Cross-functional team effectiveness factors

Team Performance Management: An International Journal
Cross-functional team effectiveness: An examination of internal team environment, shared leadership,

and cohesion influences
Josh Daspit, C. Justice Tillman, Nancy G. Boyd, Victoria Mckee,
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Josh Daspit, C. Justice Tillman, Nancy G. Boyd, Victoria Mckee, (2013) "Cross‐functional team effectiveness: An
examination of internal team environment, shared leadership, and cohesion influences", Team Performance Management:
An International Journal, Vol. 19 Issue: 1/2, pp.34-56, https://doi.org/10.1108/13527591311312088
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TPM
19,1/2 Cross-functional team
effectiveness
An examination of internal team environment,
34 shared leadership, and cohesion influences
Josh Daspit
Department of Management and Information Systems,
Mississippi State University, Starkville, Mississippi, USA
C. Justice Tillman
Baruch College, City University of New York, New York, New York, USA, and
Nancy G. Boyd and Victoria Mckee
Department of Management, University of North Texas, Denton, Texas, USA
Abstract
Purpose – Current research remains unclear on what factors contribute to cross-functional team
(CFT) success. Thus, the primary purpose of this investigation is to examine internal factors of the
team (namely internal team environment, shared leadership, and cohesion) and the influence of each
factor on CFT effectiveness.
Design/methodology/approach – Structural equation modeling is used to empirically examine the
data collected from an undergraduate student sample. Teams worked competitively on a complex task
requiring functional area expertise.
Findings – Results from the study indicate internal team environment influences effectiveness
through shared leadership and cohesion as found in other forms of teams. However, unique to CFTs,
internal team environment is not directly related to effectiveness, and shared leadership does not
directly influence cohesion. The findings suggest that in CFTs, internal team environment indirectly
influences effectiveness.
Research limitations/implications – The findings of this study can be used to expand current
models of CFT effectiveness. Additionally, by examining the internal dynamics of the team (e.g.
internal team environment) researchers will be better able to account for the previous vast differences
found in CFT outcomes.
Practical implications – Managers interested in influencing team effectiveness are encouraged to
focus on the internal dynamics of CFTs. To indirectly influence team effectiveness managers should
insure teams establish a clear purpose and that members support one another and feel comfortable
making contributions to the team.
Originality/value – This investigation offers understanding of how CFTs can be structured to
influence effectiveness and provides insight into previously inconsistent findings. Both researchers
and managers will benefit from an enhanced understanding of how internal factors uniquely influence
CFT effectiveness.
Keywords Internal team environment, Shared leadership, Cohesion, Cross-functional team effectiveness,
Leadership, Team working
Paper type Research paper
Team Performance Management

Vol. 19 No. 1/2, 2013
pp. 34-56 Due to the rapid nature of change and high level of competitiveness in the modern
q Emerald Group Publishing Limited
1352-7592
business environment, firms are forced to find ways to remain adaptable to their
DOI 10.1108/13527591311312088 dynamic environment. The use of cross-functional teams (CFTs) is a common practice
as managers find ways to create a more responsive firm (Parker, 2003). CFTs consist of Cross-functional
individuals from various functional areas in the firm that work together to obtain a team
specific goal (Webber, 2002). CFTs are used to develop new products (Bunduchi, 2009),
transform organizations (Tabrizi, 2007), increase speed to market (Griffin, 1997), and a
effectiveness
variety of other tasks. Members from diverse functional areas contribute unique
perspectives to CFTs, which can create innovative teams well-adept at problem solving
(Lovelace et al., 2001). 35
Although the use of this type of team has increased in popularity, research is
inconsistent in identifying what factors contribute to the success of CFTs. For example,
researchers find that functional diversity has a positive influence on schedule
performance (Keller, 2001), product development time (Eisenhardt and Tabrizi, 1995),
and new venture performance (Li and Zhang, 2007), while other researchers show
functional diversity negatively influences sales (Simons et al., 1999), information

sharing (Bunderson and Sutcliffe, 2002), and overall performance (Ancona and
Caldwell, 1992). Still, other researchers contend that functional diversity in teams has
no effect on product quality (Sethi, 2000) or performance (Webber and Donahue, 2001).
With this variance among observed outcomes, researchers are left to wonder how
CFTs affect performance and what causes the vast differences in outcomes.
Cognitive resource diversity theory states that the diversity of knowledge in a CFT
positively influences performance due to the various perspectives each member brings
to the team (Horwitz, 2005). On the other hand, because CFTs consist of members with
specialized expertise, the variation in knowledge and perspectives has the potential to
create communication barriers and conflict among team members (Majchrzak et al.,
2011). Taken together, if members are unable to work collaboratively in a supportive
environment, the full value of the diversity is not utilized. In other words, if the internal
dynamics of the team do not support collaborative interactions among members, then
the full potential of the team is not realized. Overall, we suggest that the effectiveness
of the CFT is contingent on the internal characteristics of the team, and in this study,
we seek to better understand how these dynamics influence CFTs. Specifically, we
examine how the internal characteristics are related and how team effectiveness is
influenced in the context of CFTs.
To examine the manner in which internal characteristics of CFTs are related, we
utilize a framework from McDonough (2000), which suggests CFTs consists of three
internal elements. The internal elements are operationalized as internal team
environment (stage setting element), shared leadership (enabling element), and
cohesion (behavioral element). This framework provides a classification of internal
elements specific to CFTs and offers a process-oriented conceptualization that attempts
to capture the complex nature of internal team dynamics.
The primary objective of this study is to investigate how internal characteristics are
related and how effectiveness of the CFT is influenced. Using the identified framework,
we identify internal components and conduct an empirical examination to identify the
precise nature of the relationships. From a detailed investigation of internal factors,
researchers and managers will better understand the variation in CFT outcomes
resulting from internal dynamics and additional insight will be obtained into how to
manage CFTs for optimal effectiveness.
TPM Literature review and hypotheses
19,1/2 Numerous researchers examine internal factors that influence team outcomes, yet few
studies offer a comprehensive model to explain the internal dynamics of the team.
Among the researchers that offer a comprehensive model are Cohen and Bailey (1997),
who conduct a review of various team types and propose a generalized model, which
includes external and internal factors that influence team effectiveness. Although
36 Cohen and Bailey (1997) are well-regarded for their contribution to the team literature,
the framework from McDonough (2000) offers a conceptualization of internal effects
specific to CFTs.
McDonough (2000) suggests that CFT outcomes are influenced by three internal
elements. First, stage-setting elements are factors that relate to the climate of the team.
Second, enabling elements facilitate the project-related efforts of the team, and last,
behavioral elements facilitate trust and cooperation in the team. Teams are considered
multi-tasking, process-oriented units in the firm (Marks et al., 2001), and the elements
proposed by McDonough (2000) are congruent with representing phenomena that work
together in a process-like manner to influence CFT outcomes. In line with the
categorizations proposed, we operationalize each category using constructs that allow
for further examination of the relationships among the identified internal factors.
Specifically, given that stage-setting elements are factors related to the climate of the
team, the stage-setting elements are operationalized using the construct of internal
team environment, as this construct reflects elements of internal team climate.
Additionally, shared leadership is examined as an enabling element given that such
elements are represented by leadership-oriented factors. Last, the construct of cohesion
is used to examine the cooperation of the team as identified by the behavioral element.
Given that teamwork processes are shown to influence performance outcomes (e.g.,
LePine et al., 2008), we seek to further investigate how the internal team dynamic
process influences outcomes in the context of CFTs. In the following sections, each
construct is defined, and the relationships among the constructs are individually
examined as they relate to the framework. Figure 1 depicts the conceptual relationships
we discuss in further detail below and propose in our hypothesized model.
Internal team environment and shared leadership

