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Monday, 3 December 2012

When do we really need interpersonal trust in globally dispersed new product development teams?

When do we really need interpersonal trust in globally dispersed new product development teams?

  1. Miriam Muethel1,
  2. Frank Siebdrat1,
  3. Martin Hoegl2
Article first published online: 27 DEC 2011
DOI: 10.1111/j.1467-9310.2011.00667.x
Issue
R&D Management

R&D Management

Volume 42, Issue 1, pages 31–46, January 2012
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Abstract

Interpersonal trust refers to the willingness to make oneself vulnerable to the actions of another party. Trust is generally acknowledged as fostering knowledge exchange and thus contributing to new product development (NPD) team effectiveness. However, the conditions under which NPD teams come to rely more heavily on trust to facilitate effectiveness remain unclear. With burgeoning global collaboration on new product development, we analyze how the characteristics of global NPD teams, i.e., geographic dispersion, computer-mediated communication (e.g., e-mail, video-conferencing), team membership flexibility, and national diversity moderate the trust–effectiveness relationship. Our results show that trust is more important under the condition of geographic dispersion, computer-mediated communication, and national diversity. By specifying when trust influences NPD team effectiveness in globally dispersed teams, we discuss the theoretical implications and provide recommendations for management.

1. Introduction

Innovations depend, among other things, on the use of knowledge and the generation of new knowledge (Hoegl and Schulze, 2005). Hence, companies strive to exploit knowledge resources from inside (Ahuja et al., 2003) and outside (von Hippel and von Krogh, 2003; Lichtenthaler, 2008) by creating globally dispersed new product development (NPD) teams (Griffith et al., 2003). Among other factors, interpersonal trust has been particularly argued to be a major NPD team success factor (Bstieler, 2006). Interpersonal trust is defined as ‘the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other party will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party’ (Mayer et al., 1995, p. 712). In this vein, trust has been shown to foster open communication styles, constructive conflict resolution, and free information flow (Zand, 1972). By positively influencing both knowledge transfer effectiveness and efficiency (Lane et al., 2001), trust thus appears to be an important source of effectiveness in global NPD teams (Iacono and Weisband, 1997).
However, interpersonal trust does not automatically evolve in globally dispersed NPD teams. As Muethel and Hoegl (2007) argue, global teams might be confronted with initial distrust when cultural prejudices undermine the team members' perceived trustworthiness. Trust building initiatives, particularly in the initial phase of collaboration (Wilson et al., 2006), can facilitate trust development (Jones and George, 1998) but also generate considerable costs. It is thus important to gain further insights into conditions under which interpersonal trust actually fosters NPD team effectiveness. It has been empirically shown that trust might not be a panacea (Langfred, 2004), and scholars have repeatedly requested more detailed inquiries into the circumstances under which trust unfolds its beneficial potential (Szulanski et al., 2004; Krishnan et al., 2006; Gefen et al., 2008). Gefen et al. (2008), for example, point to the necessity to consider culture's moderating effects on team processes in global environments. Given the excessive costs of trust building activities and the questions that have been raised regarding trust's general favorability (Dirks, 1999; Atuahene-Gima and Li, 2002), we point to the need for a more detailed inquiry into the circumstances under which interpersonal trust unfolds its beneficial potential in global NPD teams. We thus focus on the relevance of trust for performance in globally dispersed NPD teams in this paper. While it might also be interesting to investigate the processes through which interpersonal trust evolves in dispersed teams, this is outside of our scope, as we are interested in the (conditional) outcomes of trust, rather than the antecedents of trust.
Global NPD teams are often not only associated with geographic dispersion (Gibson and Gibbs, 2006) but also with computer-mediated communication, such as e-mail and video-conferencing (Bélanger and Watson-Manheim, 2006), flexible membership (Ancona et al., 2002), and national diversity (Kankanhalli et al., 2006). However, most studies on global teams only focus on geographic dispersion (O'Leary and Cummings, 2007). Moreover, extant research has focused on global team characteristics' direct relationship with team outcomes (Gibson and Gibbs, 2006). Joshi et al. (2009), however, point to geographic dispersion as an important moderator of team processes (Webster and Staples, 2006). Bierly III et al. (2009) address this claim, but only empirically investigate geographic dispersion as a moderator of the trust–performance relationship. Other global NPD team characteristics, such as computer-mediated communication, team membership flexibility, and national diversity remain unaddressed by research.
Given this research gap, our objective is to analyze the effects of these global NPD team characteristics on the relationship between trust and effectiveness in NPD teams. Our article makes several contributions to the field. First, we advance the growing body of literature by focusing on the importance of trust for NPD team effectiveness (Bstieler, 2006; Bstieler and Hemmert, 2008). By analyzing how global NPD team characteristics affect interpersonal trust's importance in such teams, our more fine-grained analysis details when trust is particularly critical and, by the same token, when teams are less dependent on trust to achieve high levels of NPD team effectiveness. Second, we conceptually extend previous research on trust in dispersed teams, which has mainly focused on geographic dispersion (McDonough III et al., 2001; Chidambaram and Lai Lai, 2005; Cramton and Webber, 2005; Fuller et al., 2006) by considering global teams' additional characteristics. Particularly, we explore the mechanisms by which (besides geographic dispersion) computer-mediated communication, team membership flexibility, and national diversity (besides geographic dispersion) are likely to influence interpersonal trust's effectiveness in NPD teams. Moreover, this study provides empirical evidence from organizational NPD teams, thus adding significantly to prior research on global teams, which have often relied on laboratory settings and student populations (O'Leary and Cummings, 2007).
By showing that not all global NPD team characteristics lead to trust's increased benefit for NPD team effectiveness, this research acknowledges the importance of considering interpersonal trust's moderating conditions (Atuahene-Gima and Li, 2002). In the face of the investment needed to develop trust in global NPD teams, we advance research by demonstrating under which conditions interpersonal trust actually strengthens the relationship between interpersonal trust and NPD team effectiveness.
The following discussion starts off by providing a brief review of the literature that supports trust having a generally positive effect on effectiveness. Thereafter, we describe the moderators listed above, theoretically outline the hypothesized moderation mechanisms, and offer empirical evidence of their influence on the trust-effectiveness relationship. Finally, we discuss the implications for theory and practice.

