The moderating role of transformational leadership on team effectiveness in a virtual context

Research Paper (postgraduate), 2021

38 Pages, Grade: 1,7



List of content

List of content

List of abbreviations

List of figures

List of tables

1. Introduction

2. Literature Review:
2.1. State of the Art
2.2. The impact of virtuality on team effectiveness
2.3. Moderation

3. Empirical evidence
3.1. Virtuality and team effectiveness
3.2. Moderation effect

4. Discussion
4.1. Key findings
4.2. Theoretical implications
4.3. Practical implications
4.4. Limitations and directions for future research

5. Conclusion



List of abbreviations

e.g. example gratia

et al. et alia

fig. figure

FtF face to face

P proposition

p./pp. page/pages

R&D research and development

VT virtual teams

List of figures

Figure 1: Conceptual model – The moderating role of transformational leadership on the connection between virtuality and team effectiveness

List of tables

Table 1: Direct effects of transformational leadership

Table 2: Indirect effects in context of transformational leadership

Table 3: Combination with non-vertical approaches

Table 4: Included studies in context of virtuality and team effectiveness (1/3)

Table 5: Included studies in context of virtuality and team effectiveness (2/3)

Table 6: Included studies in context of virtuality and team effectiveness (3/3)

1. Introduction

Globalization, the resulting environmental changes, and the ongoing decentralization of the work process, as well as constantly evolving technologies and the current global pandemic, have significantly driven the formation of virtual teams (VT). Members of VT are geographically separated from each other and communicate via computer-mediated communication (e.g. Cascio, 2000, p. 85; de Guinea et al., 2012, p. 301; Townsend et al., 1998, p. 18).

As Waizenegger et al. (2020, p. 439) state “the pandemic could be the starting point of a new era for world-wide flexible working arrangements and digital team collaboration”. The rapid implementation of digital technologies, especially virtual team collaboration technologies, leads to an increasing number and relevance of VT (Mak & Kozlowski, 2019, p. 471) which is also evidenced by the fact that nowadays a large part of professionals already work or have worked in VT (e.g. Liao, 2017, p. 648; Mattarelli et al., 2017, p. 383).

As mentioned, the current COVID-19 pandemic has accelerated this development even more and virtual teamwork has evolved from a possible option to a requirement for many companies. According to Statista (2020), many organizations have therefore also changed their corporate policies for remote working. Worldwide, 38% of the companies surveyed already work 100% remotely, 37% have a hybrid model (Statista, 2020, p. 78). McKinsey summarizes the influence of the virus on this development as follows: “the virus has broken through cultural and technological barriers that prevented remote work in the past, setting in motion a structural shift in where work takes place […]” (Lund et al., 2020). When some or all members of a team work remotely, this inevitably leads to more virtual teamwork, and as Bell and Kozlowski (2002, p. 45) state: “Virtual teams are here, and they are here to stay”. This not only changes the organization of work and the interaction of team members but also has implications for the nature, as well as the challenges and opportunities, of team leadership. Despite the potential benefits of virtual teamwork (e.g. Cascio, 2000, pp. 81–82; Gajendran & Harrison, 2007, pp. 1535–1536; Gibson & Gibbs, 2006, pp. 81–82; McLeod, 1992, p. 269), both the team members of VT and the team leader of such a team face at least as many challenges due to physical and temporal distances, as well as the use of technologies, among other factors (e.g. (Alsharo et al., 2017a, p. 480; Marlow et al., 2017, p. 586; Mesmer-Magnus et al., 2011, p. 216; Warkentin et al., 1997, p. 979). Generally, the impact of virtual teamwork on the effectiveness of teams is controversial. The academic literature has been providing inconsistent evidence on this since the 1990s (e.g. Townsend et al., 1998, p. 28; Walther, 1995, p. 197; Wiesenfeld et al., 2001, p. 785). Therefore, in this seminar paper, we have turned to the research problem of these different statements in the literature about the influence of virtuality on the effectiveness of teams. As a moderating variable, we have chosen the transformational leadership style. The reasons for this are among other things the results of Hambley et al. (2007a, p. 55) who have found that especially in VT, leadership plays a crucial role. Purvanova and Bono (2009, p. 343) even found that the most effective leaders are “those who increased their transformational leadership in virtual teams". Therefore, this seminar paper is based on the following research question: Could transformational leadership influence the relationship between virtuality and team effectiveness?

