commitment is beneficial to all, then the
virtual arrangement will continue to be effective.

From networks to virtual organizations

The notion of networks is by no means recent, since social and economic exchanges
have always depended on the direct and indirect links between individuals or groups.
Firms need to be able to respond to changes in customer preferences and behaviours,
but may not have the internal staff capabilities, skills and knowledge to match market
demand. Consequently companies have found networking to be a useful way to access
the desired expertise at the appropriate time (Miles et al. 2000).
What is ‘new’ is the power of emerging technologies that allows instantaneous
interchange across time and space. Developments such as Electronic Data Interchange
(EDI), groupware, email, intranets, and the Internet including mobile communication
links such as Wireless Application Protocol (WAP) and Global System for Mobile
Communications (GSM) have enabled large and small companies to acquire new
capabilities in terms of reach, real-time interchange and increased artificial memory.
As businesses adopt the new technologies and processes, Hagel and Singer (1999)
have identified the ‘unbundling’ of corporations such that companies with comple-
mentary competencies will enter into partnerships to add value to an end product or
service. An example is Dell Corporation and its suppliers. Dell is fully reliant on its
network partners – from the computer’s memory chip by Intel to the computer screen
from Sony to the packing and delivery of requisite components for any Dell product
by UPS and its own affiliates across the globe.

Global Networks 4, 4 (2004) 375–390. ISSN 1470–2266

© 2004 Blackwell Publishing Ltd & Global Networks Partnership 375
Alf Crossman and Liz Lee-Kelley

No single organizational form can serve all purposes (Miles and Snow 1986). So
there is no typical ‘shape’ or ‘form’ for these technology-enabled business networks,
except that they are generally known by their chosen strategic options such as
outsourcing, strategic alliances, joint venturing and collaboration. Given the wide-
ranging bases for virtual association, in this article we explore the perceptions of team
members working within the virtual organization setting.
Outsourcing to off-load operational functions and processes through the use of
subcontractors and independent workers perceived to be able to do the same job for
less cost has become a steadily rising trend – hence Bill Gates’s (2000) advice to
businesses to identify their core competencies and ‘outsource everything else’. Out-
sourcing took off in the recession of the late 1980s to mid-1990s, which forced
companies to look for innovative ways to increase efficiency and reduce costs while
still meeting market needs. A report commissioned by the Foundation for Manu-
facturing and Industry in June 1998 had identified that manufacturing outsourcing in
Britain alone amounted to over £400 billion (in Oates 1998: 3). Indeed, the present
UK Labour government was quick to appreciate the need to continue the policy begun
by the previous Conservative administration to use a network of competent advisers
and suppliers to help central government and local authorities achieve their perform-
ance objectives. One of Labour’s first efforts was the transfer of the management of
National Savings and their Premium Bonds to an EDS-Siemens private-sector
alliance. Similarly, economic-political agreements such as the signing of the US–
Canadian trade accord, the gradual enlargement of the European Union and the
ASEAN trading pact offer further opportunities for companies to use technology to
reach out and network beyond their own boundaries.
With the commercialization of the Internet and recent advances in software and
communication technologies, business networks are evolving into alliance-based
‘virtual’ organizations consisting ‘of networks of workers and organizational units
linked by information and communication technologies (ICTs)’ (Hughes et al. 2001:
49) designed to facilitate a combination of partners’ resources to achieve mutual
goals. A survey by Andersen Consulting (in Oates 1998: 7) of 350 executives to
explore their vision of corporate structures in 2010 showed an overwhelming
expectation of a predominance of the virtual organization, defined as a flexible entity,
operated by a small permanent staff whose skills, processes and other resources are
augmented through access to an external supply network – thus prompting Raval
(2000) to suggest the new powerful telecommunications platforms as the key drivers
of change.

