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AN EXAMINATION OF TRUST AND ITS RELATIONSHIP
      TO PRODUCTIVITY, EFFECTIVENESS, AND CORPORATE
                CULTURE IN VIRTUAL TEAMS

                     John Karpiscak, U.S. Army Topographic Engineering Center
                                  Jean Gordon, Capella University
                   Toni Buchsbaum Greif, Sound Beach LLC & Capella University
                           Steven Callahan, The Robert E. Nolan Company
                         Lee StJohn, Sound Beach LLC & Capella University



                                                    ABSTRACT

          Based on Sarker’s research (Sarker, Valacich, & Sarker, 2003), a quantitative survey instrument was
administered to employees of three companies within the insurance industry that utilize virtual teams as part of their
business operations. Results indicated a direct relationship between corporate culture and the observed levels of trust
as well as an extension of corporate culture into the virtual environment. Findings indicated that corporate culture
directly affects personality, institutional and cognitive based trust, and, therefore, the effectiveness of virtual teams.
By improving corporate culture with respect to the three modes of trust, the level of productivity and effectiveness
within virtual teams is improved; conversely, if corporate culture remains static or declines, trust and effectiveness
within virtual teams similarly remain static and/or decline. With the rapid expansion in the use of virtual teams
across business operations, it is paramount for management to assess and address deficiencies in the associated
cultural elements that foster trust as a means to increase productivity and effectiveness.


                                                INTRODUCTION

        This research espoused the theory that personality, institutional, and cognitive based trust
influences corporate culture (Sarker, Valacich, & Sarker, 2003) and directly relates to
effectiveness and productivity of virtual teams (Zucher, Darby, Brewer & Peng, 1996). The
researchers proposed that positive influences of corporate culture positively affect company
virtual team trust, efficiency, and productivity; conversely, negative influences create negative
impacts. This serves as additional validation of Ernst (2001), who determined that performance
gaps are present between organizations despite their seemingly identical formal organizational
structures. In addition, based upon the findings of this research, corporate culture and its
associated elements of trust, appear related to the generation of these performance gaps.

                                          CORPORATE CULTURE

        Organizational culture represents the shared values and beliefs that influence the
member’s of an organization’s presentation, behavior, and interactions (Schein, 2004). Culture
translates its reflection of an organizational member’s level of engagement, satisfaction, and
commitment expressed in the form of collaborative personality (Harris & Mossholder, 1996;
Sims, 2000). From a performance perspective, culture directly links to the effectiveness of the
organization (Berrio, 2003; Lamond, 2003) and by providing the management framework may in
fact be a stronger influence than leadership itself (Pool, 2000). Corporate culture lies at the heart


                                                            1
of strategy (Bolman & Deal, 2008), acting as a catalyst to drive performance or to create a stifled
environment based on the resulting shared value system (Lamond; Morgan, 1993). With respect
to virtual teams, the lack of physical proximity provides a complicating factor that may be
measurable based on the degree of trust that exists.
         In evaluating the relationship between trust and culture in virtual teams, a common
framework is necessary. Deal and Kennedy (1982) as well as Hofstede (1991) describe various
measurement sets for evaluating corporate culture. Deal and Kennedy (1982) use thirty-two
variables to describe corporate culture while Hofstede (1991) uses thirty-six variables; each set
of measurements contain a different orientation. Hofstede’s research in particular has held up
under the rigors of review and replication, acting as a basis for comparison to alternative scales
even in contemporary research (King, 2007; Maznevski, Distefano, Gomez, Noorderhaven, &
Wu, 2002; Sondergaard, 1994). The difficulty in applying these descriptions within an
organizational context is that their influences tend to vary from industry-to-industry; affected by
environmental factors, such as national and regional social cultures. Given the predisposition of
corporate culture as a reflection of national culture (Schneider and Constance, 1987) this
research focuses at the national level without substantive consideration of potential localized
influences.
         The basis for the framework used to evaluate the impact of trust on virtual teams will be
Deal and Kennedy’s (1982) work, which uses thirty-two descriptive variables categorized into
six meta-groups: history, values and beliefs, rituals and ceremonies, stories, heroic figures, and
informal cultural network. These six meta-groups combined form four cultural constructs: work-
hard, play hard; tough-guy macho; process; and, bet-the-company (Deal & Kennedy). The work-
hard, play-hard culture manifests as having a rapid feedback/reward cycle with relatively low
risk, leading to stressors originating from the quantity of work, rather than uncertainty. The high-
speed action of this culture leads to high-speed re-creation typically found in restaurants and
software companies. The tough-guy macho culture identifies itself as having a rapid
feedback/reward cycle operating in a high-risk environment. The high-risk nature of this culture
leads to stressors originating from the potential loss/gain of reward. These cultures focus on the
present rather than the longer-term, with typical examples including police units, surgeons, and
sports participants. In the third construct, known as the process culture, there is a slow
feedback/reward cycle and relatively low risk. The slow cycle and low risk leads to work that
labeled as plodding which provides a sense of comfort and security. In this culture, stressors may
arise from internal politics and/or frustration with systemic issues perceived as unnecessary or
counterproductive. The process culture tends to be bureaucratic in nature, concerned with
maintaining the status quo while ensuring the security of the past and future. Process cultures
typically operate in national governments, banks, and insurance companies. The last cultural
construct is the bet-the-company culture. This culture has a slow feedback/ reward cycle and
functions amidst high risk. Stressors arise from the elements of high risk combined with the
extended delays that occur before it is clear if the actions taken have generated the expected
results and associated rewards. By necessity, this culture takes a long-term approach,
counterbalanced by investing extensive resources into ensuring that things happen as planned.


