Information Technology & People

Information Technology & People
Virtual teams: team control structure, work processes, and team effectiveness
Gabriele Piccoli Anne Powell Blake Ives
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Virtual teams
Virtual teams: team control
structure, work processes, and
team effectiveness
359
Gabriele Piccoli
School of Hotel Administration, Cornell University, Ithaca, New York, USA
Anne Powell
School of Business, Southern Illinois University Edwardsville, Edwardsville,
Illinois, USA, and
Blake Ives
Information Systems Research Center, C.T. Bauer College of Business,
University of Houston, Houston, Texas, USA
Keywords Team working, Communication technologies, Control structures, Communication,
Autonomous work groups, Employee behaviour
Abstract Seeks to determine the impact managerial controls have on the effectiveness of virtual
teams. Using an experimental design compares self-directed virtual teams to counterparts where
behavior controls are used as a method of managerial control. The data were collected using 51
student teams of three or four members each from three different countries. The results indicate
that the most satisfied team members were in virtual teams with effective coordination and
communication. Members of self-directed virtual teams report higher individual satisfaction with
the team and project, while different control structures had no significant impact on virtual team
performance. Future research should investigate how these findings generalize to organizational
workers, rather than just looking at students. This paper is just a first step investigating one type of
managerial control: behavior controls. The small amount of research that has been published on
virtual teams has primarily concentrated on self-directed teams. This paper compares results of
team effectiveness by looking at both self-directed virtual teams and virtual teams with behavioral
controls enforced.
Introduction
Continuing developments of information technologies (IT) have led to the creation of
new organizational forms that are flexible and responsive (Fulk and DeSanctis, 1995;
Jarvenpaa and Ives, 1994). The virtual team represents an important example of these
new organizational forms (Jarvenpaa and Ives, 1994). Virtual teams are groups of
geographically, temporally, and/or organizationally dispersed knowledge workers
brought together across time and space by way of information and communication
technologies (DeSanctis and Poole, 1997; Jarvenpaa and Leidner, 1999; Lipnack and
Stamps, 1997; Townsend et al., 1998). We limit our investigation to a class of virtual
teams that has recently garnered considerable research attention. These are virtual
teams that are assembled on an “as needed basis” in response to specific customer
needs or to collaborate on unique projects (Iacono and Weisband, 1997; Jarvenpaa et al.,
1998; Jarvenpaa and Leidner, 1999). Information Technology & People
Vol. 17 No. 4, 2004
pp. 359-379
q Emerald Group Publishing Limited
An early version of this paper appeared in the Proceedings of the 21st Annual International 0959-3845
Conference on Information Systems (ICIS ’00), Brisbane, Australia, December 2000. DOI 10.1108/09593840410570258
ITP Both practitioners and academic observers have recognized the potential
17,4 advantages offered by the deployment of virtual teams. Virtual teams overcome the
limitations of time, space, and organizational affiliation that traditional teams face. As
a consequence, they are expected to enable organizations to better face the continued
shift from production to service environments (Townsend et al., 1998), the increasing
requirement for cross-organizational strategic cooperation (Jarvenpaa and Ives, 1994;
360 Townsend et al., 1998), the need to overcome geographical, temporal, and
organizational boundaries, and the necessity to bring together dispersed talent
(Jarvenpaa and Leidner, 1999; Lipnack and Stamps, 1997). Most notably, the class of
virtual teams that we consider offers unprecedented levels of flexibility and
responsiveness.
While virtual teams provide a number of advantages over traditional co-located
teams, they also face obstacles that their traditional counterparts do not have to
contend with. Technological support for virtual teams and collaboration in distributed
environments, once a major obstacle, is now readily accessible (Constant et al., 1996).
Instead, social and managerial challenges now represent the major hurdles to
successful adoption of this new organizational form. Others have recognized that
virtual teams will fail to meet expectations if organizations do not anticipate and
address the unique challenges of this new environment (DeSanctis and Poole, 1997;
Handy, 1995; Victor and Stephens, 1994). Primarily, organizations must be able to
effectively use IT to rapidly mesh the individual skills of strangers, or near strangers,
into interdependent work products (Iacono and Weisband, 1997). Given the pros and
cons of working in a virtual context, it is essential that we begin to understand the
determinants of team effectiveness in this environment.
The range of issues studied on virtual teams is broad (Powell et al., 2004) but the
empirical research to date has focused on self-directed virtual teams[1]. It appears that
extant IS research has been implicitly based on the assumption that virtual teams will
be able to optimally organize their work-flow and manage internal processes (Powell
et al., 2004). The potential impact of traditional managerial control mechanisms on
team effectiveness has not been fully investigated. Our primary goal is to determine the
effect that control mechanisms have on outcomes in the virtual team, as well as what
effect control mechanisms have on work processes such as coordination and
communication effectiveness in the virtual team. In doing this, we also examine
whether coordination and communication effectiveness fully mediate the relationship
between control mechanisms and outputs of the virtual team.
The next section introduces the theoretical frame of reference and develops the
research hypotheses. A discussion of the research methodology follows. The analysis
and research results are then presented, followed by a summary of conclusions,
limitations, and implications for future research.
Theoretical framework
Virtual teams exist in an environment that precludes, or severely limits, the ability of
team members to meet face-to-face. Still, virtual teams share some similarities with
traditional co-located teams. For this reason, and because of the lack of a cogent theory
of virtual team effectiveness, we draw on the traditional team literature to develop our
research hypotheses. Specifically, we focus on theoretical models of managerial control
(Ouchi, 1979), product development (Brown and Eisenhardt, 1995), and socio-technical
systems (Bostrom and Heinen, 1977a, b; Mumford and Weir, 1979; Passmore, 1988; Virtual teams
Pearce and Ravlin, 1987). The literature on managerial control provides support for the
investigation of different control mechanisms. The product development literature
helps illuminate the internal processes underlying cross-functional development teams’
effectiveness, and socio-technical theory sheds light on the role of team autonomy and
its relationship to team effectiveness.
Our approach is consistent with previous research advocating the transfer of 361
existing theory to new environments and contexts with appropriate modifications so as
to account for the unique characteristics of the new setting (Rice and Williams, 1984).
Thus, mindful of the dissimilar context in which virtual teams interact (e.g. lean
communication channels, time dispersion, organizational and geographical dispersion),
we draw on the computer mediated communication literature, as well as the early
findings of virtual team research, to extend our understanding of traditional, co-located
teams to the virtual context. Building on our review of these literatures, we develop a
theoretical model for our investigation.
Literature review
Control mechanisms. Recent work in the tradition of control theory has investigated the
effect of control mechanisms on small groups such as information systems design and
development teams (Guinan et al., 1998; Henderson and Lee, 1992; Kirsch, 1997) and
retail outlet crews (Eisenhardt, 1985). In this tradition, control is defined as “the
mechanisms through which an organization can be managed so that it moves toward
its objectives” (Ouchi, 1979, p. 833), and is conceptualized as the effort to ensure that
individuals working on team projects act in conformity with predefined strategies
(Kirsch, 1997). One form of control that has received attention in the traditional team
literature is behavior control – a type of formal control designed to structure the
transformation process of work as opposed to the results (i.e. outputs) of work
activities (Ouchi, 1977; Snell, 1992). When behavior control is enforced, “specific rules
and procedures are articulated, which, if followed, will lead to desired outcomes”
(Kirsch, 1997, p. 217). Thus, behavior control mechanisms call for structuring the work
by employing procedures, and rewarding individuals for complying with them (Kirsch,
1997; Snell, 1992). In traditional co-located teams, behavior controls are frequently used
to stimulate team performance, foster cooperation, and increase individual satisfaction
(Henderson and Lee, 1992; Pinto et al., 1993). Typical behavior control mechanisms
include the definition of explicit work assignments, the specification of rules and
procedures, and the filing of project plans and project reports (Henderson and Lee,
1992; Kirsch, 1997; Pinto et al., 1993). Early virtual team research has endorsed
behavior control as a method of managerial control in virtual teams, indicating that,
“Clear schedules must be established of when the team will provide reports, interim
deliverables and the final product” (Townsend et al., 1998, p. 25). Yet the majority of
virtual team research has focused on self-directed teams with no behavior control
(Powell et al., 2004).
A second form of control in team management is self-direction. While the concept of
self-directed teams is not new (Guzzo and Dickson, 1996), very limited work has
focused on teams of knowledge workers (Janz et al., 1997). Team self-direction is a type
of informal control that develops over time from the socialization processes occurring
within the team. Initially, there are no formal procedures or processes the team must
ITP follow. Instead, the socialization process identifies and reinforces the norms, values,
17,4 and goals important to the team (Kirsch, 1997). While Kirsch defines this approach to
control as clan control, the key characteristics of clan control and our term of
self-direction are the same. Even when there are some formal controls (i.e. deadlines)
imposed on a virtual team, team members will still create their own informal control
mechanisms to ensure desired behaviors and attitudes in team members (Crisp and
362 Jarvenpaa, 2002). The socio-technical tradition and previous traditional team research
suggest that, at the individual level, knowledge workers greatly value autonomy
(Cheney, 1984; Goldstein and Rockart, 1984). Some studies examining co-located teams
have found that autonomy appears to have positive implications at the team level for
member satisfaction, but no relationship with performance (e.g. Janz et al., 1997; Cohen
and Ledford, 1994), while other studies have found that the highest performing
co-located teams were those with behavioral controls (Henderson and Lee, 1992, Kim
and Lee, 1995).

