Inside the black box: Leadership influences on team effectiveness

This study investigated the influence of two leader inputs (structuring and external information seeking) on the understanding and performance effectiveness of twenty newly formed teams engaged in a complex managerial decision making task over time. Each team consisted of approximately 4 members (including one designated leader) and made decisions to manage a simulated single-business manufacturing firm within a 4-firm industry for 7 decision episodes across eight weeks. Decision episodes were interdependent across time, and decisions could affect outcomes in task environments both internal and external to the team. Performance effectiveness was measured in terms of profitability, with business operating efficiency as an intermediate performance outcome within the team's internal task environment. Results indicated that leaders of more effective teams performed more structuring early in the team's life, and that the positive influence of early leader structuring on efficiency was fully mediated through team shared understanding about the importance of inter-functional coordination. Supplemental analysis suggested that early leader structuring may have its greatest direct effect on early team efficiency outcomes, and that teams may develop shared understanding and perform better as a result of this experience. Results also indicated that leaders of more effective teams sought more information from the firm's external task environment across time. Leader external information seeking was found to be positively related to the emergent, shared team understanding about the importance of a determinant of team effectiveness that consisted of both internal and external task dimensions. Team shared understanding about this determinant was positively related to subsequent team effectiveness. Across time, leaders of more effective teams also rated the importance of this determinant of team effectiveness higher than leaders of less effective teams. The present research suggests that leader influences can both contribute to and co-exist with team shared understanding over time to yield higher efficiency and effectiveness in complex knowledge work situations including the dynamic, multifaceted task environments of management teams.