Networking across space: the challenges of the virtual organization

Form and duration
Although the virtual organization is often seen as an electronic-commerce phenom-
enon, the association is accurate only when e-commerce is defined in its broadest
sense of conducting transactions using electronic communications systems. What is
true is the proliferation of terms that are used to describe the network organization,
including the ‘dynamic network’ (Miles and Snow 1986) and ‘virtual organization’

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(Moshowitz 1986). More recently, the lexicon has been extended to embrace other
terms such as ‘web enterprises’, ‘communities of practice’; ‘virtual teams’ and
‘virtual communities’ (Hagel 1996; Hammer and Champy 1993; Lave and Wenger
1991; Lorenzoni and Baden-Fuller 1995; Rheingold, 1993). Web enterprises, con-
ceived as part of the e-commerce phenomenon, describe any business that is totally
Internet-based and with no physical premises. Examples of communities of practice
include the medical profession and pharmaceutical research. Virtual teams use
communications technology to link people of varying employment statuses, across
geographical boundaries and possibly different time zones, to work on a common
project. Virtual communities refer to collectives of private individuals or consumers
sharing information on topics of common interest, including possible economic
transactions. While this variety of terms suggests specificity and different conceptual
interpretations in terms of form and substance, it also illustrates a broad similarity
insofar as they refer to links between parties with common needs or interests using
some technology platform. In summary, the virtual or network organization is more a
strategic concept than a prescribed organizational form, and is invariably about a
collective of companies and/or individuals coming together to work side-by-side,
using a combination of information and communication technologies for coordination
of work flows and to conduct informational and social exchanges.
The length of these cross-boundary arrangements is dependent on the object of
association and the context in which the virtual organization has to operate. Authors
such as Moshowitz (1994) and Goldman et al. (1995) suggest that the agility or
adaptability of the virtual organization stems from its opportunistic, short-term nature
where members come together and disband as soon as goals are met. Byrne (1993)
has summarized the basis of members’ relationships as temporary, loose, informal and
technology-led. It captures the major difference between the ‘old’ or traditional and
the ‘new’ or virtual form of alliance. This begs the question of the possibility of social
identification for organizational commitment.
Others such as Powell (1987) and Drucker (1993) visualize longer-term asso-
ciations in line with Dore’s (1983) submission that networks, as preferential, stable
trading relationships between competitors, can be a viable alternative to vertical
integration. In either case (whether opportunistic and short-term or stable and of
longer duration), multiple relationships are likely to be common and will present
managerial challenges, for managers are having to lead and manage internal
employees and contractors or seconded members from partnering firms. These
‘pseudo-employees’ are accountable to the lead partner within the network relation-
ship for the duration of their involvement; or possibly at varying times they are
accountable to more than one partner, if engaged in more than one project.

Management issues
Although business research has focused largely on the economics of these
technology-enabled strategic alliances, there is growing interest in the social aspects
of ‘boundary-spanners’ (Aldrich and Herker 1977) tasked with making the links
across the virtual organization. Of note is Kanter’s (1997) observation that sometimes