Carson et al. (2007) propose that the nature of the internal team environment, which
consists of shared purpose, social support, and voice, influences the development of
shared leadership over time. They suggest the elements of team environment work
Figure 1.
Hypothesized model
collectively to create a team context that encourages members to provide leadership Cross-functional
and accept leadership of other members. Shared purpose exists when team members team
have similar understandings of team goals and make an effort to remain aligned with
the common objectives (Carson et al., 2007). Past research recognizes the importance of effectiveness
shared goals and a common sense of purpose to the motivation and commitment of
team members to both their team and their work (Kirkman and Rosen, 1999). Social
support for a team is the extent to which members provide emotional and 37
psychological strength to one another (Carson et al., 2007). Research presents evidence
that team members who offer support are more likely to cooperate with one another
and share responsibilities for team outcomes (Kirkman and Rosen, 1999). The final
dimension, voice, is a positive behavior in which individuals seek to improve rather
than merely criticize (Van Dyne and LePine, 1998). Thus, the exercise of voice
contributes to an environment in which team members engage in cooperative behavior
and are committed to and actively involved in team goal achievement.

While substantial support for the important role of leadership in teams exists, the
majority of work related to leadership focuses on vertical leadership. Yet, an
abundance of theoretical and empirical evidence suggests shared leadership has a
similar, influential effect (e.g., Bass, 1997; Butler and Reese, 1991; Dubinsky et al., 1995;
Jolson et al., 1993; Ross and Offerman, 1997; Tapp, 1996; Tyagi, 1985). Leadership in
CFTs is not determined by a single, authoritative position but rather by the abilities of
members to collaborate with one another in any given moment (Pearce et al., 2009).
Shared leadership is “a dynamic, interactive influence process among individuals in
teams for which the objective is to lead one another to the achievement of team or
organizational goals or both” (Pearce and Conger, 2003, p. 1). Shared leadership
involves the distribution of leadership responsibilities to multiple team members when
there is no single, appointed leader (Pearce and Sims, 2002) and is the process through
which team members perform management duties by motivating other members,
providing feedback, and overseeing team tasks (Ensley et al., 2003).
Carson et al. (2007) find the internal environment of a team is positively related to
shared leadership. Furthermore, given the tenets of social exchange theory, which
states that individuals who perceive support from their team will experience an
obligation to repay the team, it is likely that CFT members who experience positive
shared purpose, social support, and voice (i.e., internal team environment) will be more
likely to engage in shared leadership activities. In CFTs, although individuals
represent various functional areas, when perceptions of shared purpose, social support,
and voice exist, members are more likely to participate in activities to benefit the team.
Therefore, a positive internal team environment will contribute to the increased
presence of shared leadership in CFTs:
H1. Internal team environment is positively related to shared leadership.
Internal team environment and cohesion

Tekleab et al. (2009) define cohesion as the tendency for a team to remain united in the
pursuit of its objectives. Based on social identity theory, Lembke and Wilson (1998)
suggest that when group members work on projects with interdependent tasks,
identification with the group on the part of team members will be reflected in a shared
focus on task accomplishment as well as unified behavior toward a common focus
(Lembke and Wilson, 1998). Thus, cohesion reflects a commitment on the part of team
TPM members to one another as well as the team’s overall task or purpose (Mathieu et al.,
19,1/2 2008).
Most research focuses on the influence of cohesion on team outcomes rather than on
antecedents of cohesion (Michalisin et al., 2007). Evidence exists, however, that
elements of the internal team environment contribute to team cohesiveness. Turner
(1987) proposes that the process of group formation may produce solidarity, which
38 makes the successful attainment of shared goals more likely. Man and Lam (2003)
suggest that cohesiveness is associated with the pursuit of common goals and
objectives (i.e., shared purpose). Additionally, teams in which members exchange
advice and share perspectives with one another (i.e., voice) tend to be more cohesive
(Van Woerkom and Sanders, 2010).
Further, social exchange theory contends that interpersonal interactions create
interdependent relationships among members (Blau, 1964), and such interdependencies
have the ability to generate high-quality relationships (Cropanzano and Mitchell, 2005).
The relationships reduce risk and encourage cooperation (Molm, 1994). These
interdependent relationships result in individuals perceiving a reciprocal obligation to
support those individuals who support them, thus resulting in high-quality relationships
that enhance the interconnectedness (i.e., cohesion) of the team. In CFTs, members are
more likely to work cohesively in teams when the perception of shared purpose, social
support, and voice exists. Thus, CFT members are more likely to be willing to work in a
cohesive manner if the internal team environment is supportive:
H2. Internal team environment is positively related to cohesion.
Shared leadership and cohesion

