| With the rapid growth of globalization, distributed teams have become increasingly common in organizations. In spite of the various expectations organizations have for distributed teams, evidence has shown that it is inherently challenging for team members to access, combine and apply knowledge in distributed environments, due to temporal, geographic, and cultural differences. Because information technologies alone are generally not sufficient to bridge temporal, geographic, and cultural differences in distributed teams, researchers advocate that we need to focus on social aspects (e.g., trust, social ties, formal and informal communication) that are essential to the success of distributed teams (Kotlarsky and Oshri 2005; Yoshioka, Yates and Orlikowski 2002).;Among various social aspects that are essential to the success of distributed teams, this research investigates the impact of subgroup dynamics on knowledge coordination in distributed teams. To address this research question, we extend and apply theories from two primary sources—Transactive Memory Systems (TMSs) theory (Wegner, Erber and Raymond 1991) and the faultline model (Lau and Murnighan 1998). We distinguish the concept of objective faultlines from perceived faultlines (i.e., the divisions perceived by team members as causing a split in a team), and propose that perceived faultlines will impact TMSs in distributed teams. Perceived faultlines will also affect distributed team performance and member satisfaction, mainly by shaping the knowledge coordination dimension of TMSs.;The research model was tested based on survey data collected from 156 MBA students in 42 distributed teams. Research results provided several novel insights into how perceived faultlines impact team processes (knowledge coordination) and outcomes (team performance and member satisfaction). First, we found that in distributed teams, perceived faultlines have a negative impact on all three dimensions (coordination, credibility and specialization) of TMSs. Second, knowledge coordination partially mediates the negative effect of perceived faultlines on team performance; and knowledge coordination fully mediates the negative effect of perceived faultlines on member satisfaction. Third, low levels of TMSs not only impair performance, but also reduce member satisfaction in distributed teams. Post hoc analysis using additional, longitudinal data found that, on the one hand, prior specialization (one dimension of TMS) has a significant positive effect on perceived faultline and prior credibility (another dimension of TMS) has a significant negative effect on perceived faultline; however, the prior level of coordination does not affect perceived faultline. On the other hand, the prior level of perceived faultline within a team has no effect on future TMS development. Implications for research and practice are discussed together with potential avenues for future research.;Keywords. distributed teams, subgroup dynamics, knowledge coordination, Transactive Memory Systems, faultline, virtual teams, trust, cohesion. |