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when the sharing and mutual commitment is extensive and with a high level of
process integration between the partners, it becomes hard to distinguish between
employees of one organization and those of another. This inseparability could be
regarded as a signal for the successful creation of a seamless network of corporate
businesses, or in Levitt’s (2000) term a ‘global village’. Nonetheless, management
issues for this new form of organization included understanding how activities are
conducted and monitored, and if interpersonal relationships differ from those in
traditional strategic alliances and, if so, the extent to which this might impact the
commitment and behaviour of the participants.
Until relatively recently management practice was characterized by a control
culture expressed in rigid hierarchies with ‘closed’ bureaucratic systems advocated by
industrial psychologists such as Weber and Fayol (Depickere 1999) with intensity and
stability of effort controlled by direct supervision and coercive routines (Baldamus
1961). A culture of low trust and mutual suspicion predominated. The obsession for
control extended into job design and resulted in fragmented jobs reduced to simplified
tasks (Walton 1985). Employees were afforded little if any discretion over working
methods, processes and timekeeping. However, increased globalization and inten-
sified competition has impelled organizations to strive for greater efficiency and to
increase their participation in virtual alliances. This environmental shift forced
companies to review their supervision and management process; as organizations
change their form and become ‘virtual’, their members become separated in time,
space and culture from the organization and from each other (Jarvenpaa and Leidner
1999), making close-quarter surveillance difficult, if not at times nearly impossible.
Although new technology can facilitate covert or overt activity and relationship
monitoring, a ‘big brother’ approach is unlikely to work well. Instead, Adami (1999)
suggests that outputs – such as quality and quantity – rather than inputs, are better
measures of performance for these modern forms. Morgan and Zeffane (2000) add
that individuals need to be trusted to achieve the desired output levels and to know
that management will ensure worker participation in decisions that will affect them.
Hence the ‘new’ management logic is arguably to increase worker commitment and to
raise levels of self-motivated governance. In human resource management terms, high
trust techniques such as empowerment and semi-autonomous work groups that allow
individuals to use personal judgement and discretion are depicted to be more appro-
priate for the new environment (Depickere 1999). Presumably, this change is not so
much from inspirational insight as from a realization that at-distance management is
likely to require a different leadership style.
Yet the evidence in practice indicates that one of the key inhibitors to self-
management is the ‘if I can’t see them how do I know they’re working’ mentality of
management (Tapsell 1999). Among industry observers and academic writers, the
prevalent view of virtual relationships is that trust and commitment require at least
some physical contact and effective support systems to prevent the isolation or
dependence of members and/or high stress levels (DeSanctis and Monge 1999; Handy
1995; Wiesenfeld et al. 1999). Adjunct to this concern is Handy’s (1995) caution that
lack of trust may become a self-fulfilling prophecy since individuals who feel that
they are not trusted may see no reason to behave in a trustworthy manner. Manage-

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ment’s challenging task is striking a balance between an appropriately ‘tight’ or

‘loose’ structure, which is conducive for self-governance yet still satisfies the innate
human desire for affiliation and identification.

Relationships dynamics
Management difficulties extend beyond the applied concern raised by Handy (1995)
in terms of managing people who are not co-located and may not share the same
time–space. From the individual member’s perspective, multiple reporting and
transient working relationships that provide only limited opportunity to bond through
group norms can make it difficult for the establishment of trust and commitment by
parties in a cooperative alliance. Moreover, overlapping or ill-defined work roles
within the virtual organization may contribute to any perceived injustice either in
terms of management decisions, risk distribution or resource access. Research on
participation in decision-making has also indicated that perceived involvement affects
workers’ judgement of fairness, commitment to the decision(s), and their sense of
belonging (Amason 1993; Lind and Tyler 1988; Thibaut and Walker 1975).
Research on groups has typically focused on group identity and commitment as an
individual cognitive abstraction, rather than on the physical or ‘tangible’ properties
that may be derived from a collective entity (for example through incorporation as a
company). Hence it might be argued that, as with the group phenomenon, individual
actors representing their various businesses within a virtual organization carry their
pasts with them and, when conducting boundary-spanning activities, help create the
virtual organization’s presence and history, guided by their own sense of past, present
and future, as they function in ‘real’ time (McGrath et al. 2000). The flexible nature
of membership allows participants to enter and leave the virtual team as and when
their contribution is required or comes to an end. This may deter the deindividuation2
process typical of conventional, stable, long-term groups in which a homogenous
group identity emerges. Consequently, the applicability of our conventional under-
standing of conflict and consensus within groups, concepts of organizational identity
and cohesion, how members influence one another and the leadership process
becomes central to the understanding of these modern virtual forms.
Bollen and Hoyle (1990: 482) defined perceived identity and cohesion as ‘an
individual’s sense of belonging to a particular group and his or her feelings of morale
associated with membership in the group’. Furthermore, the literature on group/team
dynamics that suggests five distinct phases of development (Rickards and Moger
2000; Tuckman 1965) offers a useful framework for understanding the development
of this sense of belonging and moral obligation. The forming stage is entered into
when the team is created; the storming stage occurs when the team members start to
vie for influence, power or position in the hierarchy; norming takes place when the
team has created a mutually acceptable system of rules, attitudes and behaviours and
settles down to the performing stage when it is able to concentrate on the tasks for
which it is responsible; the adjourning phase happens when the team either disbands,
having completed its tasks, or changes its composition as members leave and are
replaced, resulting in a ‘re-forming’ stage. However, while the model proposed by

