Managing multi-organizational project teams

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Master Thesis

Managing Multi-Organizational Project Teams

Executive Programme in Management Studies – Leadership and Management Track

Name : Martijn van der Velde

Student number : 10317384

Thesis supervisor : Dr. Claudia Buengeler

Co-reader : Dr. Anne Keegan

Due date : October 31st 2014

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Preface

At the start of the Executive Programme in Management Studies I did not really know what to expect. After I graduated as a mechanical engineer ten years ago, I quickly made a switch and started to work within ICT. After a couple of years I got increasingly involved in many different aspects of business. I felt that I was missing the educational background in management skills. Endeavouring to broaden my professional skills, I decided to start the programme. As I started with the idea that I thought that I would finally learn how things should be done in business, but I quickly realized that this was not the right approach. By learning to view business scientifically, placing it into a broader perspective, this programme surely helped me to develop myself in many ways. Although I progressed quite smoothly through the programme, the thesis process was by far the biggest challenge. A continuously pattern of frustrations interrupted by short moments of happiness resembled the punctuated equilibrium model. But finally the cliché that hard work always pays off simply came true. Therefore, I am really proud to present to you my master thesis. However, my academic journey certainly was made possible by the help of others. I really want to thank a few people who were of invaluable support. First of all, I want to thank my girlfriend Anneloes. She had to spend so much time without me and had to lend her ear to all my frustrations. I really could not have accomplished this without your support by giving me all the necessary space and mental support I needed. Secondly, I want to thank Claudia for all her help in guiding me to through the thesis process. Your critical viewpoints and advice were of great value in guiding and helping me move in the right direction. I also would like to thank my managers, Harm and Maarten, for giving me the opportunity and support to fulfil my personal endeavours next to my professional career. Finally, I really want to thank all the people who supported me in many different ways. I especially want to thank the people who supported me in finding data, which was by far the biggest hurdle.

Best Regards,

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Abstract

Complementarity of organizations is probably one of the most important reasons why organizations form inter-organizational relationships. These relationships are increasingly reflected in project teams that are devised to collaborate together to achieve a common goal. The diversity within project teams of people with different backgrounds is meant to foster team effectiveness in terms of creativity, decision-making, quality, and performance. However, despite the large potential of a multi-organizational context within projects, the degree of (dis)alignment of these diversity characteristics it could also negatively affect team functioning due to lower identification with the team and less knowledge and information sharing among the team. The aim of this research project is to investigate how these multi-organizational faultlines affects project team effectiveness and if empowering leadership moderates these relationships. Elaboration of task-relevant information and collective team identification were suggested as mediators of this moderating effect. The study was based on 96 members clustered in 28 project teams that worked in 57 different organizations. No relationship was found between multi-organizational faultlines and team effectiveness reflected by team performance and member satisfaction. Empowering leadership was found to influence this relationship, in such way that it was negatively related to team performance, but positively related to members’ ratings of satisfaction with the leader.

Implications, limitations, and suggestions for further research are discussed.

Keywords: multi-organizational project teams, team diversity, faultlines, empowering leadership

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1 Introduction

Most organizations have inter-organizational relationships and managing them seems to be more important than ever because of increasing transactional and cooperative interdependencies between firms (Grandori & Soda, 1995). In a business-to-business context this results in an increased interest in the mutual efforts of buyers and suppliers in managing their relationship to be able to improve operational and financial performance (e.g. Terpend, Tyler, Krause, & Handfield, 2008). Relationships between organizations are increasingly formed around project teams and become central to organizational success in meeting economic, social, and technological challenges as individuals from different organizations possess diverse information, knowledge, and expertise that bear on complex problems or issues (Thatcher & Patel, 2011; Van der Vegt & Bunderson, 2005). Although most current conceptualizations and definitions of teams usually refer to teams within organizations, these project teams are established across organizational boundaries as they are characterized by having members from different organizations.

Given the nature of multi-organizational teams, it is likely that team members differ in functional and educational background. For example, if an IT company is implementing a new IT system at a manufacturing company, the project team is likely to be composed of members with both an IT and manufacturing background. The diversity of knowledge, skills, and expertise within project teams fosters creativity, decision-making and general team performance. On the other hand, these teams also pose challenges like reduced commitment engendered by multiple reporting relationships, potential for increased conflict because of divergent views and values, and difficulties in communication and integration because of specific jargon, beliefs and experiences (Ancona & Caldwell, 1992; Webber, 2002; Wiersema & Bantel, 1992). In fact, a relationship is found between functional diversity and lower trust compared to more homogeneous teams (Triandis, Hall, & Ewen, 1965). Hence, this alignment and disorder of diversity characteristics may split a group into subgroups. This concept of faultlines has been introduced by Lau and Murnighan (1998) to explain differences within teams and is defined as ‘hypothetical dividing lines that may split a group into subgroups based on one or more attributes’ (1998, p. 328). The faultline perspective use the theoretical mechanisms of self-categorization, social identification, and similarity attraction to explain the formation of faultlines and their effects on team processes and outcomes (Thatcher & Patel, 2011). Meta-analysis has shown that faultlines are positively correlated with multiple types of conflict (e.g., task, process, and relationship) and have a negative relationship with

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5 satisfaction and team effectiveness (Thatcher & Patel, 2011). While negative findings of faultline research and team effectiveness are predominant, research findings regarding diversity and faultlines are mixed. Meta-analysis revealed that the impact of team diversity largely depends on contextual factors, (e.g., industry type, occupational demography, team type, level of independence) (Joshi & Roh, 2009). These contexts, together with the growing importance of teams, result in a growing interest in leadership within these teams in the past two decades (Kearney & Gebert, 2009; Mohammed & Nadkarni, 2011; Zaccaro, Rittman, & Marks, 2001).