2. Theory and hypothesis

2.1. Interpersonal trust and NPD team effectiveness

Following Cummings and Bromiley (1996), whose definition of interpersonal trust is most often applied with regard to dispersed teams (Jarvenpaa and Leidner, 1999; Jarvenpaa et al., 2004), we maintain that team members trust their team if they believe that all the team members make an effort to behave in accordance with their commitments, that all the team members are benevolent, and that no team member will take advantage of another, even when given the opportunity to do so.
Empirical studies have shown that interpersonal trust enhances communication and information sharing (Dirks and Ferrin, 2001), particularly in dispersed teams (Jarvenpaa and Leidner, 1999). Knowledge transfer enabled by information sharing allows external and internal knowledge to be combined (Madhavan and Grover, 1998), thus serving as the basis for the creation of new knowledge (Knudsen, 2007). In turn, new knowledge is a major driver of new product development (Brockhoff, 1998).
Since trust leads to the constructive interpretation of partner motives (Uzzi, 1997), mitigating uncertainty about partner behavior (Krishnan et al., 2006), it reduces the potential for relationship or affective conflicts (Zaheer et al., 1998), which is generally regarded as dysfunctional in respect of dispersed teams (Kankanhalli et al., 2006) and also in NPD teams (Dreu and Vianen, 2001). However, by fostering task-related problem-solving effectiveness (Zand, 1972), trust facilitates moderate levels of cognitive conflict, which are assumed to enhance NPD team effectiveness (De Dreu, 2006).
In sum, and consistent with prior work on dispersed (Iacono and Weisband, 1997; Jarvenpaa and Leidner, 1999; Coppola et al., 2004) and NPD teams (Bstieler, 2006; Bstieler and Hemmert, 2008; Bierly III et al., 2009), we surmise that trust positively influences effectiveness in dispersed NPD teams, i.e., the extent to which a team is able to achieve quality goals (Hoegl et al., 2004). Hence, we posit:
  • Hypothesis 1: Interpersonal trust is positively related to NPD team effectiveness.
Building on trust's general favorability (Atuahene-Gima and Li, 2002), we argue that interpersonal trust's generally positive performance effect may be strengthened under certain conditions and diminished under other conditions. Since collaboration on innovative endeavors is becoming increasingly global (McDonough III et al., 2001; Gassmann and von Zedtwitz, 2003), we focus on global team characteristics as possible moderators and delineate the relevant conditions when interpersonal trust affects NPD teams' effectiveness more strongly.

2.2. Global NPD teams' characteristics

The central characteristic of global NPD teams is geographic dispersion. Geographic dispersion relates to the team members' physical and temporal distance (Baba et al., 2004), which can vary between the same place and global distribution (Lipnack and Stamps, 2000). Although physical dispersion does not necessarily influence the use of communication technologies – highly dispersed teams can travel and fairly colocated teams mostly communicate via e-mail or telephone (Fiol and O'Connor, 2005) – it is often assumed that more geographically distributed teams are also more electronically dependent (Kirkman et al., 2004). Computer-mediated communication can provide access to relevant expertise beyond the geographical boundaries, thus leading to cultural diversity among team members (Maznevski and Chudoba, 2000). However, team members from different cultural backgrounds could also work together in face-to-face teams. Therefore, national diversity and geographic dispersion often coincide but are not necessarily related (O'Leary and Cummings, 2007). Moreover, the convenient access to expertise that computer-mediated communication offers, supports creative and flexible responses to changing demands by facilitating flexible team membership. The latter enables the team to staff flexibly according to changes in their work assignments (Langfred, 2007). Thus, we argue that geographic dispersion, computer-mediated communication, national diversity, and team membership flexibility are central characteristics of global NPD teams. All these characteristics are considered continuous variables rather than definitional elements. Moreover, although these characteristics are all pertinent to global NPD teams, they are likely to demonstrate unique effects and, therefore, are argued to be independent of one another (Gibson and Gibbs, 2006).

