Virtual Teams: What are their Characteristics, and Impact on Team Performance?

To date, efforts to understand virtual teaming have been largely anecdotal and atheoretical. Therefore, drawing from the extant research in the groups domain, we attempt to ground the definition of a virtual team in well-established group-level constructs, and design a simulation study to investigate the impact of different virtual team characteristics on team performance. Essentially, we argue that the virtual team is defined by three key characteristics—the virtual team context, the virtual team composition, and the virtual team structure. Using the VDT computational discrete event simulation model as our experimental platform, we simulated different virtual team models, and examined their impact on various team performance dimensions. We found that virtual team characteristics have different effects on different aspects of team performance. The virtual context team had a lower rework volume but higher coordination volume and longer project duration than the virtual composition team. Interestingly, we also found that the virtual structure team performed better than the software development team baseline model in all aspects of team performance. Based on these results, we proposed strategies to improve performance in different types of virtual team. Specifically, we propose (1) increasing the ease of communication and availability of routines in the virtual context team; (2) clarifying role expectations and fostering a team culture in the virtual composition team; and (3) implementing a lateral structure in the virtual team. Our results also suggest that firms should consider situational demands, specifically tolerance for errors and coordination volume, when considering the design of virtual teams.