‘Effective leadership processes are perhaps the most critical factor in the success of organizational teams, but surprisingly little is known about which leadership processes create effective teams’ (Zaccaro et al., 2001, p. 452). However, very few address the multi-organizational context within teams, which is recently put forward by Hogg, van Knippenberg, and Rast (2012) by extending the team leadership perspective and addressed the need for intergroup leadership. In addition, projects are often a temporary undertaking and to some extent autonomous from its host organizations’ (line) structures (Sundstrom, de Meuse, & Futrell, 1990). Assuming that people in general rely more on their line manager (e.g., for appraisal, promotion, etc.) than on project managers, this could affect the authority of the project manager. This is especially the case when these project managers also have to manage people from other organizations, which is typical for inter-organizational project teams. In this respect, it is likely that the leader relies more on behaviour such as sharing power with subordinates which will raise their level of intrinsic motivation (Srivastava, Bartol, & Locke, 2006). Empowering leadership fosters autonomy and motivation of team members to search for solutions both within and outside a team and a greater collaborative attempt to help one another through knowledge sharing (Srivastava et al., 2006). Empowering leadership has also been shown to stimulate knowledge sharing, team cohesion, and efficacy, intrinsic motivation and creative process engagement, and overall effectiveness (Srivastava et al., 2006; Xue, Bradley, & Liang, 2011; Zhang & Bartol, 2010), which is needed to make diverse teams successful. However, within research regarding empowering leadership, few of them have investigated the relationship with team diversity.

In sum, this study examines the effect of multi-organizational faultlines on team effectiveness. Empowering leadership is analysed as a plausible moderating variable between multi-organizational faultlines and team effectiveness. The suggested research project is contributing to the existing literature in manifold ways. Where most research has focused on diversity within organizational boundaries, this study adds the multi-organizational context

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6 into research on team diversity and team functioning. This is important, because in many respects, organizations or collaborations between organizations are collections of interrelated groups more than collections of separate individuals (Hogg et al., 2012). Hence, within multi-organizational teams there is lot of potential for diversity around many characteristics, which is heavily underexposed in academic research. This research project investigates how these multi-organizational diversity characteristics create faultlines within project teams and affect team effectiveness.

Secondly, besides the lack of attention within team diversity research, it was also lacking attention in leadership research, and was suggested as needful (e.g., Joshi & Roh, 2009; Hogg et al., 2012). Because results within diversity research are mixed, contextual factors at the workplace are important to provide insights that might enhance the effectiveness of diversity management practices (Joshi & Roh, 2009). The project manager fulfils an important role in managing these interrelated groups and stimulation of effective intergroup collaborations is therefore an important leadership function to optimize team performance (Hogg et al., 2012). Hence, given the limited authority of multi-organizational project managers, this research project investigates if empowering leadership can help project teams with strong multi-organizational faultlines to gain team effectiveness. Recent research has shown that empowering leadership is positively related to team performance, due to knowledge sharing and increased team efficacy (Srivastava et al., 2006). However, little research, if any, linked empowering leadership to team diversity and faultlines. Hence, this research project aims at providing additional insights in what the effect of empowering leadership will be concerning the effectiveness of multi-organizational teams.

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2 Literature Review and Hypotheses Development

2.1 Multi-Organizational Faultlines and Team Effectiveness

Organizational teams have become increasingly diverse and are therefore of growing interest in academic research (Joshi & Roh, 2009). Organizational teams are defined as ‘collectives who exist to perform organizationally relevant tasks, share one or more common goals, interact socially, exhibit task interdependencies, maintain and manage boundaries, and are embedded in an organizational context that sets boundaries, constrains the team, and influences exchanges with other units in the broader entity’ (Mathieu, Maynard, Rapp, & Gilson, 2008, p. 411). There are multiple types of organizational teams such as work teams, parallel teams, project teams, and management teams (Cohen & Bailey, 1997). Particular focus in this research project will be on the multi-organizational diversity within project teams and its effect on the effectiveness of such teams. Project teams are chosen, because projects are often used to organize inter-organizational relationships (e.g., Engwall, 2003; Grandori & Soda, 1995; Hanisch & Wald, 2014).

Team diversity is defined as ‘a characteristic of social grouping that reﬂects the degree to which objective or subjective differences exist between group members’ (Van Knippenberg & Schippers, 2007, p. 516). In multi-organizational project teams, members or groups of members belong to different organizations. Members in these multi-organizational project teams often fulfil different functions in their respective organizations and differ in knowledge and skills in the domains in which they are specialized as a result of their work experience and education (Van der Vegt & Bunderson, 2005). This functional and educational complementarity (and hence diversity) is probably one of the most important predictors why organizations form multi-organizational relationships (Grandori & Soda, 1995). However, the difference between functional and educational diversity in multi-organizational project teams compared to single-organizational project teams is that the functional structures in the latter are taught to share resources and develop teamwork skills. More divisional structures like multi-organizational project teams often have a higher level of autonomy and are therefore not developing coordination skills, which could hinder team effectiveness (Kozlowski & Ilgen, 2006). Hence, while the functional and educational complementarity is desirable, the fact that members are assembled from different organizations adds another diversity dimension.

To analyse the effects of team diversity, Lau and Murnighan (1998) proposed the “faultline perspective”, which is based on the idea that the interaction of diversity characteristics explains more than the degree or type of differences alone. In contrast to

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8 considering each individual's set of attributes, analysts may therefore best conceptualize team composition by considering all of the potential dynamics that team members' attributes can activate (Lau & Murnighan, 1998). Thus, teams that encompass an identical array of attributes collectively can still have different dynamics if those characteristics are distributed differently among the individuals in a team (Lau & Murnighan, 1998).

For instance, a project team of three implementing software for a new production line, might include two members working at the manufacturing company with both a functional and educational background in engineering, while the other member is working at a software company with a functional and educational background in IT. A project team could also include two members from the manufacturing company with a functional and educational background in engineering and IT and the member from the IT company with a functional background in IT but an educational background in engineering. Although the array of characteristics is identical in the two teams, the first team includes a faultline, which is an alignment of several characteristics which fosters the possibility of internal subgroup dynamics (Lau & Murnighan, 1998).

The extent of alignment of the multi-organizational diversity characteristics across the team is defined as the “multi-organizational faultline strength” and becomes stronger if attributes align more. In general, faultline strength depends on three compositional factors: (1) the number of individual attributes apparent to team members, (2) their alignment, and, as a consequence, (3) the number of potentially homogenous subgroups (Lau & Murnighan, 1998). The focus of faultline theory is thus on the structure of diversity and asserts that differences among team members have significant consequences when they cause the formation of distinct subgroups (Lau & Murnighan, 1998). Specific research on faultlines found that faultline strength explains more variance than diversity measures alone for effectiveness, satisfaction, task conflict, and process conflict (Thatcher & Patel, 2012).