Work processes: coordination and communication effectiveness. Two aspects of
work processes commonly investigated in relation to virtual teams are coordination
effectiveness and communication effectiveness. Measurements of work processes often
include aspects of both coordination and communication (e.g. Lurey and Raisinhgani,
2001; Taylor and Bowers, 1972). In addition, coordination and communication are two
of the most common dimensions of work processes studied in virtual teams (Powell
et al., 2004). For this study, we examine coordination effectiveness and communication
effectiveness as two dimensions of work processes.
The product development research tradition has investigated work processes of
product development teams that draw members from diverse functional areas. This
literature indicates that, “Effective group processes, particularly those related to
communication, increase information and so are essential for high-performing
development processes” (Brown and Eisenhardt, 1995, p. 368). These and related
findings clearly point to the central role of frequent and effective internal
communication for team success (Allen, 1977; Ancona and Caldwell, 1992;
Dougherty, 1992; Ebadi and Utterback, 1984). A high level of coordination among
team members is also a mark of effective product development teams (Ancona and
Caldwell, 1992; Kraut and Streeter, 1995; Pinto et al., 1993). Communication and
coordination breakdowns are seen as a major hurdle preventing project teams from
reaching their objectives (Curtis et al., 1988). Coordination problems in teams arise from
the dependencies between members, and they are often engendered by the structure of
the problem, particularly in complex projects (Crowston and Kammerer, 1998). Rules
and procedures are often introduced to mitigate such coordination problems (Pinto
et al., 1993).
Outcomes. The team literature defines effectiveness in terms of group-produced
outputs and the consequences a group has for its members (Cohen and Bailey, 1997;
Guzzo and Dickson, 1996; Hackman, 1987; Sundstrom et al., 1990). Effective teams
should be able to produce high quality output (i.e. products and services) and reward
team members in terms of gratification and satisfaction with the working experience
(Jarvenpaa and Ives, 1994). Thus, we define team effectiveness in terms of the
following:
.
team performance: effective teams are able to deliver a timely, high-quality
product; and
.
individual satisfaction: effective teams are able to satisfy individual team Virtual teams
members’ needs, rather than frustrate them, as a byproduct of team interaction.
Team performance and individual satisfaction are the two most common variables
when examining virtual team outcomes (Powell et al., 2004). Most research examining
performance and satisfaction has compared the outcomes of virtual teams with
traditional co-located teams (Burke and Chidambaram, 1996; Galegher and Kraut,
1994; McDonough et al., 2001; Warkentin et al., 1997). There has also been a substantial 363
amount of research done to determine what antecedents are necessary for successful
performance (Kaiser et al., 2000; Majchrzak et al., 2000; Malhotra et al., 2001; Maznevski
and Chudoba, 2000; Suchan and Hayzak, 2001) and satisfied team members (Kayworth
and Leidner, 2000; Tan et al., 2000). However, none of this research has examined the
impact of control mechanisms on virtual team performance or individual satisfaction.
Theoretical development
In this section, we build on the above discussion of traditional and virtual team
literature by examining research involving virtual teams, specifically looking at how
technology itself impacts the virtual team. Our theoretical model which guides our
hypotheses development is shown in Figure 1.
Team control structure to work processes. Significant contextual and environmental
challenges are faced by virtual teams as a result of using technology as their primary
means of communication. Visual, tactile, and verbal communication is reduced, while
technology problems that impede work processes increase. Because of the challenges
faced by virtual teams, they encounter significant obstacles to effective work
processes. When the team is allowed to self-direct, rather than being required to
comply with predefined behaviors, it can appropriate the available technology in a
manner that best fits its idiosyncratic skills, limitations, and needs (DeSanctis and
Poole, 1994). Similarly, the team can decide to appropriate the technology as expected,
but adapt the team structure and the organizational environment to correct
misalignments (Majchrzak et al., 2000). Alternatively, when behavior controls are
enforced, they force the team to comply with externally, a-priori imposed schedules.
These schedules may not match the communication and coordination requirements the
team faces once it begins its work and may instead disrupt its idiosyncratic rhythm,
hampering communication and coordination, and ultimately hindering team
effectiveness (Majchrzak et al., 2000; Maznevski and Chudoba, 2000):
H1a. Members of self-directed virtual teams achieve greater coordination
effectiveness than members of virtual teams under behavior control.
Figure 1.
Theoretical model
ITP H1b. Members of self-directed virtual teams achieve greater communication
17,4 effectiveness than members of virtual teams under behavior control.
Coordination. In general, coordination represents the degree of functional articulation
and unity of effort between different entities in an organization (Georgopoulos and
Mann, 1962), and “the extent to which the work activities of organizational members
364 are logically consistent and coherent” (Cheng, 1983, p. 156). Thus, in a well-coordinated
organization, work activities are complementary and are directed toward a common
goal without duplication of effort or fragmentation (Cheng, 1984). In a team
environment, internal coordination refers to how organized the team is in carrying out
its mission (Janz et al., 1997). Early work on virtual teams has highlighted the
difficulties virtual teams face as they attempt to coordinate work across time zones,
cultural divides, and divergent mental models (Galegher and Kraut, 1994; Kayworth
and Leidner, 2001/2002; Sarker and Sahay, 2002; Warkentin et al., 1997).
The use of technology as the primary means of communicating with team members
can impede the ability of team members to coordinate their work. Greater geographical
dispersion among team members is now possible through technology, and virtual team
members must adapt their work style to coordinate with team members whose
working style is different from their own. These differences bring about the need for
greater information exchange to coordinate and integrate the contributions of
technology-mediated team members (Qureshi and Vogel, 2001; Robey et al., 2000).
The lack of communication richness in technology-supported communication also
affects the ability to coordinate work (Galegher and Kraut, 1994), as do time delays that
occur when communicating solely though technology (Robey et al., 2000). Thus, virtual
team members are generally more likely to report difficulty in coordinating work
activities because of communication constraints (Chidambaram, 1996; Galegher and
Kraut, 1994; Hollingshead et al., 1993). Virtual teams that can overcome coordination
difficulties are likely to be more effective and satisfied (Johansson et al., 1999; Lurey
and Raisinhgani, 2001; Maznevski and Chudoba, 2000). Overcoming coordination
obstacles such as power considerations, cultural/work process differences, and lack of
communication is necessary for performance and satisfaction of the team (Johansson
et al., 1999):
H2a. Virtual team performance improves as coordination effectiveness increases.
H2b. Satisfaction increases as coordination effectiveness increases.
Communication. Effective communication processes are central to effectiveness of
traditional, co-located teams. In virtual teams, the inability to frequently meet
face-to-face, the temporal and geographical dispersion, and the significant reliance on
communication technologies creates additional obstacles to effective communication,
potentially damaging team effectiveness (Galegher and Kraut, 1994; Jarvenpaa et al.,
1998; Jarvenpaa and Leidner, 1999). While there are many advantages to
communicating via technology, this mode of interaction also introduces a new set of
communication problems that do not exist in traditional team environments.
Computer mediated communication reduces the visual, tactile, and verbal
communication that occurs in traditional team communication (Robey et al., 2000).
Electronic media are intrinsically leaner than face-to-face communication and convey a
limited set of communication cues (Sproull and Kiesler, 1986). With the leaner media,
team members find it difficult to convey the same rich information that they can Virtual teams
convey during face-to-face meetings and, with less rich communication, social
relationships are more difficult to develop (Walther and Burgoon, 1992). Individuals
who interact through information and communication technologies tend to be less
attentive and receptive to contextual cues (Lea and Spears, 1992; Sproull and Kiesler,
1986). Their interaction appears to be impersonal, task-oriented, and businesslike
(Bordia, 1997; Connolly et al., 1990; Rice and Love, 1987). 365
Technology limitations lead to other common communication problems in
technology-mediated teams. Servers crashing, incorrect email addresses, or
overloaded phone lines delaying textual information to team members impact
virtual teams much more so than co-located teams. These technology problems can
significantly delay a project when team members have technology as their primary
means of communication (Cramton, 2001; Kayworth and Leidner, 2001/2002; Suchan
and Hayzak, 2001; Van Ryssen and Hayes Godar, 2000).