Researchers suggest that more traditional forms of leadership contribute to cohesion to
the extent that leaders engage in behaviors that increase members’ attraction and
desire to remain and interact with the team. When effectively utilized, traditional forms
of leadership enhance the focus of the team and encourage information sharing among
team members, which contributes to increased cohesion (Michalisin et al., 2007).
Although substantial research exists on the influence of traditional forms of leadership
in teams, few studies empirically test the relationship between shared leadership and
cohesion.
Balthazard et al. (2004) extend the work on traditional leadership and find support
for a positive relationship between shared leadership in work teams and the level of
cohesion that exists among team members. Bergman et al. (2012) demonstrate that
teams engaging in shared leadership report less conflict and higher cohesion than
groups that do not share leadership responsibilities. Thus, in the context of CFTs, if
teams engage in shared leadership amid the presence of diverse perspectives, the level
of conflict is likely to be diminished and the level of cohesion enhanced. Therefore,
increased levels of shared leadership are likely to enhance cohesion in CFTs:
H3. Shared leadership is positively related to cohesion.
Internal team environment and team effectiveness

When evaluated in the context of teams, measures of effectiveness aid researchers and
managers in determining the extent to which a team is functional and productive.
Researchers assess team effectiveness by evaluating commitment, satisfaction,
performance, environmental factors, and numerous other factors (Cohen and Bailey, Cross-functional
1997; Janz et al., 1997). CFTs with a high degree of shared purpose, social support, and team
voice are more likely to function effectively on a daily basis. As noted by Cohen and
Bailey (1997), internal team processes, such as cooperation and communication, are effectiveness
essential to team effectiveness. Kirkman and Rosen (1999) demonstrate that team
empowerment, which includes such factors as a collective belief in the team and a
shared experience of meaningfulness in the work, is significantly related to elements of 39
team effectiveness. Janz et al. (1997) similarly note that team process factors (e.g.,
sharing information and helping others learn) are essential to team effectiveness.
Furthermore, evidence from social exchange theory explains that individuals who
perceive support from the organization or team are likely to feel compelled to help the
organization or team reach its goals (Eisenberger et al., 2001). Finally, cognitive
resource diversity theory (Horwitz, 2005) suggests that the information shared among
members influences team outcomes given a supportive climate. Therefore, it is likely

that internal team environment directly influences the effectiveness of CFTs.
H4. Internal team environment is positively related to team effectiveness.
Shared leadership and team effectiveness

Substantive participation by members in team tasks is a highly significant predictor of
outcomes (Cohen and Bailey, 1997). Teams consisting of members who engage in
interpersonal interactions with other members and share leadership responsibilities
are more likely to have lower levels of conflict and stress and higher levels of
satisfaction (Wood and Fields, 2007). For example, in a study of transportation teams,
Hiller et al. (2006) find that collective enactment of leadership roles is positively related
to higher supervisor ratings of team effectiveness. Furthermore, shared leadership is
found to influence client-rated team performance (Carson et al., 2007) and overall team
effectiveness (Pearce and Sims, 2002).
In social exchange relationships, interpersonal interactions create dependencies
among individuals. In contexts of shared leadership, individuals engaged in
participative leadership roles interact with peer leaders and may experience the
obligation to continue performing at satisfactory levels, which influences the
effectiveness of the team. Furthermore, the CFT structure enhances response times to
environmental demands when leadership is shared among functional experts.
Therefore, the CFT is more likely to be effective when shared leadership exists:
H5a. Shared leadership is positively related to team effectiveness.
While little empirical research directly examines shared leadership as a mediator
between internal team environment and team effectiveness, theoretical support exists
for such a relationship. For example, Day et al. (2004) suggest team leadership is an
outcome of team processes, and team leadership subsequently provides resources for
improved team performance. As team members engage in shared work, team-level
leadership emerges that serves as an input into team development and performance.
Further, Bligh et al. (2006) propose a model in which shared leadership mediates the
relationship between team trust, potency, and commitment and the performance
outcome of knowledge creation. Finally, Carson et al. (2007) hypothesize and find
support for a relationship between internal team environment and shared leadership as
well as between shared leadership and team performance, although they did not
TPM explicitly examine shared leadership as a mediator. In CFTs, it is likely that team
19,1/2 members from various functional areas engage in shared leadership responsibilities as
a result of perceiving shared purpose, social support, and voice, and the result of
shared responsibilities enhances effectiveness. Thus, it is likely that shared leadership
has a mediating influence on the relationship between internal team environment and
effectiveness of the CFT:
40 H5b. Shared leadership mediates the relationship between internal team
environment and team effectiveness.
Cohesion and team effectiveness