To explain how team diversity and faultlines affect team processes and effectiveness, two main streams of research emerged: the social categorization perspective and the information and decision-making perspective (Van Knippenberg & Schippers, 2007). The basis for the social categorization perspective is that differences between team members may engender the classification of others as either in-group/similar or out-group/dissimilar (Van Knippenberg & Schippers, 2007). These categorizations may disrupt group processes such as lowered communication and information sharing (Lau & Murnighan, 2005). Group belonging reﬂects ‘a perception of personal relatedness with other members’(Masterson & Stamper, 2003, p. 9). One aspect of belonging is distinguishing those who are part of the community

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9 (e.g., members of the organization including oneself and may have similar backgrounds) from those who are not (e.g., team members from other organizations and may differ in background), a process which results in boundaries (Masterson & Stamper, 2003).

As a result, social identity theory suggests three potential consequences (Ashforth & Mael, 1989). First, individuals tend to choose activities congruent with salient aspects of their own identities and support them. Second, this is affecting outcomes in respect to intragroup cohesion, collective identification, cooperation, and positive evaluations of the team (Jackson & Joshi, 2011; Van Knippenberg & Schippers, 2007). Finally, this may engender internalization of, and adherence to, own subgroup values and norms and homogeneity in attitudes and behaviour. One could argue that these processes in multi-organizational teams are engendered naturally due to differences in technical expertise, jargon, or communication style or interests, etc.

The information and decision-making perspective is based on the idea that ‘diversity may introduce differences in knowledge, expertise, and perspectives that may help work groups reach higher quality and more creative and innovative outcomes’ (Van Knippenberg & Schippers, 2007, p. 517). At the core of the positive effects of diversity emphasized in this perspective lies elaboration of task-relevant information, the group-level exchange, processing, and integration of diverse information and perspectives (Hinsz, Scott, & Vollrath, 1997; Van Knippenberg, Homan, & De Dreu, 2004; Van Knippenberg & Schippers, 2007). The different viewpoints of team members may stimulate team reflexivity, which is the team’s careful consideration and discussion of its functioning and is proposed to facilitate communication, team learning, and improved team performance (Earley, and Mosakowski, 2000; Schippers, Den Hartog, Koopman, & Wienk, 2003). Empirical studies found indeed that diversity is positively related to team learning behaviour (i.e. reflexivity) (e.g., Gibson & Vermeulen, 2003), which is an important factor in the relationship between expertise diversity and team performance (Van der Vegt & Bunderson, 2005).

However, Pelled, Eisenhardt, and Xin (1999) argued that there is a complex link between diversity and group functioning and could also foster negative outcomes, like increased conflict. Although the different values, viewpoints, and opinions could have positive relationships with performance mediated by conflict due to improved decision-making, higher quality, creativity, innovation, and performance (Jehn, Chadwick, & Thatcher, 1997; Williams & O’Reilly, 1998), there are also found negative relationships with performance (Jehn & Mannix, 2001) or no relationships (Pelled et al., 1999). These contrasting outcomes may be explained by the difference between task and emotional conflict.

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10 Conflict about the task has more favourable effects on performance than emotional conflict (Pelled et al., 1999). Within multi-organizational project teams there is often a lot of potential for emotional conflict, mainly because of conflicting interests (Ackermann, Franco, Gallupe, & Parent, 2005), which will negatively influence performance and satisfaction of the team.

Williams and O´Reilly (1998) reviewed four decades of diversity research and concluded that diversity only yield positive effects when the information and decision-making perspective applies. In other words, diversity (as opposed to homogeneity) could only be more effective when teams are able to maximize the potential positive effects (e.g., problem-solving quality, decision-making quality, creativity) (Earley & Mosakowski, 2000; Shin & Zhou, 2007) and on the other hand minimize the potential negative effects (e.g., lower trust, cohesion, commitment, and poorer communication) (Iles & Hayers, 1997; Van Knippenberg, Homan, & De Dreu, 2004).

Specifically related to faultlines, Lau and Murnighan (1998) suggested that although team diversity is a potential source for creativity and task conflict, stronger group faultlines may generate relationship conflict and group politics. Hence, the social categorization perspective predicts that diversity is most likely to impede effective team functioning for teams with strong faultlines. One could argue that in multi-organizational project teams, members identify themselves to a less extent as a collective team compared to single-organizational teams. As a consequence, Van der Vegt and Bunderson (2005) found that in teams with low collective identification, expertise diversity was negatively related to both team learning and performance. However, when team identification was high, those relationships were positive. There is a large and growing research base demonstrating that this collective climate is important for performance, member satisfaction, and viability facets of individual, team, and unit effectiveness (Kozlowski & Ilgen, 2006).

Especially in teams with strong multi-organizational faultlines, it is suggested that subgroups will have lower identification with other subgroups of other organizations because they feel more emotional support by their own subgroup. In addition, given the fact that members in multi-organizational project teams in general act more autonomous compared to single-organizational teams, research found that faultline strength is negatively related to team cohesion and conflict is more detrimental when team autonomy was high (O’Sullivan, 2003).

In addition, when project team members are geographically dispersed, which is typical for multi-organizational teams, faultlines also heighten conflict and will reduce trust (Polzer, Crisp, Jarvenpaa, & Kim, 2006). Meta-analysis on team faultlines also found that faultlines are negatively related to communication, information elaboration, and riskiness of

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decision-11 making (Thatcher & Patel, 2011). They further noted that faultlines also lead to more competition between groups and less team-level organizational citizenship. Therefore, it is suggested that the strength of multi-organizational faultlines is negatively related to project team effectiveness.

Hypothesis 1: Multi-organizational faultline strength is negatively related to team

effectiveness.

2.2 Moderating Role of Empowering Leadership

Meta-analysis of Joshi and Roh (2009) concluded that diversity can have both positive and negative effects on team effectiveness, and the relationship is thus highly inconsistent. Thatcher and Patel (2011) found that after accounting for moderating variables the effects of diversity doubled or tripled in size, which implies that context is of great influence. These variables include team context (e.g., industry setting, leadership, team type and interdependence). As noted before, team diversity can only have positive effects when teams are able to maximize the positive effects (e.g., knowledge sharing, problem-solving quality, decision-making) and minimize the negative effects (e.g., lower cohesion and collective identification, poorer communication) (Williams & O’Reilly, 1998). Because the project manager fulfils a very important role in the influence on these effects, this research project is focusing on the moderating role of leadership.