The objective of this paper is to give a brief overview of the existing research results on the individual variables, virtuality, team effectiveness, and transformational leadership style, as well as examining the main effect of the influence of virtuality on team performance and investigate the moderating variable in terms of whether transformational leadership can lead to improved team effectiveness in a virtual context.

We start with a literature review of the current state of research on team virtuality and team effectiveness. We then summarize the impact that virtuality can have on team effectiveness and examine transformational leadership style as a moderator of this relationship. We also provide an overview of the conceptual and empirical advances that have emerged from previous research. By separating the main effect, the relationship between virtuality and team effectiveness, from the moderating variable, transformational style of leadership, we are better able to consider the respective influencing factors and elements. We conclude with a discussion of future directions for the advancement of research in the area we have studied.

2. Literature Review:

In the following, the current state of research regarding the three variables virtuality, team effectiveness, and transformational leadership will be presented. In addition, the relationship between the three variables named is addressed, and transformational leadership is considered as a moderator of the relationship between virtuality and team performance.

2.1. State of the Art

Since organizations are confronted with increasingly challenging and changing markets, the nature of work in modern organizations is adapting. Especially the fast-developing communication and information technologies created a new revolutionary working environment. Internet/Intranet systems, video conferencing, and collaborative software form the basis for an innovative and virtual workplace and offer the opportunity to work independently from time, place, or organizational boundaries (Townsend et al., 1998, p. 17). As a result of these fast changes, organizations have to adjust their structures, systems, and processes to become more adaptive and flexible. Since the use of team-based working units and horizontal organizational structures increased in the past years, the growing trend of virtual workplaces can be easily integrated to create VT (Bell & Kozlowski, 2002, p. 16; Townsend et al., 1998, p. 17). (Townsend et al., 1998, p. 17) described VT as “groups of geographically and/or organizationally dispersed coworkers that are assembled using a combination of telecommunications and information technologies to accomplish an organizational task.” Cascio (2000, p. 85) complements this statement by defining it as “work carried out in a location remote from the central offices or production facilities, where the worker has no personal contact with coworkers but can communicate with them electronically”. This communication can be offered by telecommuting/telework as a means to decrease real estate costs, create work-life balance for employees, and attract and keep high-quality personnel. VT permit organizations to leverage high-quality employees from around the world and therefore be highly responsive to the changing customer needs. This national diversity and dynamic structure can be a competitive advantage for organizations in fast-changing markets (Cascio, 2000, p. 81; Gajendran & Harrison, 2007, p. 1535; Gibson & Gibbs, 2006, p. 455; Raghuram et al., 2001, p. 396). Cascio (2000, p. 81) also stated that many companies have instituted virtual workplaces and have reaped the following benefits: Access to global markets and environmental benefits, increased productivity, improved customer service, and higher profits. Riemer and Vehring (2012, pp. 271–272) developed a model that divides the types of virtual organizations into three categories: internal, outsourcing, and networked. Outsourcing and networked virtual organizations create virtual workplaces externally, across various organizations. VT were often defined by the absenteeism of personal face-to-face (FtF) communication. The divide between virtual and traditional teams changed to a hybrid environment that combines various grades of virtual and FtF work (Griffith et al., 2003, p. 267; Schweitzer & Duxbury, 2010, p. 274).

But virtuality can also cause negative effects on individuals and teams. Possible disadvantages of integrating virtual workplaces into existing work processes can be the feeling of isolation, the lack of trust, cultural issues, and setup and maintenance costs (Townsend et al., 1998, p. 82). Social isolation through restricted communication breadth negatively affects the personal relationships between employees and between leaders and their employees at the workplace (Gajendran & Harrison, 2007, p. 1532; Townsend et al., 1998, p. 82). For our purposes, we will define VT as geographically independent team members working together on projects, often without FtF contact and communicating primarily through telework and telecommuting.