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Tuckman (1965) is a convenient touchstone, it cannot accurately predict that every

team will transit each stage; it is conceivable some might not pass beyond the
storming stage. Moreover, the primary application of the model was to conventional
teams and the suitability for virtual teams is of interest, not only to assess the
application, but also the potential differences in the techniques and practices adopted
for each stage.
Not sharing common geographical or temporal space, the supervision and coordin-
ation of project stages, clarification of queries and performance appraisal will have to
find alternative delivery. Managers within the virtual network have to compensate for
the lack of planned and spontaneous face-to-face interactions in order to build mutual
trust and reciprocal commitment. As Maruca and Egan (1998: 34), in their assessment
of telecommuting, observe: ‘managing teams that work off-site requires managers to
pay extra attention to matters that are often taken for granted on site.’ In the absence
of physical cues, some other mechanisms with which actors can process information
about one another to form expectations of behaviour for themselves and others in the
group situation will have to be employed.3
Finally, recent research work has produced encouraging evidence of social pro-
cesses and social relationships (for example, Latané’s 1996 dynamic social impact
theory, Polley’s 1989 group field dynamics approach, and Poole and DeSanctis’s
1989 adaptive structuration theory) and there appears to be a general consensus on the
importance of trust as an embedded state (even by those who prefer to adopt an econ-
omic outlook and/or assuming a more positivistic methodological approach), engen-
dering commitment and reducing deceitful behaviour for successful partnering (for
example Cook and Emerson 1978; Galaskiewicz 1985; Granovetter 1985 and
Williamson 1993). However, most of the studies were conducted prior to the evo-
lution of the virtual organization and there is, as yet, no clear explanation of how trust
and commitment evolve and are sustained in these ‘new’ dispersed cooperative
structures.

Trust in the virtual organization

A central premise of any interpersonal or group relationship is the concept of trust
(Lewicki and Bunker 1996; Zaheer et al. 1998). Without trust, no social, political or
economic exchange is possible as it requires one party to make some form of overture
towards another with the tacit assumption that the other party can be relied upon to
reciprocate with appropriate good grace. Although there appears to be no single, all-
embracing definition of trust, the proposition by Rousseau et al. (1998: 395) that trust
is a psychological state comprising the intention to accept vulnerability based on
positive expectations of the intentions of behaviour of another, fits the reliance/risk
trade-off that characterizes inter-organizational alliances.
A prevalent notion in the organizational literature is that trust between organiz-
ations is an important independent variable or ‘cause’ of successful partnership and
joint performance because of enhanced capabilities and cooperation and reduced
transactional costs (Gulati 1995; McAllister 1995; Mayer et al. 1995). Likewise, trust
itself may be a dependent variable (namely the outcome) in that it is the result of prior

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experience and identity formation, as illustrated by the strong collaboration between