Leadership could be broadly defined as “influence processes affecting the interpretation of events for followers, the choice of objectives for the group or organization, the organization of work activities to accomplish the objectives, the motivation of followers to achieve the objectives, the maintenance of cooperative relationships and teamwork, and the enlistment of support and cooperation from people outside the group or organization” (Den Hartog & Koopman, 2001, p. 167). Managing multi-organizational project teams will often bring additional complexities because of the temporality and moderate leader authority (Keegan & Den Hartog, 2004; Tyssen, Wald, & Spieth, 2013). For example, there is evidence that certain forms of leadership that are highly effective for line teams, not necessarily have to be successful for project teams. For example, transformational leadership, where a leader defines the need for change, create visions, mobilise commitment to these visions and transform individual followers and even organisations (Bass, 1997). A positive relationship was found with motivation and commitment in line teams, but no such link was found in

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12 project teams (Keegan & Den Hartog, 2004). The suggested explanation is that employees reporting to project managers may not seek social support from their project managers to the same extent as they do from their line managers (Keegan & Den Hartog, 2004). This supports the social categorization perspective as noted before. Given the moderate authority and potential conflicting interests in such teams, especially within multi-organizational project teams, the project manager may have to find other ways to gain commitment and motivation of the members.

In this respect, to gain effectiveness of such teams, the project manager might therefore put more emphasis on fostering self-management or self-leadership skills of team members themselves (Pearce & Sims, 2002). A key presumption of empowerment theory is that empowered individuals perform better than those relatively less empowered (Thomas & Velthouse, 1990). The performance gains arise from the flexibility of being able to resolve problems at source, rather than escalating to specialists or senior management (Parker and Turner, 2002).

In addition, at the team level, this could be considered as a self-fulfilling prophecy. According to social cognitive theory, ‘individuals inﬂuence their environment through their behaviour, both of which (environment and behaviour), in turn, inﬂuence the individual’ (2002, p. 157). Committed and motivated team members will also affect the commitment and motivation of other team members. Intrinsically motivated people have to be less actively managed in how to perform work and are better able to cope with problems and issues that arise. Empowerment lead to increased ownership over tasks and responsibilities, and stronger performance (Druskat & Wheeler, 2003). In addition, intrinsically motivated and committed team members will see performance obstacles not as problems but rather as opportunities for learning (Manz & Sims, 2001). Empowered teams have been found to frequently take action on problems and improve the quality of their work by initiating changes in the way work is carried out (Wellins, Byham, & Wilson, 1991). This implies that empowerment will influence both individuals’ social and cognitive behaviour within the team, and in turn will have a positive effect on the behaviour of other team members. Empowerment could therefore help teams with strong faultlines by contributing to the reduction of the negative effects (e.g., lower cohesion and commitment, poorer communication) and enhance the possibility for the positive effects (e.g., creativity, better quality, better decision-making).

Based on these theoretical foundations, Pearce and Sims (2002) build the empowering leadership type which includes encouraging independent action, opportunity thinking, teamwork, and self-development. Team empowerment has been based on the dimensions of

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potency (i.e. the collective belief of a team that it can be effective), meaningfulness (i.e. the

extent to which team members feel an intrinsic caring for their tasks), autonomy (i.e. the degree to which team members believe that they have freedom to make decisions), and impact (i.e. the extent to which team members feel that their tasks make significant organizational contributions) (Kirkman & Rosen, 2000).

Empowering leadership behaviour of leaders could be defined as behaviours whereby power to some extent is shared with subordinates, which will raise their level of intrinsic motivation and make them invest in their work (Srivastava et al., 2006). In general, empowering leadership positively affects the psychological empowerment of members, which in turn influences both intrinsic motivation and process engagement, which will positively influence performance outcomes such as creativity (Zhang & Bartol, 2010). Empirical research found that shaping an empowerment climate was positively related not only directly to both task and contextual performance behaviours, but partially through both individual and team empowerment (Tuuli & Rowlinson, 2009). This suggests that both empowerment climate and psychological empowerment play complementary roles in engendering individual and team performance. Other research showed that empowering leadership was positively related to both knowledge sharing and team efficacy, which, in turn, were both positively related to team performance (Srivastava et al., 2006). At the same time, satisfaction as an important attitudinal outcome on the part of team members may also increase (McDonough, 2000). Therefore, it is proposed that empowering leadership fosters the positive effects that are important for teams with strong faultlines in helping them to gain effectiveness.

Hypothesis 2: Empowering leadership moderates the relationship between

multi-organizational faultline strength and team effectiveness in such way that the relationship is positive under high levels of empowering leadership but negative or non-significant under low levels of empowering leadership.

2.3 Elaboration of Task-Relevant Information as a Mediator

As noted before, diversity can only be positive when a team is able to enhance the positive effects (i.e., the information and decision-making perspective) and minimize the negative effects (i.e., the social categorization perspective). Hence, this study investigates how empowering leadership affects these important mediating mechanisms based on these two perspectives.

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14 At the core of the information and decision-making perspective lies the elaboration of task-relevant information, which is considered one of the most critical mechanisms why diverse teams potentially outperform homogeneous teams (Van Knippenberg et al., 2004). However, although all different members may be highly skilled and intelligent, they may not be fluent in each other's domains. When trying to make decisions that require trade-offs across functional areas, these differences in domain expertise could become a major impediment to joint problem solving (Cronin & Weingart, 2007). Thus, although the broader range of task-relevant resources and perspectives that diversity affords constitutes a potential benefit, active steps must be taken to ensure that teams make use of this variety (Van der Vegt & Bunderson, 2005).

To enhance the elaboration of task-relevant information for teams with strong multi-organizational faultlines, it is suggested that empowering leadership behaviour could play an important role. Empowering leadership will influence both individuals’ social and cognitive behaviour within the team, and in turn will have a positive effect on the behaviour of other team members and enhance the possibility for the positive effects of diversity. Related to the elaboration of task-relevant information there are several reasons to assume why empowering leadership could positively influence this mediating mechanism. First, fostering autonomy will motivate a search for solutions both within and outside a team and a greater collaborative attempt to help one another through sharing information and knowledge (Srivastava, Bartol and Locke, 2006). Second, team members are likely to receive fair recognition by an empowering leader for their contribution of ideas and information, which motivates them to share their unique knowledge with one another (Srivastava et al., 2006). Finally, the coaching behaviour of an empowering leader includes encouraging team members to solve problems together and thereby providing them with opportunities to share their knowledge (Arnold, Arad, Rhoades & Drasgow, 2000).

Hypothesis 3a: Elaboration of task-relevant information mediates the moderating effect of

empowering leadership on the relationship between multi-organizational faultline strength and team effectiveness.