The ability of individuals to effectively communicate without face-to-face
interaction varies as a function of their experience with the medium, the available
time to complete the task, and social norms within the team (Carlson and Zmud, 1999;
Chidambaram, 1996; Fulk and DeSanctis, 1993; Walther, 1995). While contextual
variables such as experience and time on task help in mitigating some of the
communication difficulties faced by virtual teams, the barriers to effective
communication remain significant in the virtual environment.
Using technology as a primary means of communication has been found to reduce
team effectiveness because of increased communication problems associated with lags
and delay of communication, inability to assess understanding of fellow team
members, and team members’ differing frames of reference, language, culture, and
motivation to participate (Cramton, 2001; Galegher and Kraut, 1994; Jarvenpaa et al.,
1998; Jarvenpaa and Leidner, 1999; Robey et al., 2000; Walther and Burgoon, 1992;
Warkentin and Beranek, 1999; Warkentin et al., 1997). These difficulties are magnified
for short-term virtual teams that work under significant time pressure. Virtual teams
that succeed in coping with these communication challenges will be more effective:
H3a. Virtual team performance improves as communication effectiveness
increases.
H3b. Satisfaction increases as communication effectiveness increases.
Team control structure to outcomes. Most virtual team research to date has focused on
self-directed (i.e. autonomous) teams (Galegher and Kraut, 1994; Iacono and Weisband,
1997; Jarvenpaa et al., 1998; Jarvenpaa and Leidner, 1999), but there has been no
explicit test of the benefits that such organizational structure offers in the virtual
environment.
Behavior control mechanisms are extensively used in traditional teams (Kirsch,
1997) and their extension to the virtual environment has been advocated (Townsend
et al., 1998). Virtual teams face greater project management challenges, including
keeping on schedule and ensuring that project goals remain stable (McDonough et al.,
2001). For teams with assigned leaders, team members regarded poor leaders as those
who did not provide enough detail on what needed to be done and did not provide a
clear separation of tasks among members (Kayworth and Leidner, 2001/2002).
Proponents suggest that by providing appropriate schedules and assignments for the
ITP completion of work tasks and requiring the team to periodically report on its progress,
17,4 communication and coordination challenges can be minimized (Townsend et al., 1998).
Yet, a chief advantage of virtual teams is their flexibility, enabling them to draw the
most appropriate set of individuals required to complete a specific task (Jarvenpaa and
Leidner, 1999; Townsend et al., 1996). For this reason, virtual teams are frequently
employed for atypical and highly specialized projects involving unique information
366 and changing requirements (Jarvenpaa and Ives, 1994; Robey et al., 2000). Virtual
teams are continually shifting and adapting to changes in technology and the social
structures of the organization and team (Qureshi and Vogel, 2001). Thus, virtual team
members must be willing to work in a dynamic environment, embrace change, and
adapt as needed. Organizations with successful virtual teams have recognized the need
for team members who, “work comfortably without constant supervision, require
minimal formal structure, enjoy autonomy . . . ” and who are able to solve problems on
their own rather than turning to managers (Robey et al., 2000). In virtual teams where
leadership was designated, “leaders as mentors” was more closely associated with
leadership effectiveness than “leaders as directors” (Kayworth and Leidner, 2001/2002).
Socio-technical theory (Passmore, 1988; Pearce and Ravlin, 1987) suggests that greater
team autonomy may increase team performance and individual satisfaction by
harnessing the team’s self-regulatory capacity. This perspective suggests that
autonomy “enables group members to effectively deal with task and environmental
demand by making decisions in the process of doing work” (Cohen et al., 1996, p. 647).
Thus, the team is able to allocate its resources efficiently and cope with changes in the
working conditions and demands (Cohen et al., 1996).
Virtual team members must adapt to contextual and environmental changes such as
cultural diversity, differences in work practices, and variations in time zones and
schedules (Robey et al., 2000); most importantly, they must learn to effectively use
information and communication technologies as the backbone of their operations
(Maznevski and Chudoba, 2000). Doing so requires significant adaptation of the
various technologies available to the team, and an innovative and proactive stance on
the part of individual team members (Robey et al., 2000). When substantial adjustment
on the part of team members is needed, behavior controls that limit the team’s
autonomy may prove detrimental to team effectiveness; here, reporting requirements
that are routinely used in traditional co-located teams may stifle the improvisation and
adaptation required for virtual team effectiveness:
H4a. Self-directed virtual teams achieve higher performance than virtual teams
under behavior control.
H4b. Members of self-directed virtual teams express greater satisfaction with their
experience than members of virtual teams under behavior control.
Mediation effects. We hypothesize that team self-direction increases virtual team
effectiveness because it improves the work processes of communication and
coordination effectiveness within the team. In other words, we contend that the
positive effect that self-direction has on team performance and team members’
satisfaction is due to self-direction’s positive effect on work processes (i.e. coordination
and communication effectiveness). Formally, we argue that coordination and
communication effectiveness mediate the relationship between the team control
structure and team effectiveness (Furst et al., 1999):
H5a. When the effects of coordination and communication effectiveness are Virtual teams
controlled for, there is no performance difference between self-directed virtual
teams and virtual teams under behavior control.
H5b. When the effects of coordination and communication effectiveness are
controlled for, there is no difference between the level of satisfaction reported
by members of self-directed virtual teams and those of virtual teams under
behavior control. 367
Research methodology
