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RESEARCH REPORT Innovation in Globally Distributed Teams: The Role of LMX, Communication Frequency, and Member Influence on Team Decisions Ravi S. Gajendran and Aparna Joshi University of Illinois at Urbana-Champaign For globally distributed teams charged with innovation, member contributions to the team are crucial for effective performance. Prior research, however, suggests that members of globally distributed teams often feel isolated and excluded from their team’s activities and decisions. How can leaders of such teams foster member inclusion in team decisions? Drawing on leader–member exchange (LMX) theory, we propose that for distributed teams, LMX and communication frequency jointly shape member influence on team decisions. Findings from a test of our hypotheses using data from 40 globally distributed teams suggest that LMX can enhance member influence on team decisions when it is sustained through frequent leader–member communication. This joint effect is strengthened as team dispersion increases. At the team level, member influence on team decisions has a positive effect on team innovation. Keywords: distributed teams, virtual teams, LMX, team innovation, member influence on team decisions Organizations are increasingly relying on globally distributed teams as a means for spurring innovation (Gibson & Gibbs, 2006). Such teams are characterized by geographic and time zone disper- sion, reliance on electronic communication, and membership het- erogeneity (Bell & Kozlowski, 2002; Gibson & Gibbs, 2006; Martins, Gilson, & Maynard, 2004). To innovate, globally distrib- uted teams must harness the range of diverse knowledge and expertise available within the team (Malhotra, Majchrzak, & Rosen, 2007). It is critical, therefore, that all team members have an influence on its goals, priorities, and decisions (Kirkman, Rosen, Tesluk, & Gibson, 2004). Yet research suggests that achieving such inclusion in team decision making is a challenge for teams whose members are scattered across different locations and time zones (e.g., Cramton, 2001). This article, therefore, focuses on the role of leaders in fostering innovation in distributed teams by enabling member influence on team decisions. Ensuring that members of distributed teams influence team deci- sions presents challenges for leaders of distributed teams. Several studies of distributed teams report uneven distribution of critical task-related information among members—remote team members often report being kept out of the loop on important information and excluded from important team decisions (e.g., Armstrong & Cole, 2002; Breu & Hemingway, 2004; Cramton, 2001; Grinter, Herbsleb, & Perry, 1999). Echoing these findings, an accumulating body of research on distributed work arrangements suggests that employees who work remotely from their work groups can experience feelings of isolation and disidentification (e.g., Cascio, 2000; Joshi, Lazarova, & Liao, 2009; Maruping & Agarwal, 2004; Thatcher & Zhu, 2006; Wiesenfeld, Raghuram, & Garud, 1999, 2001). When members are on the periphery of team activities, their motivation to contribute ideas and expertise may decrease (Ellemers, De Gilder, & Haslam, 2004; Tyler & Blader, 2003; van Knippenberg & Ellemers, 2003), which hurts the team’s ability to utilize its diverse talent base to deliver innova- tive products and services. How then can leaders of globally distributed teams promote member influence on team tasks and decisions? We propose that leader–member exchange (LMX; Graen & Scan- dura, 1987) is instrumental for fostering member involvement in globally distributed teams. Relative to traditional collocated settings where proximity facilitates a sense of belonging that motivates mem- bers to contribute to the team (Fiol & O’Connor, 2005; Joshi et al., 2009; Wiesenfeld et al., 1999, 2001), distributed team settings are characterized by an impoverished team environment bereft of the material, social, and symbolic cues that drive engagement with a collective. In such settings, we examine whether high-quality LMX could motivate members to provide inputs that influence team tasks and decisions. High-quality LMX is characterized by leaders treating followers as unique individuals, developing ongoing dyadic relation- ships that are sustained through exchanges of material and socioemo- tional resources (Graen & Scandura, 1987). Additionally, recent research by Kacmar, Witt, Zivnuska, and Gully (2003) suggests that the beneficial effects of LMX on members are amplified by communication frequency with the team leader. According to Kacmar et al. (2003), relationship quality with the leader is related to but distinct from communication frequency (see also Antonakis & Atwater, 2002). This leads us to consider communica- tion frequency with the team leader as a moderator that could strengthen the impact of LMX on member influence on team deci- This article was published Online First June 18, 2012. Ravi S. Gajendran, Department of Business Administration, College of Business, University of Illinois at Urbana-Champaign; Aparna Joshi, School of Labor and Employment Relations, University of Illinois at Urbana-Champaign. Aparna Joshi is now at the Smeal College of Business, Pennsylvania State University. Special thanks go to Raj Echambadi, Greg Northcraft, Jayashree Ravi, and Subra Tangirala for their help in developing this article. Correspondence concerning this article should be addressed to Ravi S. Gajendran, College of Business, 487 Wohlers Hall, 1208 South Sixth Street, Champaign, IL 61822. E-mail:
[email protected] Journal of Applied Psychology © 2012 American Psychological Association 2012, Vol. 97, No. 6, 1252–1261 0021-9010/12/$12.00 DOI: 10.1037/a0028958 1252 Th is d oc um en t i s c op yr ig ht ed b y th e A m er ic an P sy ch ol og ic al A ss oc ia tio n or o ne o f i ts a lli ed p ub lis he rs . Th is a rti cl e is in te nd ed so le ly fo r t he p er so na l u se o f t he in di vi du al u se r a nd is n ot to b e di ss em in at ed b ro ad ly . sions in globally distributed teams. Figure 1 illustrates our multilevel theoretical model. First, we investigated whether individual-level ef- fects of LMX on member influence on team decisions depends on team dispersion and member communication frequency with the team leader. Member influence on team decisions refers to the degree of member involvement in and impact on team activities and decisions (Locke & Schweiger, 1979; Mitchell, 1973). Team dispersion refers to the extent to which members are distributed across different loca- tions and time zones. Then, we examined whether member influence on team decisions aggregated to the team level impacts team innova- tion—the development of new ideas, processes, products, and proce- dures that are designed by the team to be useful (West & Anderson, 1996). Theory and Hypotheses LMX and Member Influence on Team Decisions: The Moderating Effect of Dispersion Prior research has linked LMX to member influence on decision making (e.g., Fairhurst & Chandler, 1989; Scandura, Graen, & No- vak, 1986). Members in high-quality LMX relationships with their team leader are likely to reciprocate the benefits accruing from it by contributing their knowledge and inputs to the team (Hofmann, Morgeson, & Gerras, 2003; Liden, Sparrowe, & Wayne, 1997). Such contributions of expertise enhance member influence on team deci- sions (Locke, Alavi, & Wagner, 1997). Although LMX can enhance member influence on team decisions in all teams, we expected to find that its effects are stronger in distributed teams. As team dispersion increases, it increases the likelihood that mem- bers are kept out of the loop on important team decisions and de- creases the availability of physical and symbolic cues that signify membership in the collective (e.g., Cramton, 2001; Kirkman, Rosen, Gibson, Tesluk, & McPherson, 2002; Kraut, Edigo, & Galegher, 1990; Mortensen & Hinds, 2001; O’Leary & Cummings, 2007). The consequent feelings of isolation are expected to erode members’ psychological connection to the team and diminish their motivation to contribute to it (Fiol & O’Connor, 2005). Moreover, team dispersion not only reduces opportunities for members to contribute to the team but also reduces their ability to observe the impact of their contribu- tions, which may lead to feelings of uncertainty about their value to the team (Tyler & Blader, 2003). A high-quality LMX relationship can be instrumental in motivating member contributions to distributed teams by reducing uncertainty and creating a psychological connection to the team. Because high- quality LMX symbolizes support, acceptance, and security (Gerstner & Day, 1997), it can empower team members and motivate them to contribute to the team (Corsun & Enz, 1999; Keller & Dansereau, 1995; Parker & Price, 1994). Further, a high-quality LMX relation- ship signals to members that they are worthy of attention from an authority figure, which reduces member uncertainty about their value to the team and increases their willingness to contribute their expertise toward team tasks (Tyler & Blader, 2003). Together, such member self-enhancement and uncertainty reduction can also lead members to identify with their team leader (Fiol & O’Connor, 2005; Schyns & Day, 2010). In the absence of physical or symbolic cues that connect members to the team in distributed settings, the team leader could become an important symbolic representation of the team (Eisenberg, 1986; Graen & Uhl-bien, 1995; Wayne, Shore, & Liden, 1997). Feeling psychologically connected to the team this way could moti- vate members to contribute to it. Such contributions are more likely to influence team decisions because they are provided in the context of a high-quality LMX relationship characterized by mutual trust and respect. The impact of a high-quality LMX on member influence on team decisions is relevant for traditional collocated teams as well. For instance, it may provide members with the interpersonal safety required for sharing novel insights with other members. However, its implications for member inclusion in team activities are rela- tively less critical in collocated teams where proximity and fre- quent communication reinforce members’ psychological connec- tion to the team, which motivates effort and contributions to it (Ellemers et al., 2004). Frequent interactions also increase oppor- tunities available for such contributions and provide opportunities to observe their impact on team activities and decisions (Monge & Contractor, 2003). Therefore, we expected to find that while LMX positively impacts member influence on team decisions in all teams, its effects are stronger as team dispersion increases. Hypothesis 1: Team dispersion will moderate the positive relationship between LMX and member influence on team decisions such that the relationship will be stronger for teams that are more dispersed. Communication Frequency With Leader as Moderator Prior research on the quality of communication among leader– member dyads finds that it reflects LMX quality—communication is positive and supportive when LMX is high but negative and confrontational when LMX is low (Fairhurst, 1993; Mueller & Team InnovationLMX