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2.4 Collective Team Identification as a Mediator

Regarding minimizing the negative effects according to the social categorization perspective, one must consider the motivational climate within a team in order to identify conditions under which multi-organizational diversity will be leveraged (Van der Vegt & Bunderson, 2005). One such negative effect of low interpersonal attraction and high levels of social categorizations is low collective team identification (Van Knippenberg et al., 2004). In line with Van der Vegt and Bunderson (2005), it is argued that this motivational climate begins with members' shared sense of identification with a team and that the effect of multi-organizational faultlines on team outcomes is therefore contingent on the degree of collective team identification within a team. Collective team identification is the emotional component of social identification and is the emotional significance that members of a given group attach to their membership in that group (Van der Vegt & Bunderson, 2005). This has been shown to most adequately capture the motivational force that induces individuals to engage in interactions with others (Bergami & Bagozzi, 2000). Earlier research found that that the extent to which team members identify with their teams played a critical role in how faultlines translated into performance outcomes (Bezrukova et al., 2009). When members strongly identified with their teams, teams with strong information-based (i.e. education and function) faultlines had high levels of performance.

For multi-organizational teams, it is argued that empowering leadership behaviour will have a positive effect on collective team identification. As noted before, team empowerment is a motivational construct that has been defined as the collective experience of heightened levels of motivation as a result of team members' assessments of their team's tasks as providing them with high levels of meaningfulness, autonomy, impact, and potency (Kirkman & Rosen, 1997). Therefore, it is argued that team empowerment will raise the level of collective social identification within the team, which in turn will increase the willingness to put more effort to enhance team performance. In addition, the participative decision-making related to empowering leadership will give individuals greater decision-making responsibility, which will stimulate that project members are more committed to the team as a collective, especially when decisions are made collectively (Srivastava et al., 2006).

These motivational states, such as empowerment and affective commitment, are likely to capture proximal influences on members’ engagement with work and willingness to contribute to their team, which serve to mediate between team stimuli and team members’ behaviors (Chen, Edinger, Farh, & Shapiro, 2010). In their studies they found evidence for the motivating effects of empowering leadership on both psychological empowerment and

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16 affective commitment of team members. Therefore, it is proposed that empowering leadership stimulates team effectiveness of teams with strong multi-organizational faultline teams through collective team identification.

Hypothesis 3b: Collective team identification mediates the moderating effect of empowering

leadership on the relationship between multi-organizational faultline strength and team effectiveness.

3 Methodology

3.1 Research design

Hypotheses were tested in a deductive explanatory study based on project teams in real organizations. The targeted teams were those composed of different organizations or business units where team members are likely to have different backgrounds. Typical case sampling was used because a specific team context was needed within the sample (Saunders, Lewis, & Thornhill, 2009). Companies within the network of the researcher were invited through direct calling, email, or social media. To increase generalizability, no specific requirements for the industry or company type were set. However, the multi-organizational project teams were predominantly related to IT or construction projects. In conversations the importance and benefits of participation were addressed together with the discretion of information. In addition, a management summary of the results was offered to encourage professional interest and commitment to the study. Data was obtained through survey questionnaires because it is the most frequently used method to answer ‘what-questions’ (Saunders et al., 2009, p. 144). Different questionnaires were developed for the project members and the project managers. The surveys were made available online and distributed via the project managers.

The final sample consisted of 36 project teams with 106 project members and 36 project leaders. For missing values in the data, hot deck imputation was used to complement the missing values, because all variables were categorical (Myers, 2011). However, when missing data exceeds 10%, hot deck imputation could not be used (Myers, 2011). Hence, in the final sample, 28 project teams remained of which 96 project members and 28 project managers completed the questionnaire. The average team size was 3,39 members (SD=2,02). Team members were employed at 57 different companies and filled positions in management (36,5%), engineering (31,3%), sales (5,2%), consultancy (6,3%) or other (20,8%). The team members completed studies in IT (22,9%), engineering (40,9%), management (14,6%),

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17 economics (5,2%) or other (16,7%) at a level of WO (17,7%), HBO (52,1%), MBO (25%), VMBO (2,1%) or other (3,1%).

3.2 Measurement

Independent variable: Multi-organizational Faultline Strength

Organizational affiliation and functional background were measured by means of open ended questions. Respondents had to fill in the name of the company they are currently working for, together with their current job title and description. Open ended questions were chosen to ensure that any relevant differences were captured. The responses were aggregated into categories afterwards. Educational background was measured by asking respondents to indicate and specify their highest completed education. In addition, multiple options for educational level were given based on the Dutch educational system. Faultline strength was calculated based on the faultline algorithm Fau developed by Thatcher et al. (2003), because it allows the inclusion of categorical variables, and has been frequently used in earlier faultline research (e.g., Lau & Murnighan, 2005; Molleman, 2005). This algorithm calculates the percentage of total variation in overall team characteristics accounted for the strongest group split by calculating the ratio of the between-group sum of squares to the total sum of squares (the larger the value the larger the faultline strength 0<x<1). There is an ongoing debate on how the different diversity characteristics should be weighted (e.g., Meyer, Glenz, & Vora, 2013). For example, the question arises whether the difference in age of ten years should be equally weighted compared to the difference in gender or ethnicity? However, the diversity variables of interest in this study are all categorical in nature. Hence, the weights of organizational affiliation, functional background, and educational background are considered to be equal.

Moderator: Empowering Leadership

Empowering leadership was measured based on the 12-item (α = .87) scale developed by Ahearne, Mathieu & Rapp (2005). The scale has been used in earlier research (e.g., Rapp, Ahearne, Mathieu, & Schillewaert, 2006; Zhang & Bartol, 2010). The scale consists of the factors of enhancing meaningfulness of work, fostering participation in decision-making, expressing confidence in high performance, and providing autonomy from bureaucratic constraints. Items were slightly adapted to the project team context. For example, words like “my manager” were changed in “the project manager of this project”. Members were asked about their perceptions of the leadership behaviour of the project manager. Example items for

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18 each of the factors were respectively “The project manager of this project helps me to understand how my objectives and goals relate to that of the project”, “The project manager of this project makes many decisions together with me”, “he project manager of this project believes that I can handle demanding tasks”, and “The project manager of this project allows me to make important decisions quickly to”.