Cohesion provides a bonding force in teams that facilitates group development and
maintenance (Gupta et al., 2010). Dobbins and Zaccaro (1986) note that positive
consequences accrue to teams as a result of greater cohesion, including enhanced team

interaction and involvement in team affairs, less friction between members, higher
levels of trust, and greater coordination. Team synergy increases, reducing team
maintenance needs and increasing attention to task-related activities (Dobbins and
Zaccaro, 1986; Van Woerkom and Sanders, 2010).
Balthazard et al. (2004) find the level of cohesion is related to the team’s level of
performance for a given task. Mullen and Copper (1994) indicate that conflicting research
exists on the relationship between cohesiveness and performance but find in their
meta-analysis that a significant relationship between the constructs exists. They
attribute the effect to a shared commitment of a task or purpose. Further, Tekleab et al.
(2009), using longitudinal data, find strong support for a direct and positive relationship
between cohesion and perceived team performance, team satisfaction, and team viability.
Based on social exchange theory, helpful behaviors are exhibited because members
perceive an obligation to assist a team that is supportive of their individual needs
(Rhoades et al., 2001). The high-quality exchange relationships that exist between an
individual and the team encourage members to exhibit positive behaviors that contribute
to the effectiveness of the team. Furthermore, Tabrizi (2007) states that cohesive CFTs
share knowledge through enhanced communication, which enhances the effectiveness of
the team. Therefore, it is likely that cohesion in CFTs enhances effectiveness:
H6a. Cohesion is positively related to team effectiveness.
Previous research provides support for cohesion as a mediator of internal team
environment and effectiveness. For example, Lin and Peng (2010) find cohesion
mediates the relationship between organizational citizenship behaviors towards
individuals and team performance. Cohesion is shown to mediate the relationship
between team member trust and performance (Mach et al., 2010). Finally, when the
internal environment of CFTs is supportive and members perceive a shared purpose,
social support, and voice, members engage in open dialogue and are more likely to
share unique perspectives (Tabrizi, 2007). When CFTs are cohesive and perspectives
are shared in a healthy manner, the overall outcome of the task is likely to be enhanced.
Therefore, it is likely that cohesion has a mediating influence on internal team
environment and effectiveness in CFTs:
H6b. Cohesion mediates the relationship between internal team environment and
team effectiveness.
Method Cross-functional
Participants and procedure team
A group of undergraduate students organized into CFTs at a large university in the
southwestern USA participated in the study. The response rate and exclusion by way effectiveness
of listwise deletion of missing data due to absent values of study variables yielded 24
teams (n ¼ 142). Students surveyed were enrolled in a business policy (capstone)
course, which is a course taken by students typically at the end of the senior year. The 41
course employed a case-based model to teach students strategic management. In the
course, students worked closely on case analysis projects over a four-month period and
were engaged in a variety of tasks including financial analysis, marketing analysis,
statistical problem solving, and implementing the strategic management process.
Teams were assigned three comprehensive cases that encompassed strategic and
functional issues and were charged with developing well-crafted solutions to solve the
managerial dilemmas presented. The cases covered a range of industries and exposed
students to the integration process necessary for successful managerial
decision-making, which includes integrating knowledge from various functional
areas. The context of the classroom was similar to an industry environment, given the
competitive nature of teams in the course and the type of tasks undertaken.
Additionally, to enhance the competitive nature of the cases, the last case was a “live”
case that included an existing decision facing managers of a current firm. The top
teams from the course were chosen to present their findings at a final case competition
(held outside of class time), and a board of representatives from the firm selected one
winning team. The winning team (and finalists) received cash prizes and participation
awards.
Students were assigned to teams by the professor based on criteria designed to
maximize within-team heterogeneity. Specifically, prior to the commencement of the
semester-long project, the professor formed each team by assigning one student from
each major to each team to insure functional diversity (i.e., one representative from
management, marketing, accounting, finance, etc.). Furthermore, each team consisted
of at least three different functional areas, both genders, and a range of GPAs. Teams
ranged in size from four to eight members with a mean size of 5.92 individuals, and
56.9 percent of the sample members were male. This sample was well-suited to test the
proposed hypotheses because the tasks were highly similar and the life cycles were
identical.
Questionnaires were used to assess students’ perceptions of internal team
environment, shared leadership, cohesion, and team effectiveness. The questionnaires
were administered via hardcopy to each of the students during the latter part of the
course. The instrument contained instructions on how to complete and properly submit
the questionnaire to the research team, and the nature of the instrument design
guaranteed respondents complete anonymity in both their responses and their decision
to participate. Participation in the study was voluntary, and students were not given
course credit for completion of the questionnaire.
Measures
The questionnaire used previously validated multi-item scales, which are summarized
below. Unless otherwise noted, all items were responded to on a seven-point Likert
scale. The anchors for the scales were 1 (strongly disagree) to 7 (strongly agree), and
TPM the items in the scales were averaged to create an overall mean for each variable. The
19,1/2 items were coded such that high values represent high levels of the construct
measured.
Internal team environment. The perceptions of internal team environment were
assessed using ten items that assessed shared purpose, social support, and voice
(Carson et al., 2007). An example item is, “The members of my team devise action plans
42 and time schedules that allow for meeting our team’s goals.” The internal reliability for
the internal team environment scale in this study is a ¼ 0:89.
Carson et al. (2007) examined internal team environment and tested for discriminant
validity by performing a confirmatory factor analysis using EQS (Bentler and Wu,
2005), which specified a higher-order factor with three dimensions (indicated by the ten
items) that yielded a good fit to the data. The authors also examined the convergent
validity of the structure for internal team environment by examining the correlations
among the three subscales. The zero-order correlations were high, ranging from 0.72 to
0.80 (p , 0:001), which provided evidence that the three subscales represented highly
interrelated dimensions. Therefore, in line with the operationalization proposed by
Carson et al. (2007), we measure internal team environment as a higher-order construct
composed of three dimensions (shared purpose, social support, and voice).
Shared leadership. Shared leadership was assessed using the ten items scale
developed by Wood and Fields (2007). An example item is, “Each member helps to
identify, diagnose, and resolve the problems that face this team.” The internal
reliability for the shared leadership scale in this study is a ¼ 0:90.
Cohesion. The individual perceptions of cohesion were assessed using five items
from Podsakoff et al. (1993). An example item is, “My group members know they can
depend on each other.” The internal reliability for the cohesion scale is a ¼ 0:92.
Team effectiveness. Perceptions of team effectiveness were assessed using
twenty-two items from Pearce and Sims (2002). The scale comprised six primary
subscales of effectiveness: output, quality, change, organization and planning,
interpersonal, and value. An example item is: “The team is highly effective at
implementing solutions.” The internal reliability for the team effectiveness scale in this
study is a ¼ 0:96. In line with the study by Pearce and Sims (2002), the dimensions of
the scale were combined to create an overall measure of team effectiveness that was
used in hypothesis testing.
Control variables. To minimize potential alternative explanations for the
relationships reported in this study, we included several control variables identified
in prior research. Team composition – including team size, demographics, skills, and
abilities – is shown to have an influence on team outcomes (e.g., Jackson and Joshi,
2002). Past research provides inconsistent results of optimal team size and its effects on
perceptions of outcomes (Campion et al., 1993); therefore, team size was included as a
control variable.
Additionally, team diversity is shown to have an influence on perceptions of team
effectiveness (e.g., Campion et al., 1993). Similarly, past research provides inconsistent
results about homogeneity versus heterogeneity of teams. Because various
demographic variables are shown to explain variance in perceptions of team
effectiveness, gender was included as a control. Finally, cognitive ability is also shown
to affect the perceptions of team outcomes (e.g., Devine and Phillips, 2000). We measure
cognitive ability using the GPA of the individual. We gathered self-reported
information on each of the variables and converted the data into categories for Cross-functional
purposes of testing each variable: gender, team size, and GPA. team
Data analysis effectiveness
Structural equation modeling (SEM) in Mplus 6.1 (Muthén and Muthén, 1998-2010) was
used to test the hypothesized model. All analyses used a covariance matrix as input
and a maximum-likelihood estimation. We began by estimating a measurement model 43
for the scales. We then added paths to the measurement model to test the hypothesized
relationships. Finally, we estimated several alternative models to explore the model
that best represented our data.
Results
Descriptive statistics and zero-order correlations
The descriptive statistics and zero-order correlations for the major variables of interest
in the study are provided in Table I. Overall, the zero-order correlations support the
proposed model. Internal team environment was significantly correlated with shared
leadership, cohesion, and team effectiveness (r ¼ 0:75, p , 0:01, r ¼ 0:69, p , 0:01,
and r ¼ 0:74, p , 0:01, respectively). Further, the correlations of cohesion with shared
leadership and team effectiveness were significant (r ¼ 0:67, p , 0:01 and r ¼ 0:78,
p , 0:01, respectively), and shared leadership was significantly correlated with team
effectiveness (r ¼ 0:80, p , 0:01). These results suggest that internal team
environment is linearly related to shared leadership, cohesion, and team
effectiveness. Although team size, gender, and GPA were explored as control
variables, only gender was found to have an intercorrelation among the key variables
in the study. The following analyses include control variables although a post-hoc
analysis revealed exclusion of the control variables did not alter any statistical results.
Initial analysis
Prior to testing the hypothesis in the study, confirmatory factor analysis (CFA) was
used to evaluate the factor structure, internal reliability, and discriminant validity of all
constructs. We began the analysis at the item level; however, a post-hoc examination
revealed strong evidence of correlated indicator residuals. Although common post-hoc
modifications that use a step-wise procedure have recently been criticized, researchers
suggest creating item parcels to remedy correlated indicator residuals (Landis et al.,
Variable M SD 1 2 3 4 5
1 Internal team environment 5.31 0.96 0.89