2.3. Geographic dispersion

NPD teams become increasingly geographically dispersed, because companies strive to leverage specialized technical and local market knowledge from different sites (McDonough III et al., 2001) to increase innovation effectiveness (Brockhoff, 1998).
We argue that interpersonal trust's positive effects are particularly strong when geographic dispersion is high. With team members relying on one another to fulfill their work obligations (Zaheer et al., 1998), high levels of interpersonal trust lead to a decreased need for monitoring (Langfred, 2004). The positive effects of trust are particularly beneficial for team effectiveness under geographic dispersion, as face-to-face interactions are quite rare (Carson et al., 2003), making the monitoring of task activities and processes more difficult (Gibson and Gibbs, 2006). Moreover, interpersonal trust leads to the acceptance of uncertainty (Lane and Bachmann, 1996). Since global NPD teams are challenged by a decreasing awareness of one another's work status (Dennis, 1996; Tan et al., 1998), the benefits from trusting the other members are likely to increase if dispersion is high. Finally, interpersonal trust is characterized by faith in the partner's benevolence and intentions (Mayer et al., 1995), making each team member more likely to renounce control mechanisms (Fryxell et al., 2002). Thus, the team members assume that each of them is engaged in task accomplishment even if there is no control to verify this (Das and Teng, 1998). This, in turn, leads to interpersonal trust's increasing relevance for dispersed NPD team effectiveness.
These arguments emphasize the critical importance of interpersonal trust under greater geographically dispersion, and point to the latter's positive moderating effect on the relationship between interpersonal trust and effectiveness. Hence, we posit:
  • Hypothesis 2: Geographic dispersion increases the positive relationship between interpersonal trust and NPD team effectiveness.

2.4. Computer-mediated communication

Developments in computer-mediated communication systems have made it feasible for NPD teams to work together despite their physical dispersion (Zack and McKenney, 1995). These systems allow digitized information to be entered, stored, processed, distributed, and received (Kahai and Cooper, 1999), as well as allowing computer conferencing systems, electronic and voice mail systems, group decision support systems, and text retrieval systems (Huseman and Miles, 1988). Computer-mediated communication is a continuum and is a question of the relative extent of computer-mediated rather than face-to-face communication (Griffith et al., 2003). A team that operates entirely through e-mail, text exchanges, and teleconferences, never meeting face-to-face, is more electronically dependent than a team whose participants have a monthly face-to-face meeting. (Gibson and Gibbs, 2006)
We argue that in NPD teams with high levels of computer-mediated communication, the relationship between interpersonal trust and team effectiveness is particularly strong. Trust leads team members to consider sources of information and the other team members' motives positively (Mayer et al., 1995). As the integration of the team members' individually unique knowledge is crucial to NPD team effectiveness (Madhavan and Grover, 1998), smooth knowledge exchange processes between the team members are very important in this context. Assuming that the other team members have positive motives, interpersonal trust also diminishes dysfunctional conflict (Jehn and Mannix, 2001). The limited media richness and social presence in electronically dependent teams lead to fewer nonverbal cues (Kahai and Cooper, 1999), less contextual information (Kankanhalli et al., 2006), and, thus, to misunderstandings among team members (Desanctis and Monge, 1999; Mortensen and Hinds, 2001). Moreover, technical expertise is often bound to a specific language, which might differ among the NPD team members (Cramton, 2001), allowing misunderstandings to arise. The positive consideration of other team members' motives thus seems to be particularly essential in settings characterized by high levels of computer-mediated communication.
Finally, trust is reflected in team members' willingness to listen to and absorb others' knowledge without verifying this information (Szulanski et al., 2004). Under conditions of strong computer-mediated communication, this willingness is particularly important because computer-mediated communication largely prevents information verification (Johnson and Lederer, 2005). Thus, the importance of trust increases. Moreover, trust implies a willingness to share one's useful knowledge (Levin et al., 2006), implies that the sources of information are considered trustworthy (Andrews and Delahaye, 2000), and that the amount of information exchanged is likely to increase. Since NPD teams continually depend on the integration of their members' unique knowledge (Espinosa et al., 2007), a willingness to rely on the information given becomes crucial to knowledge-sharing effectiveness. Information verification would increase knowledge exchanges' time and cost.
The positive effects of interpersonal trust are therefore crucial in the presence of strong computer-mediated communication, which is generally characterized by lower levels of information-sharing effectiveness than found in face-to-face teams (Kirkman et al., 2006). Therefore, we propose that if team members' computer-mediated communication increases, interpersonal trust has a stronger impact on team effectiveness:
  • Hypothesis 3: Computer-mediated communication increases the positive relationship between interpersonal trust and NPD team effectiveness.