Japanese firms (Ouchi 1981). Doney et al. (1998) add that trust relies on social norms,
values and underlying behavioural assumptions – presumably these assumptions are
derived from some form of shared cultural history. However, participating members
within a virtual organization may be culturally diverse with no previous working or
partnering history, and therefore do not share a common past. With the increasingly
transnational nature of enterprises and the technological advances that facilitate
virtual alliances, the impact of cultural diversity, with different lexicons, values and
interpretations, on dispersed team working is a particularly relevant issue.
In such a virtual structure with its variant of historical and new ties, the ante-
cedents for trust-building behaviour based on a common belief that individuals or
groups will act in good faith to fulfil commitments, demonstrate honesty in negoti-
ations and refrain from excessive advantage (Cummings and Bromiley 1996) may be
harder to assume for some than others. Additionally, the need to rely on a variety of
artificial communication media can affect the process and form of confidence in other
members within the network. Moreover, it is possible that remote workers’ expec-
tations will be more personal and idiosyncratic – being constructed in a social vacuum
– as they will be isolated from the usual benchmarks of the conventional organization
structures, relationships and practices. This may in turn result in goal divergence and
long-distance organizational politics, which Hughes et al. (2001) consider to be
common in distributed organizations. Individuals perceiving a state of inequity in the
relationship might adjust their behaviour to restore a state of equilibrium (Adams
1965). In other words, those who feel their commitment to the organization is not
being adequately reciprocated might adjust their own level of commitment down-
wards to restore the perceived balance. This is particularly pertinent when a team is
comprised of a mixture of internal and contract personnel, each with a different per-
ception of the degree of commitment of their contractual and psychological relation-
ships with the parent organization. The building of trust in these virtual settings,
constructed on the basis of diversity and uncertainty, remains fundamental if the
environmental uncertainties are to be overcome (Jarvenpaa and Leidner 1999).
However, while a trusting relationship may be created through computer-mediated
communication, this has been shown to be less robust than trust achieved through
face-to-face communication (Jarvenpaa and Leidner 1999; Kasper-Fuehrer and
Ashkanasy 2001).
Lewicki et al. (1998) found that trust is dynamic and in relation to an alliance’s
life cycle, trust evolves with the situational context (Ring and Van de Ven 1994). It
might be said that distributed coordination could be achievable directly through
institutionalized plans and procedures. Parkhe (1993) argues that over time, relevant
signals from organizational practice, personal observation and experience will allow
for less emphasis on formal coordination and compliance measures. Hence, if a trust-
ing atmosphere can encourage tolerance, then this is likely to help keep the alliance
going during difficult times. Indeed, trust development as a continued, reciprocal and
revitalizing process is seen as a key factor for Singaporean investors in China to
maintaining long-term cooperation (Luo 2000). From this synthesis of the literature, it
would appear that trust is produced through repeated interpersonal exchanges and its

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production in turn cements an initial willingness to work with one another. It also
suggests that trust may be modified by actual experience.
Inkpen and Currall (1997), in their study, reported that trust between alliance
partners depends on the length of relationship prior to the alliance, the level of
strategic alliance risk and the strength of interpersonal attachment. Luo’s research
(2002) extends these earlier findings by concluding that trust is moderated by con-
textual variables; in particular, the age of alliance, the level of interdependence on one
another’s resources and the risk commensuration between the partners. However, the
extent to which the insights from the above and other similar studies would inform the
specific understanding of cooperation and governance in the modern virtual organ-
ization is unclear. For example, where certain virtual associations may be short term,
with a transactional [psychological] contract, perceptions of reciprocity are likely to
be different when compared with the long-term, relational contracts that might exist in
organizations with more conventional structures.4
Trust and control are critical factors in the success of the virtual organization
(Cohen 1997; Jones and Bowie 1998) and understanding the conditions for cooper-
ation and collaboration, or of distrust and resentment, will depend on the willingness
and ability of management and individuals to adjust to and accept the new structures
and relationships. Problems might arise when the individual believes the organization
has failed to keep perceived promises (Morrison and Robinson 1997). However,
understanding the trust mechanism as glue in maintaining virtual relationships is still
in its infancy, and there is as yet little specific research on the impact of any trust
betrayal on the integrity of the network of relationships within the virtual organ-
ization. As Handy (1995: 44) observes, ‘If we are to enjoy the efficiencies of the
virtual organization, we will have to discover how to run organizations based more on
trust than on control. Virtuality requires trust to make it work,’ leading Jones and
Bowie (1998) to conclude that the virtual organization represents a ‘paradox’; it
exhibits structural properties that work against the building of high trust relationships
in which members’ commitment to the virtual partnership is relational rather than
purely transactional.
Based on Handy’s (1995: 46) logic that ‘trust needs touch’ and ‘shared commit-
ment requires personal contact to make it real’, it is unlikely that a totally virtual
relationship is conducive for trust creation; thus further underlining the importance of
geographical and time distantiation as factors implicating team development. Addi-
tionally, Butler’s (1986) assertion, made prior to the latest wave of communication
technologies, that interpersonal trust is an essential part of human relationships, adds
to the need to examine whether multiple relationships, lack of co-proximity and
having to rely on artificial media for communication affect trust and commitment
formation. Garfoot and Labrow’s (2003) caution against over-estimating the power of
IT as an effective substitute for personal contact because problems of clarity of
function, role or purpose can easily disrupt working relationships within the virtual
networks, thus further highlights virtual organizations as complex systems.
While there is an abundance of literature on trust in sociology, psychology,
management and even economics journals, there is relatively little that is specifically
related to organizations with atypical structures and spatial–temporal relationships.