We tested our research propositions through a field experiment employing a two-group
pre-test, post-test design with 51 virtual teams of three and four members. While the
realism and generalizability of an experiment using students is constrained, an
experiment affords us the highest level of control over confounding factors (McGrath,
1982). One criticism of using students as a means to examine groups over time is the
predominant reliance on zero-history groups as well as the limited duration of the
experiments (George and Jessup, 1997). In the study of short-lived virtual teams,
however, these characteristics become strengths of the research design rather than
weaknesses because, by definition, our unit of interest has no common history and
disbands after a limited amount of time.
Subjects
A total of 201 students who were enrolled in electronic commerce courses at six
different universities participated in the research. The teams were initially composed of
four subjects (three teams had only three subjects).
While it has been found that it is the distance between team members rather than
cultural differences that contributes more to challenges the virtual teams face
(McDonough et al., 2001), we wanted to minimize any confounding aspects of cultural
differences. To do this, we chose schools from countries that were culturally similar.
Participation in the study was secured from schools in the USA, Ireland, and New
Zealand – three countries that are similar in all cultural dimensions (Hofstede, 1980).
The research subjects were well educated and employed (or were soon to be
employed) in knowledge work positions. Their average age was 28.11 and 66.2 percent
were males. On average they had 5.08 years of work experience, had been members of
15 work teams, and had managed three. Finally, 10.1 percent of them reported having
been a member of a virtual team in the past. Subjects were randomly assigned to
teams. To ensure geographical dispersion, no two students from the same university
were placed on the same team.
Procedures
All subjects participating in the experiment first completed a preliminary survey.
Information was collected on a number of demographic variables, work experience,
experience working in teams, self-reported experience using available communication
and collaboration technologies, attitudes toward information technology, and
computer self-efficacy. The survey confirmed that there was no pre-treatment
difference between the treatment and control groups on the above dimensions. To
increase motivation, a substantial percentage of each student’s final grade (20-25
ITP percent) was assigned to the exercise. We also provided a financial incentive of 1,500
17,4 US dollars to be equally shared among the members of the two best teams[2].
Before beginning the main project, during which the experimental manipulation
was applied, the teams engaged in two preliminary exercises lasting a combined three
weeks. These exercises were designed to help subjects become acquainted with the
available communication and collaboration technologies, to stimulate early
368 communication and team development, and to allow students to become familiar
with the opportunities and challenges offered by virtual teams and their environment.
We administered the pre-test upon completion of the second preliminary exercise and,
as expected, established that no systematic difference on the variables of interest (i.e.
coordination, communication) existed between the treatment and control groups before
the start of the main project. The main project lasted five weeks and consisted of the
development of a business plan for a newly formed company that specializes in
developing and marketing a business innovation. The teams selected the product or
new business they intended to pursue. They were provided with a general template to
be followed when developing the business plan. Upon completion of the five-week
project, a post-test questionnaire was given to all subjects. The post-test measured the
same items as the pre-test: coordination and communication effectiveness of the team,
and satisfaction with the team.
This project is particularly well suited for the investigation of the research
questions in this study because the task requires considerable interaction among
members of the team and could not be easily accomplished by one or two group
members. Specifically, the project has components of decision-making and information
exchange, and requires extensive communication and coordination of effort. Since
virtual teams are expected to generally focus on such projects as planning, reporting,
and developing ideas (Furst et al., 1999), the project chosen for this study is realistic as
well.
A communication hub was created for each team. Through the hub, the team
members had easy access to an email distribution list, synchronous and asynchronous
electronic discussion facilities, shared server space, time zone clocks, and the exercise
schedule.
Experimental manipulation
Half the teams, randomly selected, were required to file weekly reports that would
mimic and enforce behavioral control procedures commonly employed in traditional
teams. In these reports, the following issues were addressed each week:
.
Project plan. Document the major activities needed to successfully complete the
project (long-term planning), and what activities must be completed by the next
weekly report deadline (short-term planning).
.
Work assignments. For each task due for completion by the following week,
identify specific team members as responsible for completion.
.
Progress report. Report on the progress made toward project completion. Discuss
the short-term goals identified in the previous week’s project plan and the
advancement toward their achievement.
The above operational definition of behavior control was based on popular
mechanisms used in traditional co-located teams (Henderson and Lee, 1992; Kirsch,
1997). Since behavioral control models call for rewarding individuals or teams for Virtual teams
complying with them (Kirsch, 1997; Snell, 1992), compliance with the reporting
requirements counted for a considerable part of the team’s final grade on the project (20
percent).
In order to balance external requirements across all teams, the subjects in the
control group were required to complete an individual two-page report at the end of the
project. The individual reports to be filed by the subjects in the control group did not 369
interfere with the internal organization of their teams. These teams were informed that
they should self-direct during completion of the project.
Variables and measures