But besides virtuality or virtual workplaces, this seminar paper also portrays the variable team effectiveness, which can be differentiated into team performance (Maynard et al., 2012, p. 355), task performance outcomes (Lurey & Raisinghani, 2001, p. 525), decision quality (Swaab et al., 2016, p. 18), innovation (Gajendran & Joshi, 2012, p. 1253; Gibson & Gibbs, 2006, p. 455), and team satisfaction (Lurey & Raisinghani, 2001, p. 526; Stark & Bierly, 2009, p. 463). “Effective teams are able to deliver a timely, high-quality product [and] (…) are able to satisfy individual team members’ needs, rather than frustrate them, as a byproduct of team interaction (Piccoli et al., 2004, p. 363). Action Processes such as coordination, communication, and knowledge and information sharing are critical in forecasting team effectiveness and team efficiency (Kock & Lynn, 2012, p. 328). Teams work efficiently by meeting task requirements and simultaneously minimizing the costs for resources like an employee’s time and effort (Hoegl & Gemuenden, 2001, p. 445). A team can be called successful and high-performing when it meets the objectives which were formerly externally defined (Bell & Kozlowski, 2008, p. 30; De Dreu & Weingart, 2003, p. 742; Lovelace, 2001, p. 781). Because of these various definitions and dimensions of team effectiveness, we focus on the following variables when we discuss team effectiveness: team performance, innovation, communication, trust, cohesion, information/knowledge sharing, and satisfaction.

By using virtual innovations and more technology to work better, cheaper, faster, and smarter, many organizations are certain that VT have the ability to overcome these boundaries and achieve a substantial competitive advantage on the market (Cascio, 2000, p. 16; Townsend et al., 1998, p. 17). But even though these innovations can be helpful in fast-changing markets, many companies do not consider the possible negative aspects. Because of that, many researchers found inconsistent results regarding the integration of virtuality into the working environment. Therefore, this seminar paper aims to address this issue by focusing on the impact of virtuality on team effectiveness and the moderating role of transformational leadership.

2.2. The impact of virtuality on team effectiveness

The discussion on the impact of virtuality on team effectiveness goes back to the 1990s (e.g. (Townsend et al., 1998, p. 28; Walther, 1995, p. 197; Wiesenfeld et al., 1999, p. 785) and is, as mentioned before, discussed controversially in the literature.

According to McLeod (1992, p. 269), virtuality in a team context leads to improved task focus, improved decision quality, and more equal participation among group members. Furthermore, it was found that virtual communication between team members is less constrained by social norms or peer pressure (Mesmer-Magnus et al., 2011, p. 216), and high virtuality contributes to a reduction of fear in expressing dissenting ideas (Pissarra & Jesuino, 2005, p. 286).This is significant because voice expression is critical to successful team performance, as voice leads to improved work attitudes, improved decision making and performance, and increased innovation, among other benefits (Bashshur & Oc, 2015, p. 1546). "Voice matters. It is related to a variety of positive outcomes at all levels" (Bashshur & Oc, 2015, p. 1546). In addition, virtuality provides team members with the opportunity to process and think through the information they receive from other team members for longer periods of time compared to FtF-interaction, which increases the possibility of information exchange (Mesmer-Magnus et al., 2011). This is also essential to team effectiveness, as information sharing is one of the essential components of successful teamwork (Rousseau et al., 2006, p. 551). Further, the members of VT benefit from greater flexibility, especially regarding the locations and hours for working, which offers several benefits, including higher productivity (Bélanger, 1999, p. 149) and higher loyalty and commitment (Grover & Crooker, 1995, p. 283; Roehling et al., 2001, p. 163). Kelliher and Anderson (2010, p. 90) further noted that „flexible workers had more positive scores on measures of overall job satisfaction and organizational commitment than those who did not have flexible working patterns “. And this in turn is crucial for the team effectiveness, because „the more satisfied team members are, the greater the effort they will exert in team processes, and the greater belief that they will have in the team achieving its goals “ (DeOrtentiis et al., 2013, p. 534).

Concluding, (SHRM, 2019, p. 17) found that the most significant benefits of VT include diversity and creativity, and both have as well a positive effect on the effectiveness of teams (Gilson et al., 2005, p. 526; Horwitz & Horwitz, 2007, p. 1006).