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Thus, the impact of changes in organizational form on the psychological relationship

is both interesting and potentially complex. The underlying concern for trust form-
ation and reproduction in these modern forms is the opportunity for reciprocity and
mutual obligation as antecedents to trust and commitment – a reciprocity that
Rousseau (1989) had identified when observing the role played by the organization’s
agents, such as supervisors and junior or top management, as emanating from an
individual’s perceived contribution to and obligations from the organization. The
exact nature and composition of members’ commitment, apart from expressed job
satisfaction and willingness for continued association in conventional organizations is
far from certain; in the virtual organization it is even more problematic owing to the
atypical relationships that exist, the motives for collaboration and the means by which
the participants interact. The purpose of this research was specifically to examine the
importance of reciprocal trust and commitment and to identify potential barriers to
their achievement in an atypical organization in which members are spatially and
temporally separated, yet held accountable for their combined performance.

Methodology
Our study was conducted as a pilot for a more comprehensive research project that
involved a series of virtual project teams operating on a global scale, transcending
numerous time zones and national cultures. We held preliminary discussions with the
manager of a small department in one of the UK divisions of the organization,
CompuCo, and with his agreement conducted a survey of his team. The research was
conducted with the members of the ‘virtual’ team, geographically dispersed across the
United Kingdom and western Europe, during June and July 2001. Due to the lack of
geographic proximity we collected the information from respondents through a com-
bination of face-to-face interviews, a quantitative and qualitative questionnaire
distributed and returned by email and by direct email correspondence. Our research
objective was to establish the perceived need for reciprocal commitment and trust
among the team members and the impact of the ‘virtual’ team structure on personal
interactions (Rickards and Moger 2000; Tuckman 1965). We were also interested in
the degree of commitment from the organization in terms of tenure and status
(employee or contractor) and how this would implicate individuals’ commitment to
the organization (group), division and line manager levels.

Case study: CompuCo

The division studied in CompuCo was established as an independent company in
1990. A UK-based software group, which, at the time of the study had 45 offices
worldwide and a market capitalization of £185 million, acquired the company in
1999. The division adopted a strategy of ‘in-sourcing’ expertise to provide value
solutions to clients that have outsourced all or part of their functions or processes,
predominantly in the fields of data warehousing, content value management and data
migration. Through a combination of permanent staff and contract personnel, it
operated a numerically flexible approach. At the time of the study, the ‘workforce’
totalled 90, of which 60 per cent were permanent with the remainder being contracted

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on fixed-term contracts. Project teams were a combination of permanent and