2 Shared leadership 5.09 1.03 0.75 * * 0.90
3 Cohesion 5.23 1.24 0.69 * * 0.67 * * 0.92
4 Team effectiveness 5.28 0.92 0.74 * * 0.80 * * 0.78 * * 0.96
5 Team size 5.92 1.12 2 0.12 0.12 2 0.11 2 0.14
6 Gender 0.57 0.50 0.17 * 0.14 0.23 * * 0.15 0.00
7 GPA 4.37 1.24 2 0.37 2 0.83 0.14 2 0.59 0.00 Table I.
Means, standard
Notes: Reliability estimates (Cronbach’s Index of Interal Consistency ¼ a) appear in italics along the deviations, and latent
diagonal; *p , 0:05; * *p , 0:01, two-tailed; n ¼ 142 variable intercorrelations
TPM 2009). Thus, scale scores from sub-dimensions and multiple-item parcels (Hall et al.,
19,1/2 1999) were used as indicators of latent constructs where each item loading was
restricted to the respective a priori construct, and each latent construct was allowed to
correlate with all other constructs. This strategy is shown to provide more stable
parameter estimates and improve fit of the CFA model (Bagozzi and Heatherton, 1994;
Bagozzi and Edwards, 1998; Bandalos and Finney, 2001; Little et al., 2002; MacCallum
44 et al., 1999). In addition, given the sample size in the current study, item parcels were
appropriate for the CFA as the number of parameters estimated in the subsequent
structural model is minimized and a simplified examination of indirect effects results
(Ahearne et al., 2005).
Our measurement model consisted of four factors, which yielded one factor for each
scale. We used a variety of goodness-of-fit indices to assess the fit of the model: the
comparative fit index (CFI (Bentler, 1990)), the Tucker-Lewis index (TLI (Bentler and
Bonett, 1980)), the root mean squared error of approximation (RMSEA) with confidence
intervals, and the standardized root mean square residual (SRMR). As shown in
Table II, after allowing seven pairs of items within the factors to correlate, the fit
indices suggested that the four-factor model offered the best fit of the data (x 2 (122,
n ¼ 150Þ ¼ 245:99, p , 0:001; CFI ¼ 0:95; TLI ¼ 0:94; RMSEA ¼ 0:08;
SRMR ¼ 0:04) with significant (p , 0:01) standardized path loadings.
In an effort to provide more evidence for discriminant validity, we used the
procedures outlined by Fornell and Larcker (1981) to calculate the average variance
extracted and the square root of the average variance extracted for each measurement
scale. Next, we examined whether the squared interconstruct correlations for each of
the construct pairs were greater than the shared variance of each construct as
suggested by Netemeyer et al. (1990). Discriminant validity can be concluded when the
square root of the average variance extracted exceeds the corresponding latent variable
correlations. In all cases, this condition is met.
Nonindependence assessment
The participants in the study were from the same course and assigned to teams. Thus,
to determine the appropriate level of analysis, we calculated the intraclass correlation
coefficients (ICC). This procedure involves calculating a one-way random effects
ANOVA where the variables of interest are the dependent variables, and the group
Change from
Model 1
2 2
Model Description x df x /df CFI TLI RMSEA Dx 2 Ddf
1 4-factor 245.99 122 2.02 0.95 0.94 0.08