2.5. Team membership flexibility

Dynamic changes in the task, situation, and conditions are a key characteristic of new product development and demand flexibility in the team structure (Langfred, 2007). As such, NPD teams are often characterized by frequent changes in team membership (Gibson and Gibbs, 2006).
Trust's positive relationship with effectiveness is likely to be particularly strong in teams with high levels of team membership changes. Interpersonal trust leads team members to listen to problems, to pass along relevant information (Williams and Anderson, 1991), and explain the work (Van Dyne and LePine, 1998). This positive effect is likely to become even more important in the context of frequent changes in team membership, as team members tend to lack a common vocabulary and their understanding of team processes is limited (Wiersema and Bantel, 1992). These team members are thus faced with uncertainty and anxiety about socially accepted behavior (Harrison et al., 2003). Hence, trust's positive effects tend to increase in teams with flexible membership.
Moreover, interpersonal trust is associated with the willingness to allow deviances from socially accepted behavior (Lewicki and Bunker, 1996). In the belief that team members act with the best intentions and do not deliberately disregard social norms, but simply do not recognize them, deviances are not attributed to actors' lack of goodwill. These benefits become even more important under conditions of flexible membership, as, besides the problem of new members not being acquainted with team norms, shorter tenure also leads to less commitment to established norms and practices (Finkelstein and Hambrick, 1990). Thus, new team members might not feel obliged to adhere to the team norms and could provoke dysfunctional conflict. Therefore, interpersonal trust becomes increasingly relevant for NPD team effectiveness in the context of non-stable team membership. Hence, we posit:
  • Hypothesis 4: Team membership flexibility increases the positive relationship between interpersonal trust and NPD team effectiveness.

2.6. National diversity

Firms increasingly take advantage of international opportunities to maximize the use of scarce knowledge resources (Cramton, 2001) and to capture comparative cost advantages. Consequently, product development activities' internationalization has shown strong growth (Moenaert et al., 2000; Björn and Bodo, 2008). The more nationally diverse an NPD team is, the more it faces cultural and linguistic differences between its members, as well as differences along broader cultural dimensions, such as individualism and collectivism (Kankanhalli et al., 2006). Culture is a set of shared symbols, norms, and values in a social collectivity (Dongsong et al., 2007), thus serving as a filter for one's perception of the surrounding environment, as guiding behavior, and as social interaction (Chudoba et al., 2005). In their conceptual piece, Nakata and Sivakumar (1996) argue that culture influences NPD team effectiveness. As such, the authors assume, for example, that individualism increases NPD team effectiveness, while power distance is argued to demonstrate negative effects.
In settings with high levels of national diversity, the importance of trust is likely to increase. Trust mitigates uncertainty about partner behavior (Krishnan et al., 2006) by facilitating mutual understanding and giving one another the benefit of the doubt (Zaheer et al., 1998). If one party encounters its partner undertaking unexpected actions, which could be ascribed to both good and bad intentions, a constructive interpretation of the partner's intentions is critical, as the first party is assumed to exhibit goodwill (Krishnan et al., 2006). Since teams with high national diversity demonstrate divergent preferences for social interaction norms (Zhang et al., 2007), this positive effect of interpersonal trust becomes particularly important. Consequently, trust's positive effects may increase in teams with high levels of national diversity. Moreover, trust fosters the predictability of the other party's behavior (Zaheer et al., 1998) by alleviating communication deficiencies. This is particularly important in highly international teams with frequent misunderstandings.
Finally, interpersonal trust increases voluntary deference (Kramer, 1999). A trusting recipient is more likely to accept advice from the other team members and to change his or her behavior. Hence, trust is particularly relevant in nationally diverse teams to overcome the downsides of social categorization and its negative consequences for knowledge exchange. In this context, trust's positive effects are particularly important, as individuals tend to categorize others according to physical cues, such as race, and to develop expectations about one another's behavior (Hogg and Terry, 2000). These cues and expectations then shape their interactions; i.e., the opportunities they assign one another to speak, and the appreciation of one another's contributions (Weisband et al., 1995). Therefore, we propose that with national diversity in NPD teams increasing, interpersonal trust has a stronger impact on team effectiveness because it strengthens the team's ability to cooperate. Accordingly, we posit:
  • Hypothesis 5: National diversity increases the positive relationship between interpersonal trust and NPD team effectiveness.

3. Methods

3.1. Sample and data collection

We test our hypotheses on a sample of 80 software development teams from five software development companies' 28 different worldwide labs. Four of the companies are headquartered in Germany and one in the United States. The companies participating in our study organize their R&D in various software laboratories dedicated to the development, testing, and adaptation of basic software programs. While most software labs are proficient at the entire software development value chain, some labs are specialized in certain functionalities or development processes. Each laboratory participating in this study produced a list of projects, which also included the team leaders' names and contact information.
In a second step, the team leaders were provided with additional information about the present study and asked to complete a spreadsheet by providing descriptive details of the team and its team members (e.g., their gender, age, nationality, and the location of each team member's office). In a third step, all the team leaders and team-external managers, as well as randomly chosen team members, were contacted and asked to complete the online questionnaire. The respondents' participation in this study was strictly voluntary. A team was only included in the final data set if the team leader, the team-external manager (i.e., the manager to whom the team leader reported), and at least two team members had completed the questionnaire. The team leaders and managers' response rate was 100%, while that of the team members was 68%.
Each laboratory employed between 20 and 5,500 software developers (median = 600). All software development projects completed 12 months prior to our study's data collection and on which teams of nine or fewer members worked, were included in the study. This selection criterion ensured that the study focused on small integrated work teams, rather than on larger collectives that are often structured into multi-team projects (Hoegl et al., 2004), which often occurs in respect of software development programs (Dubé et al., 2006). Overall, our analyses are based on a total of 392 responses from 80 team leaders, 80 managers, and 232 team members. This sample contains 28% female team leaders and 24% female team members. Teams in our sample have an average of 5.9 members (median = 6, standard deviation = 1.8, min = 3, and max = 9), while the average age of the team members was 37.0 years (median = 37.0, standard deviation = 8.6).