contracted workers, assimilated into the day-to-day functions to such a degree that
their employment status is not obvious. This organizational structure was adopted by
CompuCo as an effective way of getting closer to the customer by acquiring and
providing skills to bridge existing competency gaps. The immediacy of integration
into the team resulted in some individuals being allocated to customer locations from
their first day with CompuCo. As a consequence, they were expected to progress from
the ‘forming’ to the ‘performing’ stage, with little consideration given to the
‘storming’ or ‘norming’ stages (Tuckman 1965).
Within the team members there was a high degree of consensus that reciprocal
commitment in the work relationship was essential. The highest degree of
commitment was at the personal or individual level; with the division (European)
ranked second and the group (worldwide) last. This could be a result of the long-term
association with the contract personnel as well as long-serving staff. Although con-
tracts were essentially of fixed durations, tied to the estimated time-span of projects,
upon completion most of these knowledge workers would be recommissioned to work
on other projects. As far as perceived reciprocity is concerned, the team members felt
a higher level of commitment to their present and future well-being at the personal
level. They perceived some commitment at the divisional level, but felt the group was
not really committed to them. This is probably due to the sense of isolation from the
group, probably for very practical reasons as well as the recent assimilation into the
larger group had yet to be bedded down. This apparent lack of commitment at the
group level exemplified by one team member’s remark that ‘I do not relate to the
group due to having no contact with them’, may also be a symptomatic characteristic
of the virtual organization.
A second major finding was that there was clear consensus among the team mem-
bers that a high trust relationship was more important in a team that is geographically
dispersed than in one that is proximate. While accepting the need to work cooper-
atively together early on, they also confirmed that it took time to establish trust in a
team and that face-to-face contact was essential and should not be discarded in favour
of the electronic media.
Team members were asked to comment on the extent to which they were trusted
to work to the best of their ability without close supervision. As with commitment,
responses were measured at the group, divisional and personal levels. There was a
perception that they were highly trusted at the personal and divisional levels, but not
at the group level. There was clearly a significant degree of empowerment and self-
governance, as team members reported a high level of freedom and their whereabouts
during hours of work did not need to be accounted for. Clearly the ‘if I can’t see them,
how do I know they’re working’ factor (Tapsell 1999) was overcome in this particular
division of CompuCo. In his interview the manager made it clear that individuals will
only behave in a trustworthy manner if the organization demonstrates trust towards
them, thus supporting Handy’s observation (1995).
There was agreement that at the personal and divisional levels greater interest was
placed in outputs (quantity and quality) rather than inputs (hours/days of work), thus
supporting Adami’s (1999) claim, and that individuals were trusted to produce the

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desired outcomes without close supervision. However, at the group level the evidence
was less clear. The higher degree of trust at the personal and divisional levels
extended to the perception that individuals would be looked after and well-treated, but
again there was a lack of trust at the group level. Apart from the possibility that trust
was in its infancy because of the newness of the group, this could also suggest that
distance might inhibit the trust-building process.
In terms of team working, team members reported that for a team to achieve
optimum performance it was necessary to operate initially in a face-to-face setting. As
one team member commented: ‘I do not believe that a fragmented, geographically
distributed “team” can ever be as productive as a team who are working together in
the same location.’ Although there was a high deployment of communication tech-
nology, its effectiveness for building trust between team members was also rejected.
This seems to highlight the potential difficulties of high performance and trust
building in virtual teams.
Likewise, the notion that a team of skilled ‘experts’ is capable of self-direction
and less dependent on the leader for direction and guidance was also questioned. As
one team member put it: ‘There are times when a team of experts may need more
direction and guidance than an unskilled team, if they have a tendency to take
themselves in directions that they are either excited or comfortable with, and
therefore not necessarily following the direction that the company needs them to
take.’
From a psychological contract perspective, there is clearly a relational contract in
CompuCo, but only with the agent (manager) with whom there is a high expectation
and realization of reciprocal commitment and trust at the personal level. This rela-
tional contract does not appear to extend to the group level. A further uncertainty is
the way in which the psychological contracts in CompuCo may develop as the
structure and membership of the organization changes and new personalities and
values challenge the status quo. The company demonstrated dynamic characteristics
and the need for reciprocity exists longer than the initial economic relationship, for
while an individual may only be required for a fixed period of time this was likely to
lead to future periods of alliance.

Conclusion
Paradoxically, low commitment from the organization to the individual leads to low
trust and team effectiveness is inhibited; yet organizational efficacy in dispersed
teams requires high mutual commitment, high trust. From the exploration of the
literature, it is evident that the new challenge facing companies is how to capitalize
on the potential of new communication technologies to create value-adding capa-
bilities for competitive advantage. In order to fill the knowledge and skill gaps
created as learning lags behind advances in technology, an alliance-based organiz-
ational form, the virtual or network organization has evolved to breach these gaps.
We propose that the essence of the new organizational form is in fact technology-
enabled partnering under various guises such as outsourcing, strategic alliances,
joint venturing and collaboration. The virtual or network organization is therefore