Mediators: Collective Team Identification and Elaboration of Task-Relevant Information

The information and decision-making perspective was assessed by means of the 4-item (α = .78) elaboration of task-relevant information scale (Kearney & Gebert, 2009) and measures the extent of information exchange within the project team. An example item of elaboration of task-relevant information was “The members of this project team carefully consider the unique information provided by each individual team member”. Items were rated on a scale ranging from 1 (strongly disagree) to 5 (strongly agree). The social categorization perspective was measured by means of the 4-item (α = .87) collective team identification scale (Van der Vegt & Bunderson, 2005) and measures the project members’ bonding and commitment to the project team. An example item for collective team identification was “The extent to which members in this project team feel a strong sense of belonging to their team”. Items were rated on a scale ranging from 1 (strongly disagree) to 5 (strongly agree).

Dependent variables: Team Effectiveness

Team performance was assessed by means of the subjective team performance evaluations of the project managers. Using objective data to assess performance would not be appropriate in this study, because the project teams operated in very different industries and no comparable objective performance information across teams was available. In addition, objective performance indicators could be influenced by numerous other external factors not controlled by the team (e.g., economic recession) (Ancona & Caldwell, 1992). Project team performance was therefore measured by means of the 6-item (α = .74) performance scale of Van der Vegt and Bunderson (2005). Project managers were asked to rate their project team compared to the average they expect on effectiveness, efficiency, productivity, quality, overall achievement, and mission fulfilment. Items were rated on a scale ranging from 1 (far below

the average that I expect) to 7 (far above the average that I expect).

Besides team performance, satisfaction with the team and satisfaction with the leader were assessed to reflect an attitudinal performance outcome (Cohen & Bailey, 1997). Team

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19 satisfaction was measured by the job-satisfaction scale (3 items) of (Zhou & George, 2001) and slightly adapted to the project team context. Team members were asked if they were satisfied with both the project team (α = .85) and the project manager (α = .75). An example item for team satisfaction was “In general, I like working in this project team” and for leader satisfaction was “in general, I don’t like the project manager of this project”. All items were rated on a scale ranging from 1 (strongly disagree) to 5 (strongly agree).

Control Variables

Several demographic diversity characteristics were included as control variables (i.e. age, gender, organizational tenure, and nationality), because literature has noted their potential effects on team processes and outcomes (Lau & Murnighan, 1998; Molleman, 2005). For age and organizational tenure diversity the standard deviation was used. In addition, project managers were asked to indicate the actual project team size, which is important for studying faultlines, because when the overall group is very large, it is unlikely that subgroups can be homogeneous across multiple attributes and therefore have strong faultlines (Hart & Vugt, 2006; Thatcher & Patel, 2012). Finally, task complexity and task interdependence were included because work that involves complex tasks requires the use of numerous high-level skills is more mentally demanding and challenging. In addition, when team members are more interdependent on each other, it is likely to have a potential influence on motivational outcomes and behaviour (Morgeson & Humphrey, 2006; Van Der Vegt, Vliert, & Oosterhof, 2003). Task complexity was assessed by means of the 4-item (α = .73) scale of Morgeson and Humphrey (2006) and task interdependence by means of the 5-item (α = .80) scale of Van der Vegt and Janssen (2003). Example items were ‘My work in this project involves performing relatively simple tasks’ and ‘I need information and advice from other project members to perform my job well’. Items were rated on a scale ranging from 1 (strongly disagree) to 5 (strongly agree).

3.3 Data aggregation

Because the model was tested at the team level and data was obtained at the individual level, some of the study variables needed to be aggregated to the team-level. To assess whether this aggregation to the team level was justified the interrater agreement rwg[J] was calculated (Bliese, 2000). In addition, the intraclass correlation coefficients were calculated to assess the level of consensus and consistency (ICC[1]) corrected for the average team size

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20 (Biemann, Cole, & Voelpel, 2012) and the reliability of the average ratings of the team members (ICC[2]) (LeBreton & Senter, 2008). Values were 0.92 (rwg[J]),0.3 (ICC[1]), F=2,48

(p<.01), and 0.6 (ICC[2]) for team learning behaviour, 0.92 (rwg[J]), 0.29 (ICC[1]), F=2.37

(p<.05), and 0.58 (ICC[2]) for co-worker help and support, 0.89 (rwg[J]),0.35 (ICC[1]), F=2.82 (p<.001), and 0.65 (ICC[2]) for elaboration of task-relevant information, 0.89

(rwg[J]),0.45 (ICC[1]), F=3.77 (p<.001), and 0.73 (ICC[2]) for collective team identification,

0.97 (rwg[J]), 0.24 (ICC[1]), F=2.07. (p< .01), and 0.52 (ICC[2]) for empowering leadership.

Given these values, aggregation to the team level is acceptable1 (LeBreton & Senter, 2008).

1

Although the values ICC[1] andr*wg(J)indicate sufficient to high support for aggregation, the values of

ICC[2] are somewhat modest, which is due to small team sizes in the sample (LeBreton & Senter, 2008). The results based on variables with modest ICC[2] values could therefore represent conservative effects.

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4 Results

Descriptive statistics and correlations are displayed in Table 1. No significant correlation was found between multi-organizational faultline strength and the various effectiveness variables. Also no significant relationship was found between faultline strength and elaboration of task-relevant information and collective team identification. However, there was a positive correlation between empowering leadership and the elaboration of task-relevant information (r = .72, p < 0,01), collective team identification (r = .51, p < 0,01), team satisfaction (r = .73,

p < 0,01), and satisfaction with the leader (r = .79, p < 0,01). When focusing on the control

variables there was a positive correlation of elaboration of task-relevant information with task interdependence (r = .40, p < 0,05) and task complexity (r = .42, p < 0,05) and a positive relationship of satisfaction with the leader with task interdependence (r = .39, p < 0,05) and task complexity (r = .40, p < 0,05).