In addition to the positive influences of virtuality mentioned so far, the literature cites at least as many negative influences of virtuality on team effectiveness. The main factors to be mentioned here are an increased potential for miscommunication and a lack of interpersonal communication. This is crucial because communication is one of the critical variables for effective teamwork (e.g. Johnston & Rosin, 2011, p. 3; Marlow et al., 2017, p. 586) . Mesmer-Magnus et al. (2011, p. 216) call this "lack of warmth and non-verbal cues" and the literature generally speaks of a loss of communication diversity and richness due to virtuality compared to FtF- communication (e.g. Alsharo et al., 2017, p. 480; Cogliser et al., 2012, p. 761; Kayworth & Leidner, 2000; Martins et al., 2004, p. 813; Schaubroeck & Yu, 2017, p. 637; Warkentin et al., 1997, p. 979). Among other things, this causes VT to need more time for decision-making and therefore more time to complete a task (Blaskovich, 2008, p. 41; McLeod, 1992, p. 270) which in turn is likely to lead to lower teamwork effectiveness.

Besides communication and interaction between the team members, it is essential to build trust (e.g. Bierly et al., 2009, p. 561; Morrison-Smith & Ruiz, 2020, p. 6) which enables individual team members to work together more effectively and efficiently and therefore has a significant influence on team effectiveness and success (Alsharo et al., 2017, p. 479; Brahm & Kunze, 2012, p. 606; De Jong et al., 2016, p. 6). “Individuals with higher trust are more likely to work with others to achieve interdependent goals than individuals with lower trust. This is due to those individuals with higher trust having a greater belief that if they work with others then their goals are more likely to be accomplished than if they act alone” (DeOrtentiis et al., 2013, p. 534). Schiller et al. (2014, p. 573) observed that FtF-teams have a higher level of trust and team satisfaction than VT. This is related, among other things, to the communication and interaction problems mentioned above, because especially in VT trust is influenced by “communication behavior, including timely responses, open communication and giving feedback […]“ (Henttonen & Blomqvist, 2005, p. 114). Furthermore, it was found that the team satisfaction in VT is lower than in FtF-teams (McLeod, 1992, p. 272) and besides communication and trust, the variables already mentioned above, satisfaction is also a crucial variable for effective teamwork “ (DeOrtentiis et al., 2013, p. 534). The team members satisfaction in VT can be affected by feelings of isolation, which in turn occurs, among other things, due to limited communication, which in turn hinders the quantity and quality of members' interactions (Bierly et al., 2009b, p. 561; Cooper & Kurland, 2002, p. 519). Additionally, due to the lower social interaction (e.g. disclosure of personal information, making jokes, etc.) and the resulting social isolation in teamwork that only takes place virtually the motivation of individual team members can be negatively affected and interpersonal processes can be impeded (Gajendran & Harrison, 2007, p. 1532; Handke et al., 2020, p. 8; Morrison-Smith & Ruiz, 2020, p. 9; Townsend et al., 1998, pp. 82–83).

Also related are the results of various studies (e.g. (Kerr & Murthy, 2009, p. 257; Mesmer-Magnus et al., 2011, p. 217) which state that teams with low virtuality are more open when it comes to information sharing than teams with high virtuality. Gibson and Gibbs (2006, p. 466) add that the geographic dispersion of team members makes it difficult to coordinate interactions and hinders the sharing of information. Reasons for this could include the previously mentioned communication and trust problems in the virtual environment. These obstacles lead to less information and knowledge being shared among team members and this can negatively impact team cohesion, team member satisfaction, and ultimately team effectiveness (Kerr & Murthy, 2009, p. 257; Rousseau et al., 2006, p. 551).

The variables mentioned so far which have an influence on the effectiveness of teams may also influence team collaboration and team cohesion, which in turn also plays a critical role in team effectiveness (Assbeihat, 2016, p. 254; Williams et al., 2006, p. 606). “Cohesion is important because it represents the ability of a team to achieve shared goals. The greater cohesion within a team, the more likely that the individuals within the team will be able to function in the manner needed in order to accomplish its goals and be effective” (DeOrtentiis et al., 2013, p. 534). Further, in general, collaboration in the virtual environment is more difficult for all team members, Morrison-Smith and Ruiz (2020, p. 1) and Warkentin et al. (1997, p. 985) have found that in VT there is generally less team cohesion, which is probably due to the already mentioned factors of communication and interaction problems, lower satisfaction and lower trust.