3.2. Measures

All constructs considered in this investigation refer to the team as the unit of analysis. Accordingly, all measures were specified on the team level. Thus, the respondents were asked to evaluate the team's properties and behaviors as a whole. The questionnaire was administered in German and in English. A pretest was conducted with seven members of a software development team at a consulting and an engineering company. After this pretest, the wording of some items and the online questionnaire's layout were refined for later use in the present study. To ensure content validity and to avoid a possible common source bias, data from various respondents were used to measure the different variables. All items used in this study were drawn from published scales. These items were also discussed with the company representatives before the questionnaire went online. This process resulted in several changes to the wording of items to increase their clarity and interpretability. Table 1 provides the descriptive statistics and correlations in respect of all the variables in our study.
Table 1. Descriptive statistics and correlations (N = 80 teams)
VariablesInformantaMeanSD123456789
  1. a
    This study used different informants for different levels of analysis: TL, team leader; TM, team member; M, manager.
  2. r > 0.17 is significant at the P < 0.10 level;
  3. r > 0.21 is significant at the P < 0.05 level;
  4. r > 0.30 is significant at the P < 0.01 level.
(1) Team sizeTL5.941.77–        
(2) Project length (LOG)TL1.140.290.04–       
(3) Task demandsTL3.380.860.240.26–      
(4) Gender diversityTL0.230.190.10−0.020.05–     
(5) TrustTM3.930.440.06−0.22−0.13−0.14–    
(6) Geographic dispersion (LOG)TL1.291.500.14−0.160.050.340.01–   
(7) Computer-mediated communicationTL2.940.91−0.07−0.22−0.080.010.100.43–  
(8) Team membership flexibilityTL0.360.40−0.27−0.23−0.49−0.180.07−0.080.00– 
(9) National diversityTL0.210.240.040.000.090.040.120.630.19−0.13–
(10) NPD team effectivenessM4.050.75−0.26−0.15−0.34−0.270.36−0.31−0.110.24−0.25
3.2.1. Dependent variable
The measurement scale for NPD team effectiveness was based on the scale used by Hoegl and Gemuenden (2001), which was specifically designed to assess team effectiveness in software development teams. To capture NPD team effectiveness, the items assess the overall team effectiveness, such as customer satisfaction with the work output, as well as detailed measures evaluating important effectiveness dimensions, which include the product quality, reliability, and the software solution's usability. Team-external managers judged all NPD team effectiveness indicators, using a scale ranging from 1, ‘strongly disagree,’ to 5, ‘strongly agree.’ This assessment revealed a strong consistency, with all items loading on one factor (Cronbach's alpha = 0.92).
3.2.2. Independent variable
Trust was measured using Jarvenpaa and Leidner's (1999) trust scale for the dispersed team context, which has been also employed in further studies (Jarvenpaa et al., 2004). Since the benevolence-related aspects of trust have been shown to be particularly crucial for dispersed teams (Piccoli and Ives, 2003), we added Levin and Cross's (2004) item that measures benevolence. Trust was assessed on a five-point answer scale. Cronbach's alpha for this five-item measurement instrument was 0.82.
In our study, the trust scores were obtained by means of aggregated responses from multiple team members, excluding the team leaders. Prior to aggregating the team members' evaluations of trust, inter-rater agreement was assessed by means of James et al.'s (1984) proposed multiple-item estimator for within-group inter-rater reliability. This test yielded results indicating a generally very strong rating agreement in respect of the same team (rwg = 0.89), which therefore justifies the aggregation (LeBreton et al., 2003). In addition, we calculated the agreement index that Brown and Hauenstein (2005) recently proposed to overcome scale dependency and sample size dependency's limitations, as well as possible bias through a falsely assumed uniform null distribution, all of which are inherent in the rwg(1) family of inter-rater agreement indices. With a score of 0.75, this improved inter-rater agreement index also confirms agreement in respect of our trust measure. Given this homogeneity of within-team ratings, the data were aggregated on the team level by calculating the arithmetic mean.
3.2.3. Moderator variables
In order to test our moderation hypotheses 2 to 5, we used geographic dispersion, computer-mediated communication, team membership flexibility, and national diversity as moderator variables. To calculate the geographic distribution, we referred to the team descriptions provided by the team leaders to locate each team member's office. Building on O'Leary and Cummings (2007), we used this information to calculate the mileage index, capturing the geodesic distances between sites weighted by the number of members at these sites. The latter was based on a matrix of all possible, nonredundant, member-to-member connections. We took the natural logarithm of these scores to normalize the geographic distribution. To capture computer-mediated communication, we applied the measure used by Subramani (2004) who asked the participants to indicate the degree to which degree they relied on information technology. Consequently, computer-mediated communication was measured on a scale ranging from 0% to 100% by requesting the team leaders to indicate the degree to which the team communication was channeled through virtual media (e.g., e-mail, video-conferencing, shared collaboration space). Applying this variable, we gathered one value per team that indicates the level of virtual media usage rather than face-to-face interaction. This is of special interest in our research, since colocated teams also have a tendency to prefer virtual media to face-to-face conversation. In this sense, we capture some of the shades of gray between dispersion and colocation.
In respect of team membership flexibility, we calculated the percentage of members who spent less than 50% of their working time on the project in relation to the time spent by all the team members. Finally, we calculated Blau's index (1977) to measure the level of nationaldiversity, which was based on the team leaders' descriptive data of each team member's national background. This index is calculated as
  • display math
with ‘p’ as the proportion of individuals or objects in a category, and ‘N’ as the number of categories. If all the team members are either male or female, there is maximum homogeneity, and the index is zero. If half are from one group and half from another, the index has a maximum of 0.50.
3.2.4. Control variables
Previous research on work groups suggests that team size (Hoegl, 2005), project length (Saunders and Ahuja, 2006), task characteristics (Rousseau et al., 2006), and the organizational context (Ilgen et al., 2005) may influence team effectiveness. They are therefore considered control variables in this study. The team leaders provided all the variables, with the exception of the organizational context.
First, we controlled for the size of the group and included this as a control variable in the analysis, as research suggests that even within a limited corridor of variability, team size still matters (Voelpel et al., 2008). Since some researchers claim that the development of trust in work teams is also related to the length of time team members collaborate (e.g., Jarvenpaa and Leidner, 1999), we also assessed the project length in terms of months from the beginning of the team's work to its conclusion (Mean = 17.5; Median = 12.0; SD = 16.3). After a log transformation, we included this as a control variable. Since the level of trust that is needed to succeed in NPD teams is related to the task demands (White and Steven Siu-Yun, 2005), we included the level of task demands in our analyses. We accounted for different levels of task demands within our sample and employed this variable as a five-item index (complexity, newness, time pressure, technical uncertainty, and economic risk) with good consistency (Chronbach's alpha = 0.78; all items loading on one factor).
In addition, we controlled for gender heterogeneity by using Blau's variation coefficient (1977) to avoid possible confounding effects by other relevant demographic variables (besides national diversity, which is one of our hypothesized moderators). Finally, given that this study includes data from five different software development companies, the study controlled for possible organizational effects in the analysis by including dummy variables for the respective organizations in the regression analyses. Since some of the participating companies operate globally, and the country organizations only have a slight organizational link to the headquarter organization, we assigned dummy variables to the country organizations to which the teams belonged (i.e., 11 dummy variables for 12 country organizations). A country organization incorporates one or more labs, which generally share the same infrastructure, processes, and technologies. Examining this organizational context enabled us to effectively control for all constant and unmeasured differences across the country organizations, which may explain differences in the investigated variables and relationships.