2 3-factor 313.55 125 2.51 0.92 0.90 0.10 67.56 3
3 2-factora 349.25 127 2.75 0.90 0.88 0.11 103.26 5
4 2-factorb 682.87 125 5.46 0.75 0.70 0.17 436.88 3
5 1-factorc 354.43 128 2.77 0.90 0.88 0.11 108.44 6
Notes: n ¼ 142; All x 2 diff test are significant at p , 0:001; aInternal team environment and team
Table II. effectiveness on a single factor; bInternal team environment, cohesion, and shared leadership on a
Confirmatory factor single factor; cAll items loading on a single factor; CFI ¼ comparative fit index; TLI ¼ Tucker-Lewis
analysis results Index; RMSEA ¼ root mean square error of approximation
membership indicator is the independent variable. ICC(1) represents the amount of Cross-functional
variance that resides between groups while ICC(2) represents the stability of the group team
means. Table III lists the individual ICC(1), ICC(2), and F statistic for internal team
environment, shared leadership, cohesion, and team effectiveness. The ICC(1) values effectiveness
were below the median of 0.12, and the ICC(2) values were lower than the accepted level
of 0.70 (Koslowski and Klein, 2000). Given the majority of the F statistics were
significant, the data were further analyzed at the individual level of analysis. 45
Common method bias
While the impact of common method variance is touted as a potential myth
(Vandenberg, 2006), some researchers believe common method variance may have the
ability to cause measurement error and bias the true relationships in a study.
Therefore, because of the idea that method variance can inflate or deflate the necessary
relationships among the constructs and cause either a Type I or Type II error, we
examined this possibility (Doty and Glick, 1988; Podsakoff et al., 2003).
According to Spector (2006), if the survey using self-report information introduces
this bias, a baseline level of correlation should exist among all variables. Lindell and
Brandt (2000) suggest that the strength of common method bias can be assessed
through a post-hoc marker variable approach under which a method factor is assumed
to have a constant correlation with all similarly measured items (Malhotra et al., 2006).
Results of the marker variable analysis revealed the common method variance was not
a significant factor.
Hypothesis testing
In order to test our hypothesized model, we added structural paths to our measurement
model. Results indicated the hypothesized model fit the data ( x 2 (173,
n ¼ 144Þ ¼ 308:74, p , 0:001; CFI ¼ 0:94; TLI ¼ 0:93; RMSEA ¼ 0:07;
SRMR ¼ 0:06). As shown in Figure 2, of the six estimated structural paths, all but
two (shared leadership to cohesion and internal team environment to team
effectiveness) were significant.
In examining the hypothesized relationships demonstrated in Figure 2, H1 is
supported as internal team environment was positively related to shared leadership; in
addition, H2 is supported as internal team environment was positively related to
cohesion. However, H3 is not supported given that shared leadership was not related to
cohesion; in addition, H4 is also not supported as internal team environment is not
related to team effectiveness. Finally, H5a and H6a are supported as there are positive,
significant relationships between shared leadership and team effectiveness and
between cohesion and team effectiveness respectively.
Variable ICC(1) ICC(2) F
1 Internal team environment 0.04 0.51 2.044 *