As described above, there is a wide variety of statements in the literature on how virtuality affects the effectiveness of teams. The negative points mentioned here may be addressed and partially eliminated through good leadership. Therefore, transformational leadership is considered as a moderating variable in the next step.

2.3. Moderation

To investigate team management in a virtual context and the effects of virtuality on the output of teams, seen as team effectiveness, we chose a moderation model. In aspiration to bring more clarity to the current inconsistent literature about the relation between the virtuality of teams and their outputs, we consider the effect of leadership as an important moderator.

As (Hambley et al., 2007b, p. 2) summarize, leaders and leadership style appears to play a central contribution to the effectiveness and performance of FtF and VT (Gilson et al., 2015, p. 1219; Hambley et al., 2007a, p. 55; Hertel et al., 2005, p. 80). This contribution relies on the impact of leaders on how a team is able to deal with problematic situations and the ability of a team to adapt their behavior to new circumstances (Gilson et al., 2015, p. 1219-1220). Liao (2017) additionally proposed that especially virtual leadership influences the effectiveness of VT via providing supporting structures for virtual collaboration (e.g. communication tools), introducing shared mental models by facilitating interaction and knowledge sharing inside a team as well as building trust promoting surroundings and act in a guiding manner to mediate team conflicts via bridging members in relationship and task conflicts (Liao, 2017, pp. 651–653).

When it comes to virtuality, teams and their leaders face new environments and partly impoverished communication styles, confusing new work patterns and more uncertainty than in co-located conditions. Purvanova and Bono (2009, p. 345) described these situations as “weak situations” where these insecure conditions can give leadership a great opportunity to take influence on team outcomes. Reduced FtF contact and a more limited non-verbal interaction in virtual context additionally complicate the formation of interpersonal relationships in the team (Brown et al., 2021, p. 1). Most of the common reasons for ineffective virtual leading, mentioned by team followers in the context of working virtual, were the lack of a common vision, strategy, and direction as well as too dominant behavior of the leader during conversations and online meetings (Hambley et al., 2007a, p. 48).

In literature, many different types of leadership are discussed, although two basic types are mentioned prior to others. Namely the classical transactional type of leadership and a more inspirational and relationship-oriented approach of transformational leadership.

Transactional leadership behavior is characterized by a classical leader-follower exchange process which is built on rules of reward and punishment. The main components of this managerial approach are based on contingent rewards and the management of exceptions. Therefore, a transactional leader will provide clear objectives for followers and positive reinforcements if those objectives are reached but also will make use of punishments if mistakes were taken and goals fail (Bass et al., 2003, pp. 208–209).

In order to the prior reported issues of virtual leading we follow Purvanova and Bono (2009) and suggest that the transformational leadership style, which can be seen as more participative is more important in virtual communicating teams. This is reasoned by the documented effectiveness and the four key elements of transformational leadership behavior: charismatic influence, inspirational motivation, intellectual stimulation, and individualized consideration (Purvanova & Bono, 2009, p. 344). Andressen et al. (2012) summarized the primary goals of transformational leadership as the process of inspiring team members to “pursue the leader’s vision” while simultaneously encouraging them to think independently for creating new work routines and innovative ideas by themselves (Andressen et al., 2012, p. 70). Furthermore, transformational leaders are able to encourage the team members’ interest and respect towards the team’s objectives while inducing commitment and the willingness to act as a role model in order to evaluate the group’s interest more than the individual ones (Ruggieri, 2009, p. 1018).