                                                 TRUST




                                                 2
Snow, Snell, and Davidson (1996) proposed that the issue of trust is pivotal in the context
of virtual teams where the lack of direct interpersonal engagement can be influenced trust issues.
Familiarity, shared experiences, common goals, conversational           reciprocity, and consistent
respect shown over time play key roles in defining the depth and breadth of trust that exists
(Dani, Burns, Backhouse, & Kochhar, 2006). These influences can translate into improved
performance, as the greater the level of trust between members of a virtual team, the greater the
effectiveness of the team (Lipnack & Stamps, 2000; Solomon, 2001; Zucher et al., 1996). Yet
virtual teams by their very nature are challenged in achieving the necessary relationships and
bonds requisite to establishing trust (Lipnack & Stamps; Solomon).
        Sabel (1993) linked trust to productivity by demonstrating that increased trust reduces
costs through increased creativity or the need for reduced control where there is a high level of
trust. This establishes trust as an antecedent to reducing costs and improving the productivity of a
virtual team. Conversely, Jarvenpaa and Shaw (1998) showed the existence of an increased
tendency towards reduced project performance in virtual teams due to the difficult in sustaining
commitment and role clarity over time and distance. With the increasing frequency of virtual
teams, whether due to convenience, economic necessity, or competitive advantage, trust among
team members for reliable and productive performance is critical.
        Sarker, Valacich and Sarker (2003) defined virtual team trust as the degree of dependence
individuals have with respect to remotely located team members, when taken collectively. They
distinguished three specific streams of trust components: personality-based trust, institutionally-
based trust, and cognitively-based trust. Personality-based trust develops due to a person’s
trusting nature, institutionally- based trust develops as a function of an individual’s belief in
intuitional norms/procedures, and cognitively-based trust is derived from social cues and
impressions that an individual receives from the other (Sarker et al.). Within this framework,
levels of trust in several different companies engaged in the same line of business, participated in
a study focused on determining characteristics attributable to membership in virtual teams.


                                       METHODOLOGY

         The examination of trust within the subject companies utilized an established survey
instrument developed by Sarker, Valacich, and Sarker (2003) to evaluate virtual team trust.
Voluntary participation from three separate companies within the insurance industry was
obtained (Companies A, B, and D). Company C was based outside of the USA and showed
initial interest in participating; however, they chose not to participate in the survey. The study
consisted of two parts: one, an Internet based survey using summated ratings along with
numerical and short answers; two, a series of voluntary semi-structured telephone interviews
conducted with a subset of participants from each of the companies. In addition, a basic set of
demographic questions supplemented Sarker et al.’s survey questions. In total, the survey
consisted of thirty summated ratings questions; five dealing with personality-based trust, five
relating to institutional-based trust, and twenty relating to cognitive-based trust. Scales were
valued from one through four, with lower values representing greater agreement/more positive
levels of trust and higher values representing less agreement/more negative levels of trust. No
neutral values were sought which required respondents to make a values based (Kerlinger & Lee,
1999) assessments in their responses.