2 Shared leadership 0.02 0.30 1.429
3 Cohesion 0.08 0.68 3.109 * *
4 Team effectiveness 0.05 0.58 2.370 * *
Table III.
Notes: df ¼ 23, 126; *p , 0:01; * *p , 0:001 ICC(1) and ICC(2)
TPM
19,1/2
46
Figure 2.
Standardized path
loadings
Alternative models
To insure the hypothesized model was the best depiction of the relationships examined,
it was compared to two, theoretically-rational alternative models. Table IV provides
results from the analysis of alternative models. In the first alternative model, we
relaxed the direct path from internal team environment to team effectiveness and the
direct path from shared leadership to cohesion. This model tested whether shared
leadership fully mediated the relationship between internal team environment and
team effectiveness and whether cohesion fully mediated the relationship between
internal team environment and team effectiveness. This model was found to have an
overall good fit (x 2 (175, n ¼ 144Þ ¼ 309:87, p , 0:001; CFI ¼ 0:94; TLI ¼ 0:93;
RMSEA ¼ 0:07; SRMR ¼ 0:06). Given that the alternative model is nested within the
hypothesized model, the significance test of the additional paths is based on a
difference chi-square statistic. However, the fit between the hypothesized model and
the full mediation model is non-significant (Dx 2 ¼ 1:13, Ddf ¼ 2, p ¼ 0:5694).
Therefore, the additional paths in the hypothesized model are not supported, and the
hypothesized model is rejected in favor of alternative model 1, which supports full
mediation. To provide additional evidence of our results we used the Akaike
Information Criterion (AIC (Akaike, 1973)) and Bayesian Information Criterion (BIC
(Schwarz, 1978)). The results of these two criteria suggested alternative model 1
exhibited overall better fit than the hypothesized model.
Next, we tested alternative model 2 in which we relaxed only the direct path from
shared leadership to cohesion to determine whether partial mediation of internal team
environment to team effectiveness is the best representation of our data. The partial
mediation model (alternative model 2) was found to have an overall good fit (x 2 (174
n ¼ 144Þ ¼ 308:99, p , 0:001; CFI ¼ 0:94; TLI ¼ 0:93; RMSEA ¼ 0:07;
SRMR ¼ 0:06). However, the significance of difference in fit between the
hypothesized model and alternative model 2 representing partial mediation is
non-significant (Dx 2 ¼ 0:24, Ddf ¼ 1, p ¼ 0:624). Therefore, the additional path in the
model is not supported and the hypothesized model is rejected in favor of the partial
mediation model.
Finally, we used the results of our alternative models to determine whether full or
partial mediation was the best representation of our data. Our results suggest that the
full mediation model (alternative model 1) was the most parsimonious and resulted in
the best overall fit and the best representation of our data as the chi-square difference
Information criteria
Model Akaike (AIC) Bayesian (BIC) x2 df Dx 2 Ddf CFI TLI RMSEA SRMR
Hypothesized (see Figure 1) 6,164.31 6,372.2 308.74 173 0.94 0.93 0.07 0.06
Alternative 1: full mediation
ITE ! EFF & SLDR ! COH (paths relaxed) 6,161.44 6,363.38 309.87 175 1.13 2 0.94 0.93 0.07 0.06
Alternative 2: partial mediation
SLDR ! COH (path relaxed) 6,162.56 6,367.47 308.99 174 0.24 1 0.94 0.93 0.07 0.06
Cross-functional
effectiveness
results
Alternative model test
team
47
Table IV.
TPM between the fully mediated model and the partially mediated model was not significant
19,1/2 and the additional path was not significant. Therefore, we used this more parsimonious
and fully mediated model to explore the indirect effects found in our model.
The indirect of effect of internal team environment on team effectiveness through
shared leadership was 0.38. In addition, the indirect of effect of internal team
environment on team effectiveness through cohesion was 0.32. Viewed as a whole, our
48 results provide support for H5b, as the relationship between internal team environment
and team effectiveness is fully mediated by shared leadership. Further, support was
found for H6b as internal team environment and team effectiveness was fully mediated
by cohesion.
Discussion
The overall purpose of this study was to investigate how internal characteristics of
CFTs are related and how team effectiveness is influenced. To accomplish this, we first
assessed the degree to which internal team environment influences shared leadership
and cohesion, and results suggest internal team environment influences team
effectiveness through the mediating influences of shared leadership and cohesion in
CFTs. The findings indicate members are more likely to participate in shared
leadership roles when they perceive higher levels of shared purpose, social support,
and voice (i.e., internal team environment), and team effectiveness is enhanced when
individuals engage in shared leadership. Similarly, when individuals perceive a
positive internal team environment, cohesion of the CFT is increased, thereby
enhancing the level of team effectiveness.
The findings, however, did not support the direct relationship between internal
team environment and team effectiveness in CFTs. In CFTs, the perception of the
internal environment does not directly influence effectiveness, but rather the
perception of the internal environment influences the manner in which tasks are
performed and decisions made. This finding supports the work of Carson et al. (2007) in
that when a team has an internal environment characterized by a high level of social
support, shared purpose, and voice, the team supports greater shared responsibilities
and collaboration among members. The nature of the relationships offers insight into
why researchers have found a vast array of outcomes from CFT-related studies:
Internal dynamics have a meaningful influence on team effectiveness that warrants
consideration. Additionally, the findings from the study present valuable implications
for both theory and practice, which are further detailed below.
Theoretical implications
Based on our review of the extant literature, we hypothesized that internal team
environment both directly and indirectly influences team effectiveness. Our results,
however, suggest that internal team environment indirectly influences team
effectiveness, and no direct relationship exists in CFTs. This finding is similar to
the heuristic model of team effectiveness proposed in a review by Cohen and Bailey
(1997). The authors suggest that environmental factors (i.e., industry characteristics,
market effects) have an indirect influence on team effectiveness. However, when this
broad-scope model is applied to the internal dynamics of the CFT, our findings indicate
the internal team environment influences leader behaviors and cohesion (much like the
team’s external environment influences similar constructs). Thus, our results can be
used to extend the Cohen and Bailey (1997) model and suggest that both internal and Cross-functional
external environmental forces influence certain internal characteristics in a similar team
manner.
In addition, the hypothesized relationship between shared leadership and cohesion effectiveness
was not supported. While past research supports such a relationship between shared
leadership and cohesion in traditional forms of teams (Balthazard et al., 2004; Seers
et al., 1995), this finding suggests CFTs are unique. In CFTs, it is possible cohesion is 49
not directly influenced by shared leadership given each leadership role is unique to the
functional area. Each team member may engage in shared leadership (performing
functionally-related duties), yet the leadership roles are performed separately due to
their uniqueness. In a study of CFTs, Wiersema and Bantel (1992) suggest the
unfamiliar language of members with diverse backgrounds does not enhance cohesion.
Thus, while the internal team environment encourages members to participate in
shared leadership roles and supports a cohesive team, the functional diversity of
members does not directly contribute to the team cohesion. This finding suggests
CFTs support the development of cohesion differently than other forms of teams.
Furthermore, our results offer rationale for the vast differences obtained by
researchers regarding CFT effectiveness. Investigations have resulted in findings
suggesting that CFTs have positive, negative, and no effect on team outcomes. So how
it is that researchers can obtain such variation in results when examining similar
phenomena? In addition to issues related to research design, data collection, and the
like, this study suggests that one underlying influence often overlooked is the internal
dynamics of the team. Specifically, the internal environment in which the team exists is
shown to influence internal processes as demonstrated in this study. This is in line
with findings from Russo (2012), which suggest that a positive internal team
environment mitigates negative effects of cognitive diversity experienced in CFTs.
Thus, teams with a more supportive internal environment are more likely to have
higher levels of shared leadership and cohesion, which influence team effectiveness as
demonstrated in our findings. Future researchers are encouraged to include measures
of internal team environment in CFT-related studies to account for the variation in
team context.
Practical implications
Previous research suggests that by optimizing teams, organizations are able to use
resources more effectively, improve decision and problem-solving abilities, produce
quality products and services, and increase innovation and creativity (Parker, 1990).
Given the results of the current study, we recommend that by focusing on the internal
dynamics of CFTs, managers are able to create and organize teams with an increased
likelihood of achieving positive outcomes.
The findings suggest that the internal team environment has an integral influence
on the shared leadership and cohesion of the team, which thereby influences
effectiveness. Therefore, managers should be familiar with the dimensions of internal
team environment (i.e., shared purpose, social support, and voice) and refer to these
dimensions when attempting to alter the internal environment. Specifically, managers
should support teams in establishing a clear sense of direction and purpose, encourage
members to support one another, and create an environment in which members are
comfortable making contributions to the team (Carson et al., 2007).
TPM In addition to these recommendations, managers are encouraged to consider
19,1/2 training sessions for members participating in CFTs. Team members are likely to
benefit from communication-focused trainings that instruct members on proper
communication techniques when collaborating in teams. For example, educating
members on the difference between cognitive conflict and affective conflict (e.g.,
Amason, 1996) is likely to demonstrate that not all conflict has negative consequences,
50 and if proper communication techniques are used, then substantial value can be
extracted from the knowledge diversity present in CFTs.
Limitations and future research