4. Results

Hierarchical multiple regression was used to test our hypotheses (Cohen et al., 2003). Using the interaction term's significance level (P-value) as the key indicator of moderation, the significance of the proposed interaction effects was assessed once all the control variables and main effects had been entered (Baron and Kenny, 1986). Due to the limited sample size, moderator analyses were run sequential. Table 2 shows the regression analysis's results, which are based on the trust–effectiveness relation and its moderators, with the numbered columns referring to our hypotheses (1 to 5).
Table 2. Multiple regression analysis predicting team innovation effectiveness (N = 80)
VariablesHypotheses
123456
  1. Direct effects are in parentheses below the standardized coefficients of the interaction terms. The significance of Delta R2 for the interaction terms pertaining to H2–H5 was calculated separately. All variables were mean-centered before entering the analyses.
  2. a
    P < 0.10;
  3. b
    P < 0.05;
  4. c
    P < 0.01.
11 Dummy variables for 12 country organizations
Team size−0.22b−0.23b−0.25b−0.22b−0.22b−0.28b
Project length−0.04−0.06−0.05−0.05−0.05−0.10
Task demands0.090.090.060.080.080.02
Gender diversity−0.16−0.13−0.14−0.15−0.18b−0.16
Trust0.33c0.32c0.25b0.33c0.32b0.27b
Trust x
Geographic dispersion 0.17a (−0.22b)   0.10 (−0.04)
Computer-mediated communication  0.24c (−0.18a)  0.24b (−0.15)
Team membership flexibility   −0.02 (−0.04) −0.03 (−0.15)
National diversity    0.18b (−0.27c)0.15 (−0.21)
F5.10c5.39c5.89c4.38c5.64c4.48c
R20.540.600.620.550.610.50
By first examining the linear relationship proposed in hypothesis 1, we found that trust and NPD team effectiveness are strongly interrelated (β = 0.33, P < 0.01; see Table 2). As expected, our results support the numerous claims that trust is an essential component of NPD team effectiveness (Bstieler, 2006). Hypotheses 2 to 5 are largely supported with significant interaction terms (P < 0.05) in respect of computer-mediated communication (H3) and national diversity (H5), and a marginally significant interaction term (P < 0.10) regarding geographic dispersion (H2). However, our results fail to support the moderator effect proposed in respect of team membership flexibility (H4), as its interaction term was not found to be significant.
The interactions are plotted in Figure 1. The interaction plots illustrate that teams with dispersed team characteristics, such as dispersion, computer-mediated communication, and national diversity, benefit more from trust than teams with fewer of these characteristics. Teams which manage to achieve high levels of trust despite their reliance on -computer-mediated communication, outperform colocated teams with the same level of trust. In contrast, low-trust teams with high dispersion underperform far more than teams with less dispersion and the same level of trust.
Figure 1. Interaction plots with team innovation effectiveness as dependent variable.
figure