Scales for coordination effectiveness, communication effectiveness, and satisfaction
were measured on a seven-point Likert scale. Coordination effectiveness denotes the

extent to which team members were able to work together toward a common goal
without duplicating unnecessary work. Team coordination was measured with five
items by slightly modifying validated scales[3] (Cheng, 1984; Janz et al., 1997).
Communication effectiveness denotes the extent to which information exchanged
by team members was timely, useful, and reliable. Internal communication was
assessed using a slightly modified version of a validated instrument (Frone and Major,
1988) with three items.
Satisfaction was slightly adapted from a validated scale (Pinto et al., 1993) used in
collocated cross-functional teams research. Four items made up this measure.
Team performance was based on the quality of the final document produced by the
teams. Two independent expert raters, each with extensive experience teaching an
electronic commerce course and grading similar projects, were asked to evaluate each
team’s business plan. They were blind to the research hypotheses and team
assignment. They rated the originality of the product or service proposed, its
feasibility, the thoroughness of the market research, and the professionalism of the
document presented. Inter-rater reliability was satisfactory (a ¼ 0:77).
Analysis
In this study we use ordinary least square (OLS) regression, analysis of variance
(ANOVA), and multiple analysis of variance (MANOVA) when testing variables at the
team level of analysis, namely when team performance, coordination effectiveness, or
communication effectiveness is the dependent variable. We use hierarchical linear
models (HLM) when carrying out cross-level analyses, namely when satisfaction is the
dependent variable. Because multilevel analysis using HLM is not as common as more
mainstream techniques such as OLS, ANOVA, or MANOVA, we provide here a brief
explanation of HLM.
HLM is expressly designed for multilevel analysis of nested units. In our research,
individual team members are nested (i.e. exist within) their teams and some constructs
of interest are theoretically individual-level constructs (e.g. satisfaction), while others
are group level constructs (e.g. team coordination). HLM is superior to the alternative
technique – OLS regression – for treating multilevel variable relationships (citation
withheld for blind review). Regression is based on the assumptions of normally
distributed independent random errors with constant variance. When group scores are
assigned to individuals (i.e. a team coordination score is assigned to each member of
ITP the team), the assumption of independence of the error terms is violated because error
17,4 terms now contain a systematic component due to the group level effect, as well as a
random component (Bryk and Raudenbush, 1992). Moreover, if random group level
errors vary across groups, the assumption of homoschedasticity is also violated (Bryk
and Raudenbush, 1992) and the results of the analysis biased.
370
Results
Manipulation and model check
Before proceeding with the analysis, we verified that the subjects in the behavior
control group recognized the requirement to report weekly. The participants were
asked to respond yes or no to the question: “My team was required to submit weekly
reports.” The results indicate that the behavior control group did recognize the
requirement (t ¼ 52:44; p ¼ 0:000). We also evaluated whether the behavior control
group engaged in planning, task assignment, and progress revision significantly more
than the self-directed group by asking the following questions: “My team planned its
future tasks on a regular basis during the business plan project,” “My team reviewed
its progress toward attainment of team goals on a regular basis,” and “My team
formally assigned specific tasks to individual team members on a regular basis”. The
results demonstrate that all three behaviors were successfully affected by the reporting
requirement (F ¼ 8:764, p ¼ 0:003; F ¼ 3:941, p ¼ 0:049; F ¼ 6:455, p ¼ 0:012
respectively).
Confirmatory factor analysis was performed to test the overall fit of the proposed
measurement model to the available data. The measurement model employed displays
adequate fit (x 2 ¼ 105:51, RMSEA ¼ 0:073, GFI ¼ 0:92, NNFI ¼ 0:96, CFI ¼ 0:97).
Scale check
The scales also show adequate levels of reliability: satisfaction (a ¼ 0:86), coordination
effectiveness (a ¼ 0:90), and communication effectiveness (a ¼ 0:88). Confirmatory
factor analysis was used to ensure that items loaded on the factors they were intended
to. Table I shows that items did load as expected.
Team Coordination
Scale Item Satisfaction Communication Effectiveness
Enjoyed working with VT members 0.91