Table 1 Descriptive statistics and correlations

Mean SD 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 1. Age 39,73 4,99 1 2. Organizational Tenure (Months) 107,98 59,21 ,29 1 3. Task Interdependence 4,13 0,34 -,31 -,09 (.80) 4. Task Complexity 3,77 0,58 -,26 ,05 ,68** _(.73) 5. Team Size 7,33 5,21 -,02 ,33 ,27 ,02 1 6. Multi-organizational Faultline Strength 0,72 0,24 -,05 -,29 -,07 ,13 -,22 1 7. Empowering Leadership 3,66 0,39 ,07 ,09 ,29 ,19 ,24 ,04 (.87) 8. Elaboration of Task-relevant Info 3,74 0,54 -,10 -,05 ,40* _,43* _,40* _,15 _,72** _(.78) 9. Collective Team Identification 3,28 0,67 -,08 ,06 -,13 -,02 ,35 ,02 ,52** _,53** _(.87) 10. Team Performance 4,10 0,80 ,20 ,21 -,21 ,09 ,21 -,05 ,24 ,13 ,31 (.74) 11. Satisfaction

with the team

5,06 0,65 ,07 -,09 ,24 ,33 ,05 ,19 ,73** _,62** _,50** _,14 _(.85)

12. Satisfaction with the leader

5,00 0,77 ,03 ,14 ,39* _,40* _,25 _,05 _,80** _,70** _,44* _,28 _,79** _(.75)

N=28 ** p < .05 *. p < .01

A correlation coefficient is insufficient to analyse the proportional effect of a specific variable on the outcomes of interest. Hence, to test the hypotheses in this study hierarchical linear regression analyses were used. To aid interpretation and to construct the interaction term, all variables, except the outcome variables, were standardized (Aiken & West, 1991). In Hypothesis 1 a negative relationship was suggested between multi-organizational faultline

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22 strength and team effectiveness. In the first step of the analysis the control variables age and tenure diversity, team size, task complexity, and task interdependence were included and in the second step the main effect variable of multi-organizational faultline strength. The teams were all homogeneous on nationality, culture, and gender. These variables were therefore excluded as control variables. Results indicated that multi-organizational faultline strength was negative but not significantly related to team satisfaction (β = -.11, p = .64), leader satisfaction (β = -.11, p = .60), and team performance (β = -.02, p = .94). Results of the regression analysis are displayed in Appendix 3. Multi-organizational faultline strength did not have significant effects on the effectiveness of teams. Hypothesis 1 is therefore not supported.

To test the moderating effect of empowering leadership on the relationship between multi-organizational faultline strength and team effectiveness (H2), the second main effect variable of empowering leadership was added in the second step of the regression model. In the third step the interaction term of multi-organizational faultline strength and empowering leadership was included. Results indicated that the moderating effect of empowering leadership on the relationship between multi-organizational faultline strength and satisfaction with the team was positive but not significant (β = .20, p = .26). The relationship was positive and significant for leader satisfaction at the 90% confidence level (β = .26, p <.10). To the contrary, empowering leadership was significantly negative related to team performance (β = -.55, p <.01). Results are displayed in Appendix 4 and indicate that there is no positive relationship of empowering leadership on the relationship between multi-organizational faultline strength and team effectiveness. In fact, contrary to what was predicted, the relationship on team performance was significantly negative.

Simple slope analyses were performed2 to further examine the two-way interactions (Aiken & West, 1991). Results revealed that when empowering leadership was high, multi-organizational faultline strength was positively but not significantly related to team satisfaction (β = .31, p = .26) and leader satisfaction (β =.40, p < .10 ). However, contrary to what was predicted, when empowering leadership was high, multi-organizational faultline strength was even significantly more negatively related to team performance (β = -.88, p <.05). When empowering leadership was low, multi-organizational faultline strength was also positively but not significantly related to team satisfaction (β = .23, p = .26) and leader satisfaction (β = .29, p = .26), but also significantly negatively related to team performance (β

2

Additional regression analysis based on the conditional process modelling macro of Hayes (2012) was applied, but did not lead to different results.

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23 = -.62, p < .05). Figures 2 to 4 in Appendix 5 illustrate these relationships. The prediction that the effect of multi-organizational faultline strength on team effectiveness is more positive when the levels of empowering leadership are high versus low is therefore not supported. In fact, results indicated that at higher or lower levels of empowering leadership, multi-organizational faultline strength was actually more negatively related to team performance.

Hypothesis 3a and 3b are an extension of Hypothesis 2 and suggest that the interactive relationship between multi-organizational faultline strength and empowering leadership on team effectiveness is mediated through elaboration of task-relevant information and collective team identification. To assess the indirect effect the process modelling macro of Hayes (2012) was used with bias-corrected confidence intervals based on 1000 bootstrap samples. Conditional effects were computed for all the team effectiveness variables and considered significant if their 95% confidence interval excluded zero. Results indicated that information elaboration did not mediate the interactive effects of multi-organizational faultlines and empowering leadership on team performance (β = -.07, 95% CI [-3.11, 0.95]), team satisfaction (β = -.02, 95% CI [-0.95, 1.47]), and leader satisfaction (β = .06, 95% CI [-0.49, 2.91]). Similar results were found for team identification as mediator: the indirect effect through which did not significantly predicted team performance (β = -.16, 95% CI [-2.75, 0.97]), team satisfaction (β = -.55, 95% CI [-3.34, 0,68]), and leader satisfaction (β = .46, 95% CI [-3.07, 0,48]). Hypothesis 3a and 3b are therefore not supported.

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5 Discussion and Conclusion

Project teams are becoming increasingly diverse, engendered by the increased transactional interdependencies between firms (Grandori & Soda, 1995). Although many organizations and academics are recognizing diversity as a challenging reality (Jackson & Joshi, 2011), they mainly conceptualize diversity within organizational boundaries. This research project presented one of the first steps towards uncovering the multi-organizational context within team diversity research. The aim of this study was to investigate the effectiveness of teams composed of members from different organizations. Because the structure of diversity explains more than the degree or type of diversity alone (Lau & Murnighan, 1998), this study used the faultline perspective to investigate how multi-organizational composition characterized by team members’ organizational affiliation and functional and educational background affects team effectiveness.

The prediction that the strength of multi-organizational faultlines is negatively related to team effectiveness reflected by performance and team satisfaction is not supported. This is contrary to earlier findings, which indicated that demographic faultline strength in general is negatively related to both team performance and satisfaction (Thatcher & Patel, 2011). However, earlier research of Bezrukova et al. (2009) found also no necessary relationship of information-based faultlines (i.e. based on experience and education) with performance. In addition, contrary to their predictions, Lau and Murnighan (2005) found that members of groups with stronger faultlines were actually more positive about several perceived group outcomes (e.g., less relationship conflict, more psychological safety, and more satisfaction). Although they could not explain reasons for their findings, they indicate that effects of faultlines on team effectiveness outcomes is a rather complex phenomenon, which is also showed by the findings in this study.

The main explanation why faultines negatively affect team effectiveness is that social categorization generates relationship conflict, lower communication and therefore reducing team effectiveness (Lau & Murnighan, 1998, 2005). However, this research showed that multi-organizational faultlines did not necessarily engender these unfavourable social categorizations and do not entail the potential negative effects on team effectiveness. This suggests that not all faultline compositions are necessarily negative for team effectiveness (Bezrukova et al., 2008).