5. Discussion

Given the study's results, we discuss the theoretical implications for dispersed teams, trust, and innovation research. Furthermore, we offer managerial implications, discuss the study's limitations, and make suggestion concerning required future research.

5.1. Theoretical implications

Our results provide substantial support for interpersonal trust's generally beneficial role with respect to NPD team effectiveness. As such, our findings integrate with those of Bstieler (2006) who demonstrates that trust enhances product development effectiveness, as well as with that of Fleming and Waguespack (2007) who argue in favor of trust's benefits for open innovation. Moreover, we tie in with Bstieler and Hemmert (2008) who have demonstrated national culture's moderating effects on the trust-effectiveness relationship in product development teams. However, we extend their research by demonstrating that also other characteristics of internationally dispersed collaboration – geographic dispersionand computer-mediated communication – moderate this relationship.
With regard to dispersed team research, we build on the work by Cummings (2004), Hoegl et al. (2007), and Joshi et al. (2009) who point to dispersion as a moderating condition of the relationship between team processes and team performance. However, we exceed existing moderator conceptualizations by applying a multidimensional dispersion concept to the interpersonal trust effectiveness relationship in NPD teams. As such, geographic dispersion, computer-mediated communication, team membership flexibility, and national diversity serve as conditions to determine when trust becomes particularly important for internationally dispersed NPD teams' effectiveness. Defining all four dimensions as continuous variables, we also tie in with Hinds and Mortensen (2005) who conceptualized dispersion as a matter of degree rather than regarding it as dichotomous.
The study shows that in respect of geographic dispersion, computer-mediated communication, and national diversity, trust's influence on effectiveness is more important. With regard to team membership flexibility, however, our findings did not provide support for trust's predicted stronger effect on team effectiveness. A possible explanation for this deviant finding could be that stability in team membership might not be a core characteristic of global NPD teams. Our data show that flexible membership has nonsignificant correlations with geographic dispersion, computer-mediated communication, and national diversity, while these three characteristics of global NPD teams all correlate significantly with one another. Hence, we speculate that team membership flexibility does not constitute an essential element, and therefore fails to demonstrate the moderator effect which we had derived from relevant prior literature.
With respect to interpersonal trust research, our results indicate that geographic dispersion, computer-mediated communication, and national diversity significantly influence the trust–effectiveness relationship. Hence, the results highlight the importance of identifying the conditions under which trust is particularly beneficial for team effectiveness. As such, our research integrates with Atuahene-Gima and Li's (2002) work on the contextual circumstances under which interpersonal trust unfolds its potential. As the illustrations of the significant interaction effects indicate, more colocated (less dispersed) teams benefit less (or not at all) from trust, while more dispersed teams are largely dependent on it.
Such findings shed new light on the trust–effectiveness relationship in NPD teams, revealing a much more differentiated picture than the often conveyed and universally positive notion that trust is always beneficial. The conceptual and empirical analyses in this paper highlight certain conditions under which trust becomes critical (high geographic dispersion, computer-mediated communication, and national diversity) and other conditions (low computer-mediated communication, and national diversity) where trust is not a driver of NPD team effectiveness.