Members contributed fair share 0.73
Enjoyed working on the team project 0.65
Would enjoy working with VT members again 0.91
Members’ activities were coherent 0.89
Clear sense of direction during the project 0.84
It was difficult to reach decisions 20.62
Interaction well organized 0.87
Satisfied with procedures to communicate 0.81
Information: timely 0.76
Table I. Information: accurate 0.94
Item loadings Information: useful 0.89
Team level aggregation Virtual teams
We conceptualize work processes at the team level of analysis. The construct
dimensions of coordination and communication effectiveness are measured through
individual perceptions at the individual level. In order to avoid a fallacy of the wrong
level (Rousseau, 1985), we evaluated the degree of perceptual agreement within teams
by way of the rwg(j) index (James et al., 1984). A scale is deemed appropriate for
aggregation at the higher level of analysis (e.g. the team level) when the median rwg(j) 371
among all teams is greater than 0.70 (George, 1990; Janz et al., 1997). Both the
coordination effectiveness and the communication effectiveness scales exceed this
threshold: rwg(j) ¼ 0.86 and 0.83 respectively. We therefore averaged individual
responses to generate team level indicators.
Hypotheses
MANOVA was used to test H1a and H1b. H1a stated that self-directed teams would
have higher coordination effectiveness than teams under behavioral control. This
hypothesis was not supported. We found that self-directed teams and teams under
behavioral control achieved the same level of coordination effectiveness (F ¼ 1:031;
p ¼ 0:315). H1b stated that self-directed teams would have higher communication
effectiveness than teams under managerial control. We found weak evidence
supporting this hypothesis, indicating that self-directed teams achieved somewhat
higher communication effectiveness than those under behavioral control (F ¼ 2:936;
p ¼ 0:093). Results for all hypotheses are summarized in Table II.
OLS regression was employed to test H2a and H3a. These hypotheses examined
whether coordination effectiveness and communication effectiveness were positively
related to virtual team performance. Our hypotheses were not supported (coordination:
t ¼ 1:051, p ¼ 0:299; communication: t ¼ 0:101, p ¼ 0:920).
HLM was employed to test H2b and H3b, which measured the relationship between
coordination and communication effectiveness to individual satisfaction. As expected,
team coordination effectiveness and communication effectiveness were significant
predictors of individual satisfaction (coordination: t ¼ 4:269, p ¼ 0:000;
Hypothesis F,t Significance Supported
1a. Structure ! coordination F ¼ 1:031 0.315 No