Since the increased difficulty to reach and motivate team members in a more virtual context, team literature developed concepts to foster the ability of self-managing teams. Such teams practice shared leadership which is characterized by collaborative decision-making, multilateral influence processes, and shared responsibilities instead of classical vertical top-down leadership (Hoch & Kozlowski, 2014, p. 391; Liao, 2017, p. 654). The starting point is that leadership, especially transformational leadership can be also seen as an attitude celebrated by team members towards each other rather than a pure view of a hierarchical leader towards a team while underlining that these shared leadership concepts within working groups are nevertheless complementary to the existence of a formal leader. Shared leadership is seen as a promoter of stronger bonds between team members and is presumed to buffer disadvantages of virtuality in terms of trust, cohesion, commitment, and performance, while transformational leadership which is based on largely visionary and inspirational basic ideas provides a promising concept to establish shared leadership elements and therefore influence team effectiveness (Hoch & Kozlowski, 2014, pp. 392–393; Wang et al., 2014, pp. 183–184).

As shown in sections 2.1 and 2.2 of this paper, the pure investigated effects of virtuality on team effectiveness are not consistent enough to elaborate a clear perspective on whether a team suffers or benefits from its virtuality. Building on that we want to underline that leading a virtual team gives additional challenges to leaders which requires more and different skills to reach good working team processes and outputs (Dulebohn & Hoch, 2017, p. 570). We believe these challenges and the resulting problems in the context of leading VT can be addressed by good leadership concepts and therefore suggest that transformational leadership seems to provide beneficial elements for managing VT and therefore moderates the relationship between virtuality and team effectiveness (fig. 1).

3. Empirical evidence

In the following chapters, the empirical evidence regarding our model (fig. 1) will be presented. First, we will portray the results of empirical research on the variables virtuality and team effectiveness. Second, the evidence for the moderating role of the transformational leadership style on the relationship between virtuality and team effectiveness will be demonstrated.

3.1. Virtuality and team effectiveness

In order to examine our model in more detail, we searched for various empirical literature dealing with virtuality as well as team effectiveness and related aspects. In the case of virtuality, these aspects include collaboration regardless of geographic location, the lack of FtF communication, and primary virtual communication instead. With the variable team effectiveness, we incorporate topics such as team performance, communication, innovation, trust, knowledge/information sharing, team cohesion, and satisfaction of teams. For this relationship between virtuality and team effectiveness, we selected 9 studies from well-known peer-reviewed journals (see appendix), which help to investigate our setup model and therefore addresses our research question.

To begin with, to portray the influences of the different aspects of virtuality on team effectiveness we consider the findings of Gibson and Gibbs (2006) who divided virtuality into four categories: electronic dependence, geographic dispersion, national diversity, and dynamic structure. In particular, they aimed to “capture the concept of virtuality more precisely by unpacking the negative effects on innovation of characteristics more often conceptualized as dimensions of virtuality and showing how they can be mitigated by a psychologically safe communication climate” (Gibson & Gibbs, 2006, pp. 482–483). In their analysis, they predicted that the previously mentioned dimensions are negatively related to the outcome team innovation. This research consists of 177 interviews across 14 teams which were conducted in “18 nations, 32 cities, 16 organizations, 45 organizational subunits and 11 different functional areas” (Gibson & Gibbs, 2006, p. 466). The results of their study show that dispersion across multiple sites was often prejudicial to innovation, as it made the coordination of interaction more difficult and hindered sharing information. This negative effect was also investigated between electronic dependence and innovation since it also impeded the motivation to improvise and message clarity. Contrary to that, there was no statistical evidence to prove their prediction for the effect of dynamic structure but again for the last dimension, national diversity. They found that “norms around knowledge sharing were culturally conditioned, as were communication styles, resulting in in-group/out-group dynamics that reduced information flow” (Gibson & Gibbs, 2006, p. 473). Because of these findings, we conclude that a virtual workplace and its different dimensions can cause a negative effect on the innovations of a team and therefore harm the overall team effectiveness.


Excerpt out of 38 pages


The moderating role of transformational leadership on team effectiveness in a virtual context
Johannes Gutenberg University Mainz
Catalog Number
ISBN (Book)
Virtual teams, moderating role, Moderator, transformational leadership, team effectiveness, virtual context
Quote paper
Anonymous, 2021, The moderating role of transformational leadership on team effectiveness in a virtual context, Munich, GRIN Verlag,


  • No comments yet.
Read the ebook
Title: The moderating role of transformational leadership on team effectiveness in a virtual context

Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free