5.2. Managerial implications

The findings from this research also have implications for managerial practice. Our study demonstrates interpersonal trust's increasing positive influence on NPD team effectiveness in the context of dispersed collaboration. However, the development and maintenance of high levels of trust is continuously challenged, particularly in dispersed NPD teams (Muethel and Hoegl, 2007), as perceived deviances from team norms, because of different mind sets (Arora et al., 2004), misunderstandings (Kankanhalli et al., 2006), and conflicting motives (Tomlinson et al., 2004), potentially threaten the existence of trust (Elangovan and Shapiro, 1998). The managerial implications therefore focus on trust building in the initial stages of collaboration and on trust repair where trust violations have occurred (Ferrin et al., 2007).
With regard to initial trust development, companies are well advised to invest in face-to-face meetings at the beginning of a project with high levels of geographic dispersion, computer-mediated communication, and national diversity. As our study shows, these conditions determine (at least in part) how critical trust is for team effectiveness, and hence, the degree to which investment in trust development is warranted. Kickoff meetings allow the team to get to know one another personally, to share information, and to openly discuss the goals, processes, and procedures (Cohen and Bailey, 1997). Content clarification (elucidating projects' scopes and requirements, gathering supportive background information, and creating work documents) and process information (outlining work plans and the associated time tables) foster the creation of a common ways of thinking and the development of commonly accepted behavioral norms within the team (Hackman, 1987). These, in turn, form the basis of trust development. This may be reinforced through further interaction during the project, besides focusing everyone's attention on trust-related matters such as trust violation and repair.
When trust is violated, NPD teams need procedures to repair trust to secure team effectiveness. Possible solutions are targeted at either obtaining an apology from the trust violator (Ferrin et al., 2007) or at third party trust facilitators (Mesquita, 2007).
An apology can include the offender accepting responsibility for the trust violation. Furthermore, it should convey the perpetrator's desire to reconcile with his or her fellow team members and to continue the collaboration (Kim et al., 2004). A sincere apology contains explicit statements of remorse; it is characterized by the offender's wish to shape the victim's impressions of his or her intent and motives (Tomlinson et al., 2004). For an apology to restore a trusting relationship, it should be offered soon after the violation, as it signals that the offender recognizes his or her deviant behavior (Lewicki and Bunker, 1996).
Besides the offender offering an apology, third parties could be engaged to facilitate trust reparation (Smith and Blanck, 2002). Trust facilitators employ two sets of trust-building abilities: first, those related to leading NPD teams, and second, those targeting mediation (Mesquita, 2007). Trust facilitators understand the leadership tasks in NPD teams and are able to help team leaders create a trusting environment by, for example, developing and including measures of trustworthiness in effectiveness evaluations (Abrams et al., 2003). Moreover, as mediators, trust facilitators function or intervene in cases of conflict and help the disputants achieve an agreement (Ross and Conlon, 2000). Consequently, trust facilitators mediate the negotiation of rules by disentangling and shielding new, potentially trustful, relationships from tainted existing disputes (Mesquita, 2007). Thus, managers build a trusting environment, request apologies from trust violators, and engage trust facilitators to restore trust relationships.

5.3. Limitations and outlook

A few of this study's limitations should also be noted. First, the data used in this research are cross-sectional rather than longitudinal. While our study demonstrates associations between variables, it cannot establish causality. A longitudinal research design with multiple informants would probably further our knowledge in respect of whether the effects found in our study are stable over time, or may be further moderated by timing issues. Second, we consciously focused on software development teams, because this industry's digital output makes collaborating across geographical boundaries more feasible. While we do not assume that our results are specific to software development's task contexts, we encourage further research to test the transferability of our results to other industries.
With regard to further research on trust in global NPD teams, we consider two aspects as particularly interesting. First, our results highlight the importance of trust in dispersed teams, pointing to trust's compensatory effects in respect of control (Inkpen and Currall, 2004) in dispersed environments. Control mechanism incorporate formal rules, such as procedures and policies, for monitoring purposes, as well as informal or social rules, thus emphasizing organizational norms' regulatory power (Costa and Bijlsma-Frankema, 2007). As already noted above, control mechanisms are difficult to implement in dispersed environments due to the lack of face-to-face contact (Carson et al., 2003). However, the generally accepted inverse relation has recently been criticized (Das and Teng, 1998), leading to more fine-grained models (Vlaar et al., 2007). To fully understand more the relationship between trust and control in dispersed environments, future research could examine how they are related in this context.
Second, as underlined by our results, the importance of trust for global NPD team effectiveness hints at the necessity to have high levels of trust from the very beginning of collaboration. As McKnight et al. (1998) have argued, teams might not necessarily start their collaboration with low levels of trust but might demonstrate initial trust. However, Muethel and Hoegl (2007) have shown that in cross-cultural settings, global NPD teams might also be confronted with initial distrust because of negative stereotyping. Hence, further research should investigate initial trust and distrust to offer more insights into how to ensure high levels of trust in the early stages of collaboration.

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Biographies

  • Miriam Muethel is Professor at WHU – Otto Beisheim School of Management (Germany), where she holds the Chair of Organizational Behavior. Her research interests comprise international management (particularly Confucian Asia), organizational behavior, and business ethics. She has published in the Journal of International Business Studies (2010), Journal of International Management (2010), Journal of World Business (in press), Human Resource Management (in press), and Management International Review (in press).
  • Frank Siebdrat received his PhD in leadership and human resource management from the WHU – Otto Beisheim School of Management. In his dissertation, he investigated the success factors of virtual team collaboration within the context of the software development industry. He works for an international manufacturer of consumer electrics in international sales and marketing.
  • Martin Hoegl is Professor at the University of Munich (Germany), where he heads the Institute of Leadership and Organization. His main research interests include leadership, collaboration, and innovation in organizations. He has published in the Academy of Management Journal, Decision Sciences, Human Resource Management, Journal of Business Ethics, Journal of International Business Studies, Journal of Management, Journal of Management Studies, Journal of Product Innovation Management, MIT Sloan Management Review, Organization Science, Research Policy, and other journals.
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When do we really need interpersonal trust in globally dispersed new product development teams? - Muethel - 2011 - R&D Management - Wiley Online Library
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