1b. Structure ! communication F ¼ 2:936 0.093 Weak support
2a. Coordination ! performance t ¼ 1:051 0.299 No
2b. Coordination ! satisfaction t ¼ 4:269 0.000 Yes
3a. Communication ! performance t ¼ 0:101 0.920 No
3b. Communication ! satisfaction t ¼ 3:288 0.002 Yes
4a. Structure ! performance (self-directed will be
higher) F ¼ 0:311 0.579 No
4b. Structure ! satisfaction (self-directed will be
higher) t ¼ 22:0 0.050 Yes
5a. No performance differences between two team
control structures when internal processes controlled Could not be tested
5b. No satisfaction differences between two team
control structures when internal processes Table II.
(communication only tested) controlled t ¼ 20:682 0.498 Yes Hypotheses summary
ITP communication: t ¼ 3:288, p ¼ 0:002), providing support for both hypotheses.
17,4 Individuals who felt satisfied with their teammates and gratified by the project
experience were, on average, more likely to be associated with highly coordinated
teams where communication was effective.
ANOVA was employed to test H4a to measure whether there was a difference in
performance between self-directing and behavior controlled virtual teams. While the
372 teams in the self-directed group, on average, scored slightly better than those under
behavior control, our experiment shows no statistical difference in performance
between the two groups.
H4b, measuring whether there was a difference in satisfaction between self-directed
teams and behavior-controlled teams, was tested using HLM. The rationale for this
decision is that team control structure is a team design variable (i.e. it is conceptualized
at the team level of analysis), while satisfaction is defined at the individual level of
analysis. We found that, on average, individuals associated with self-directed teams

reported being significantly more satisfied with their teammates and more gratified by
the project experience (t ¼ 22:0, p ¼ 0:05).
Finally, we hypothesized that communication and coordination effectiveness
mediate the effect of the team control structure on project outcomes. H5a and H5b,
therefore, called for a test of mediation (Baron and Kenny, 1986). H5a could not be
tested because neither team control structure nor work processes had a significant
impact on the dependent variable – team performance (Baron and Kenny, 1986).
We also did not find a significant relationship between team control structure and
coordination effectiveness (H1a). We found a weak relationship between team control
structure and communication effectiveness (H1b). Therefore, we evaluated whether
communication effectiveness mediates the relationship between team control structure
and satisfaction.
Our results indicate that communication effectiveness fully mediates the impact of
team control on satisfaction (t ¼ 20:682, p ¼ 0:498). That is, the team control
structure coefficient, statistically significant when included in the analysis alone
(p ¼ 0:050), becomes not significant once communication effectiveness is added to the
model (p ¼ 0:498). Thus, H5b was supported.
Table II provides a summary of the results.
Discussion
The study reported here was motivated by a gap in the current virtual team literature.
Most empirical studies to date have investigated self-directed virtual teams and seem
to implicitly assume that this particular team control structure is best suited to the
virtual environment. Yet, teams in the traditional environment are often managed by
way of managerial control structures. We compare the effectiveness of self-directed
virtual teams with virtual teams under behavior control - a form of managerial control
widely used in traditional teams. We also extended and tested the notion that
communication and coordination effectiveness mediate the relationship between a
virtual team’s control structure and its effectiveness.
Performance
With respect to performance, we did not find a significant relationship between
coordination effectiveness or communication effectiveness and performance. The
challenge for both researchers and practitioners is to uncover the determinants of these Virtual teams
work processes and to evaluate how to stimulate them. In this realm, the traditional
team literature may not provide enough guidance when investigating teams that rely
on technology for communication since computer-mediated communication creates
novel obstacles to effective communication and coordination.
The team control structure also had no tangible effect on team performance. This
result is consistent with recent work in traditional teams finding no link between 373
autonomy and performance (Janz et al., 1997), but it runs counter to our expectations
for virtual teams. We hypothesized that the absence of strict behavior controls would
allow the team to identify work processes that are most appropriate for the task at
hand and the team’s composition (Robey et al., 2000) while appropriating technology in
ways that fit its idiosyncrasies (DeSanctis and Poole, 1994). One possible explanation
for our finding is that working in virtual teams is still a novelty for most workers
today – only 10 percent of participants in our study had previous experience working
in a virtual environment. As a consequence, these virtual team members may not have
appropriate mental models of how to organize a virtual team, may be unable to
optimally structure their work processes, and may have to learn new ways to behave
and interact with team members. Thus, when the teams are allowed to self-direct,
significant variability in their ability to cope with the difficulties of the virtual
environment should be expected.
We did find that the most effective teams, regardless of control structure, appeared to
have one or two highly conscientious members who spent a significant amount of time
prodding teammates and structuring the work for the team. These findings, albeit
anecdotal, echo the conclusions of earlier work on leadership (Kayworth and Leidner,
2001/2002) and individual roles in the virtual environment (Vogel et al., 2001). They
suggest that virtual teams benefit from the presence of individuals whose role is to
stimulate regular, detailed, and prompt communication, and ensure that all team
members are clear on their responsibilities. It appears that these “emergent leaders,” who
specialize in coordinating team activities and fostering communication, would help virtual
teams overcome the limitations of the virtual environment and the available technology,
more so than formal control mechanisms. Future research should further investigate the
emergent leader’s role and its contribution to virtual team effectiveness.
Satisfaction
Our results show that high levels of coordination and communication effectiveness
increased team members’ satisfaction with the experience. In addition, the type of
control structure imposed on the team had a significant relationship to satisfaction.
Team self-direction appears to provide enough flexibility for the team to adapt to the
new requirements and feel that the experience has been a rewarding one. Conversely,
imposing behavior control mechanisms on a team hindered individuals’ satisfaction
(see Table I, H4b). These results are consistent with the socio-technical theory
perspective and the hypothesized benefits of self-direction. Analysis of the
communication logs of selected teams showed that the behavior control mechanisms
created pressure on the team to “meet” and complete the required reports. This added
pressure created a context in which individual expectations for work commitment and
contributions were easily broken, leading to decreased satisfaction with the team
experience.
ITP These results support the argument that virtual teams should enjoy increased
17,4 autonomy and rely less on formalized procedures (DeSanctis and Poole, 1997).
However, we also found that while self-directed teams were more satisfied, when
communication effectiveness was controlled for, there was no difference in satisfaction
between self-directed and behavior controlled teams.
374 Control structure