Because very few studies provide this direct evidence of intergroup bias, Van Knippenberg and Schippers (2007) raised the question whether there is evidence of an

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25 association of team diversity with intergroup bias in perceptions, evaluations, and social interaction. A possible explanation for the multi-organizational project teams in this sample could be that these teams mainly were formed around some sort of customer-supplier relationship and are quite different from traditional teams. Perhaps unconsciously, people in such teams may know and accept these faultlines to a larger extent and are therefore better able to cope with the potential negative effects. The focus on active faultlines is recently addressed by Zanutto, Bezrukova, and Jehn (2011). Whereas potential faultlines are based on the objective demographics of group members and their alignment, active group faultlines exist when the members perceive and behave as if they are two separate, different (and potentially even opposed) subgroups. Hence, it is critical to examine what the members perceive regarding the demographic composition within the team as this is the foundation for future interactions among team members (Zanutto, Bezrukova, & Jehn, 2011).

The second part of the study built on the premise that the main effects of diversity are important but overall are very inconsistent. Effects of diversity could double or triple in size when accounting for moderating effects (Thatcher & Patel, 2011). In light of the trend that teams are becoming increasingly diverse, it is vital to examine if and how the currently most popular and arguably most generally effective types of leadership may be suitable for meeting the demands entailed by an increasing demographic and informational/cognitive heterogeneity in (multi-)organizational teams (Bass & Riggio, 2006; Kearney & Gebert, 2009). This study investigated the moderating role of empowering leadership on the relationship between multi-organizational faultline strength and team effectiveness, because empowerment positively relates to increased ownership, more intrinsic motivation and commitment, creativity, and stronger performance (Druskat & Wheeler, 2003; Manz & Sims, 2001; Wellins, Byham, & Wilson, 1991; Zhang & Bartol, 2010).

However, the proposed positive moderating effect of empowering leadership has not been found in this study. Moreover, the prediction that empowering leadership stimulates effectiveness of multi-organizational faultline teams through enhancing elaboration of task-relevant information and collective team identification has also not been found. Although empowering leadership in this study positively correlated with multiple team processes and effectiveness outcomes (i.e. elaboration of task-relevant information and collective identification, and satisfaction), it does not necessarily have to positively affect the performance of teams with stronger multi-organizational faultlines. In fact, a significant negative moderating effect of empowering leadership on the relationship of multi-organizational faultlines and team performance was even found.

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26 In contrast, a significant positive moderating effect of empowering leadership on the relationship of multi-organizational faultlines and satisfaction with the leader was found, albeit at the 90% confidence level. Members in multi-organizational faultline teams seem to be more satisfied with empowering leaders, but then as a team are less effective. There seems to be a discrepancy between the perceptions of team members and what leadership the team needs to be effective. Although members were satisfied with the project manager, they were not able to translate these positive evaluations into better performance. It could be that considering the input of all different members will ensure that the decision-making process will take longer, which is good for some tasks but not for all.This is supported by research of Somech (2006). Participative leadership is to some extent related to empowering leadership as it is defined as joint decision making, or at least shared influence in decision making, by a superior and his or her employees (Koopman & Wiersma, 1998). Her study showed that although participative leadership positively affected team reflection in functionally heterogeneous teams and in turn facilitated team innovation, it was negatively related to team performance. Hence, although the authority and control over activities of the leader of multi-organizational teams is limited, leadership is bound to remain important in guiding the team in the right direction to gain performance.

To determine which leadership behaviour is effective for multi-organizational teams, it might be important to take the nature of the team into account. For example, Shin and Zhou (2007) found that transformational leadership, which is argued to be related to empowerment (Kark, Shamir, & Chen, 2003), moderated the relationship between educational background diversity and team creativity in R&D teams. Similar results were found in research of Kearney and Gebert (2009), who even found a positive relationship with the performance of R&D teams. Although empowering leadership fosters creativity and knowledge sharing and could be an important predictor for the performance for specific teams such as new product development teams (Zhang & Bartol, 2010) or management teams (Srivastava et al., 2006), it does not have to imply that this is effective for all type of teams.

Another factor which could have influenced results is the longitudinal effect of leadership. For example, a recent empirical study by Lorinkova, Pearsall, and Sims (2013) revealed different longitudinal effects of empowering leadership versus directive leadership. Teams led by a directive leader initially outperform those led by an empowering leader. However, despite lower early performance, teams led by an empowering leader experience higher performance improvement over time because of higher levels of team learning, coordination, empowerment, and mental model development. The average total expected

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27 duration of the teams in this study was 17,91 months (SD=22,18). The average period that the teams had worked together was 8,69 months (SD=9,74). Because there was a large difference among these teams, it is likely that the teams were in different stages of the project and leadership therefore could have different effects.

Hence, because most leadership research is focused on the leader, some have argued that focus should shift to rather if leadership is functional within teams (e.g., Morgeson, DeRue, & Karam, 2010; Zaccaro et al., 2001). This perspective of functional leadership is not defined by a specific set of behaviours but rather by generic functional responses that are prescribed for and will vary by different problem situations for effective performance (Hackman & Walton, 1986; McGrath, 1962; Morgeson et al., 2010). Especially, because the nature of multi-organizational projects could differ largely, this might be a good approach for managing multi-organizational project teams.

Managerial Implications

To be able to manage multi-organizational project teams effectively, it is important to take into account the background of the team members in the form of company affiliation, educational and functional background and the degree of alignment (i.e., faultlines) of these demographic attributes. However, the results of this study showed that these multi-organizational faultlines not necessarily have to be related with the effectiveness of such teams. The suggested negative processes behind social category, which may impede the positive information-based processes of diversity, are not found to be dysfunctional for organizational faultline teams. A possible explanation could be that people in multi-organizational project teams, perhaps unconsciously, might be more aware of these faultlines and are therefore better able to cope with these potential negative effects.

In addition, the nature of the intercompany relationships should be taken into account. Teams in this study were mainly formed around some sort of customer-supplier relationship. Especially from a supplier point of view, it is likely that members from supplying companies are more intrinsically motivated to collaborate with members of buying companies in order to gain customer satisfaction and may explain why the negative effects of faultlines are not found in this study.

Regarding the moderating effect of empowering leadership, the findings in this study showed a contradictory effect on team effectiveness for teams with strong multi-organizational faultlines. Unexpectedly, this effect was negative for performance, but positive for team members’ satisfaction with the leader. Although this could be a desired outcome

Managing multi-organizational project teams

Master Thesis