Even though the results from our findings yield insight into the nature of CFT
effectiveness, the study is not without limitations. First, the generalizability of findings
should be interpreted in light of the sample used. In order to simulate an industry

context, students from a business capstone course were selected for this study, and
students worked in teams in which no appointed leader was present. Nonetheless, the
participants represented a cross-section of business functional areas and performed
real-time consultation for existing firms, which provided a suitable context for the
study.
The research design should be considered when interpreting the results of the
study. Specifically, data were collected via a survey design, which occurred at the end
of the semester (to allow for fullest development of the phenomena). Because the data
were collected during one administration of the questionnaire, careful consideration
should be given to interpretations of the results. Future studies, however, are
encouraged to collect longitudinal data to provide insight into the causal nature of the
relationships examined.
While the intent of the current study was to examine the internal dynamics that
influence CFT effectiveness, namely internal team environment, shared leadership, and
cohesion, we acknowledge the influence of other potential factors on team effectiveness
(e.g., Cohen and Bailey, 1997; Janz et al., 1997). For example, future research may
incorporate the construct of collective efficacy, or the team’s shared beliefs in its ability
to perform effectively as a unit (Bandura, 1997). Research indicates collective efficacy is
related to cohesion and may be an outcome of internal team processes (Lent et al., 2006).
By examining collective efficacy, researchers and managers would have an enhanced
understanding of how internal processes contribute to effectiveness. Additionally,
research on team cognition demonstrates an influence on team effectiveness (e.g.,
DeChurch and Mesmer-Magnus, 2010), thus an extension of the current research model
to examine how internal team dynamics influence team cognition (or how team
cognition influences team dynamics) may yield further insight into the role of cognition
in CFTs.
Additional extensions of the CFT effectiveness model may prove valuable for future
investigations. Alternative models of effectiveness may be compared in the context of
various team types (e.g., management team, project team, special task force, etc.).
Additionally, other internal, individual factors may influence team outcomes. For
example, the influence of team pressure and the influence of individuals on the team
are likely to alter cohesion and team effectiveness (e.g., Barnard et al., 2001). Also, due
to modern constraints in industry, many organizations have adopted more flexible and
cost-efficient operations, leading to an increased use of virtual teams (Furst et al., 1999).
Since the development of shared leadership and cohesion is likely to vary according to Cross-functional
team structure and type, future researchers are encouraged to extend the current study team
to understand differences between CFTs, traditional team forms, and virtual teams
(Fiol and O’Connor, 2005). Last, while this study offers insight into the influence of effectiveness
internal team dynamics in the context of CFTs, the relationships among similar
phenomena should be considered in contexts of demographic, social, and other forms of
diversity in line with the work by Simons and Rowland (2011). By examining how 51
various forms of diversity influence team-related outcomes, researchers and managers
will have a more comprehensive understanding of how team composition influences
team success.
Conclusion
The findings suggest that in CFTs, the internal environment influences team
effectiveness directly through shared leadership and cohesion. The internal team
environment is not directly related to effectiveness in CFTs nor is cohesion influenced
by shared leadership: findings that diverge from traditional team structures. CFTs
have the potential to perform successfully when the internal team environment
supports member participation (shared leadership) and interaction (cohesion), thereby
enhancing the exchange of diverse cognitive resources and influencing team
effectiveness. As CFTs are increasingly utilized in firms, additional knowledge about
the internal influences on team effectiveness is beneficial to both researchers and
managers. Given the findings of our study, managers and researchers have enhanced
clarity on the internal factors that influence outcomes of CFTs, and this enhanced
understanding provides managers an additional tool to leverage against the fast-paced
and dynamic forces of modern industries.
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Team Performance Management: An International Journal

Cross-functional team effectiveness: An examination of internal team environment, shared leadership,

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Team Performance Management

functional diversity negatively influences sales (Simons et al., 1999), information

Internal team environment and shared leadership

and are committed to and actively involved in team goal achievement.

Internal team environment and cohesion

Shared leadership and cohesion

Internal team environment and team effectiveness

members influences team outcomes given a supportive climate. Therefore, it is likely

Shared leadership and team effectiveness

Cohesion and team effectiveness

consequences accrue to teams as a result of greater cohesion, including enhanced team

1 Internal team environment 5.31 0.96 0.89

1 4-factor 245.99 122 2.02 0.95 0.94 0.08

Variable ICC(1) ICC(2) F

1 Internal team environment 0.04 0.51 2.044 *

Limitations and future research

should be interpreted in light of the sample used. In order to simulate an industry

No. 1, pp. 73-84.

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

of Management Science and Engineering Management 1-10. [Crossref]

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