We found no significant relationship between control structure and team coordination,
and only weak results between structure and communication effectiveness. Our work
focused on team self-direction and behavior control mechanisms traditionally
implemented in conventional teams. But a number of other control mechanisms and
tools exist and are used to foster team effectiveness (see for example, Kirsch, 1997;
Ouchi, 1979). Future research should explicitly investigate different forms of control
(i.e. output control) and different applications of control tools (i.e. making tool available
but optional) in the virtual context. One important result that emerges from our work is
that simply applying behavioral control practices used in traditional teams to the
virtual environment may be ineffective, even counterproductive, and suggests that
considerable care must be taken in transitioning from co-located teams to virtual ones.
We encourage future research and practice to evaluate and clearly understand the
contextual characteristics in which virtual teams operate before applying “tried and
true” control mechanisms to this novel environment.
Conclusion
Some limitations of this study must be recognized, both to inform the interpretation of
the results and to help shape future work. The study relies on a student sample and,
despite the subjects’ average age (28 þ ) and experience (5 þ years), results should be
generalized with caution. The choice of a student sample was driven by the need to
enforce different control mechanisms under investigation. Given the focus of the study
on virtual team control structures, the role of national culture was not investigated.
While it is possible that the culture had a confounding effect, by selecting schools from
culturally similar countries, cultural differences were minimized but not eliminated.
More importantly, team members were randomly assigned to teams and teams were
randomly assigned to treatments, thus mitigating any culture effect in the aggregate.
We also constrained our investigation to one task and small groups. Both the nature of
the task and the size of the group may have an impact on coordination and
communication. We encourage future research to broaden the applicability of our
work.
As the use of virtual teams in organizations becomes more and more widespread,
there is a need for rigorous research investigating the dynamics of this novel
organizational structure. Our study focuses on teams’ work processes and the effect of
different team control structures on team effectiveness. Our research aims at bringing
knowledge of traditional teams to bear in the new environment and, based on our
findings, extending it to accommodate some of the idiosyncrasies of virtual teams. Our
results lend support to the proposition that team self-direction translates into increased
satisfaction at the individual level. Team performance, on the other hand, remained
unaffected by the team control structures that we investigated. Perhaps the strongest
contribution of our research is alerting future research and practice to the potential
problems that may accompany the blind transfer of practices used in traditional teams Virtual teams
to the virtual environment. We encourage future researchers to create and test
management control schemes for virtual teams that explicitly account for the
characteristics and challenges of the virtual environment.
Notes 375
1. Self-directed teams are defined as “. . . groups of interdependent individuals that can
self-regulate their behavior on relatively whole tasks” (Cohen and Ledford, 1994; Goodman
et al. 1988). Most notably, self-directed teams retain control over organization of work and
are able to determine work assignment, work methods, and scheduling of activities.
2. Because we expected treatment-dependent performance differences, we were ready to
re-scale grades to avoid penalizing any of the students. However, this re-scaling was not
necessary since no statistically significant performance differences occurred.

3. The slight modifications of this and other scales refer to minor changes in wording of the
items to reflect the focus of this study on virtual teams.
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and Lee, 1995).

and Hayzak, 2001; Van Ryssen and Hayes Godar, 2000).

Variables and measures

were measured on a seven-point Likert scale. Coordination effectiveness denotes the

Enjoyed working with VT members 0.91

Hypothesis F,t Significance Supported

1a. Structure ! coordination F ¼ 1:031 0.315 No

analysis. We found that, on average, individuals associated with self-directed teams

374 Control structure

necessary since no statistically significant performance differences occurred.

communication”, Management Science, Vol. 32 No. 11, pp. 1492-512.

Management: An International Journal 20:5/6, 221-241. [Abstract] [Full Text] [PDF]

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