385
Alf Crossman and Liz Lee-Kelley

more a strategic concept than a prescribed organizational form and is invariably

about a collective of companies and/or individuals coming together for mutual
benefit. Digital connectivity has allowed the partners or actors to be ‘integrated’
over time and space for quick, effective response to market forces. Our study of
CompuCo suggests that it is the exchange of commitment between the organization
and its individual service/ knowledge providers (or ‘pseudo’ employees) that provides
the platform on which the psychological contract is constructed rather than the latter
determining the type of commitment given to an organization as predicted by
McDonald and Makin (1999). From the discussion, it was also clear that time is
required to overcome operational and cultural differences to build personal trust.
Hence, the commitment level attached to an opportunistic cooperation targeted at
meeting a specific market need is likely to be predefined psychologically as a
transactional relationship.
Kanter (1997) argues that low commitment is a risk factor in alliances failing to
meet their objectives. This is supported by our submission that, as the overall objec-
tive of alliances is ultimately competitive advantage and economic gain, whether a
relationship is short-term or long-term, transactional or relational or if trust is based
on cognitive or affective knowledge of the ‘trustworthiness’ of the partners, the key to
success is still centred on the level of commitment given by the parties to the
partnership. However, as situations change, a commitment form may evolve that
would necessitate a realignment of the psychological understanding and trust between
the partners. If there is agreement between the partners that an upward shift from
short-term to long-term commitment is beneficial to all, then the alliance will
continue. If, however, there is no consensus between the partners (namely there is no
agreement to the equity of commitment given by the parties) then the alliance will
terminate, despite the economic benefits.
The findings of the case study highlighted the complex nature of organizational
commitment, because reciprocity between the organization and the individual in fact
exists at various levels – personal, divisional and group. No discernible difference
could be found in the level of commitment to CompuCo from employees and contract
workers, suggesting that employment status is not a key determinant in this instance.
A likely explanation is the overall length of each individual member’s association
with organization regardless of employment status. There was a clear demonstration
of a higher degree of commitment and trust at the personal level, thus demonstrating
the importance of a personal relationship and formation of a relational psychological
contract, backed by an appropriate amount of face-to-face contact as well as by
historical experience and understanding.
The implication for businesses is the need to appreciate that commitment is central
to the psychological understanding between the organization, the manager and the
individuals. It is derived from the perception of the longevity of association and the
degree of expectation of a trustworthy relationship, which in turn dictates the extent to
which individuals are willing to remain with the organization and to ‘reward’ the
organization with their trust and loyalty.

386
 Trust, commitment and team working: the paradox of virtual organizations

Alf Crossman and Liz Lee-Kelley

School of Management
University of Surrey
Guildford
Surrey
GU2 7X, UK

Acknowledgements
We would like to thank the Dr Alisdair Rogers and two anonymous reviewers for their
insightful, constructive and courteous comments on an earlier version of this article.

Notes
1. The authors contributed equally to this article, names appear alphabetically.
2. Deindividuation is a psychological state of decreased self-evaluation, causing a loss of self-
identity and leading to anti-normative and disinhibited behaviour. Its usage is derived from
Zimbardo’s (1969) theory that the group provides an environment in which the individual –
submerged and anonymous – suffers from a loss of self-awareness. Originally observed in
the Stanford Prison Experiment, modern examples can be seen in phenomena such as col-
lective behaviour, behaviour in online groups and in computer-mediated communications.
3. Given that one of the aims of the virtual organization and team working is resource sharing
among members, there appears to be limited research on why groups or teams fail to utilize
fully resources available in the ‘group’ (Davis 1973, 1982) and fail to generate creative
ideas, despite access to a larger knowledge pool (Diehl and Stroebe 1991).
4. Transactional contracts are essentially instrumental and based on economic exchange, for
example overtime and high performance in return for performance-based pay (McDonald
and Makin 1999). Relational contracts are emotionally based and ‘characterized on the
employees’ side by perceived obligations to their employer of loyalty, and on the
employer’s by an obligation to provide job security’ (McDonald and Makin 1999: 85).

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