                                                 3
COMPANY OVERVIEWS

         Company A is an industry leader insuring more than 25 million people. It is a multi-line,
and multi-subsidiary, publicly traded stock-based national insurer with products distributed
through career exclusive, broker, employer group, and direct marketing methods appealing to a
wide range of markets. It has grown through acquisitions of other large and has a divisional
presence overseas in the European market as well. The company participants surveyed included
a mix of corporate HR employees located in Northeastern United States (U.S.) and a similarly
located call center servicing a select, and distributed, subset of clients. These participants came
from a shared service set of functions in a dynamic, relatively high stress environment consistent
with the work-hard, play-hard cultural construct (Deal & Kennedy, 1982). Executives come from
a wide range of places including within the company, from acquisitions, and external talent
attracted to the company by its opportunities and success. Although management is working to
create a unified culture focused on delivering profitable results and increased market share,
because of recent merger activity, there is no consistently identified organization-wide culture, .
         Company B is a top-twenty multi-line mutual insurer based in the Central U.S., serving
personal, commercial, life, and health insurance markets. Products are distributed through a
network of dedicated career agents that are non-employees with exclusive contracts. The
company is super-regional (versus national) with a presence in over 15 states clustered around
the Upper-central U.S. The company has a long history of customer focus and service quality
concentrated on serving America’s middle market clientele with a strong employee focus that
works to avoid layoffs, resulting in a large population of long tenured (20+ years) employees.
With the exception of large shared-service functions (e.g., IS, HR, Finance, Education, and other
related corporate entities) the participants surveyed came from the life insurance division of the
company, which operates as a separate part of the larger company, While a relatively small
percent of the total revenue, the life company is a very profitable segment of the parent company.
The life insurance division has operated as a semi-independent but controlled subculture within
the larger overall company culture. With all of the senior management team having come up
through the ranks, promotion from within has been the primary means of advancement, Recent
turnover at the executive level due to retirements resulted in promotions from within and a mix
of new executive hires. Company B functions as a process culture (Deal and Kennedy, 1982)
where employees know Human Resources sees as one of its primary roles as protection of
employees, and acts to alleviate necessary reductions through natural attrition, redeployment, and
relocation of resources, avoiding non-performance related terminations as much as possible.
         Company D is a privately held boutique management consulting firm focusing on the
financial services industry, specifically banking (typically regional), health care, and insurance
(casualty, life/annuity, and health). Almost all of the employees, including management, come
from the financial services industry, many with ten to fifteen years of direct line experience in
the operational areas of a financial service company. The client engagements focus on
operational effectiveness, assisting companies in optimizing business processes and resource
utilization, although a secondary tier of services includes strategic planning, organizational
alignment, and market development. The participants surveyed included a mix of management,
sales, and consultants. The company has home offices for shared-service functions (e.g., IS,
Marketing, and HR), while the consulting staff all work virtually out of home offices from which
they travel to client engagements on a weekly basis. Approximately one third of the staff has 20
years tenure with the company, and 80% have been with the company for over 5 years. All



                                                4
employee levels work as teams with a focus on delivering measurable results in realized expense
savings, enhanced services, increased growth, or improved strategic alignments. The culture is
very open, and as delineated by Deal and Kennedy (1982) are seen as a bet-the-company (Deal
& Kennedy, 1982) culture, respectful of the individuals as successful previous executives, and
focused on delivering client value by developing trusted advisor relationships that last beyond a
given engagement.


                                       SURVEY RESULTS

     The administration of surveys occurred over a thirty-day period during the summer of 2008.
Solicitation for participation came by email from each company’s management seeking
participation in the survey, providing a link to a confidential Internet address operated by Survey
Monkey. Potential respondents received periodic reminder notices via e-mail of survey
availability as well as the timeframe remaining for completion. Data was gathered and reviewed
late summer, with the results of the study indicating noticeable differences in trust levels
between the three participating companies. Only fully completed surveys were included in the
data and analysis. Of the three companies participating in the study, Company B, was the most
pronounced as having the lowest levels of trust in all three categories of institutionally-based,
personality-based, and cognitively-based trust (see Figure 1).


     Figure 1: Trust Measures by Company

                         Company A        Company B        Company D       Aggregate

 Personality-Based       1.779411765 2.026785714 1.602941176 1.842741935

 Institutionally-Based 2.000000000 2.111680912 1.832352941 2.003056405

 Cognitively-Based       1.852573529 2.000000000 1.748529412 1.888371538



The measures of trust presented in Figure 1 (above) utilized a weighted value for each response
where a lesser value indicated greater agreement, translating to a greater degree of trust. The
selection of ‘strongly agree’ is represented by a value of 1.0, ‘agree’ by a value of 2.0, ‘disagree’
by a value of 3.0, and ‘strongly disagree’ by a value of 4.0. Using this scale, a statistically neutral
average (i.e., neither agree nor disagree) is represented by a value of 2.5.


                                             FINDINGS

       Companies A and D had nearly identical levels of trust, with Company D exhibiting the
highest levels of agreement in each trust category. These results indicated respondents were
experiencing a generally favorable environment of trust in their virtual teams. Company A also



                                                  5
had a generally favorable environment of trust; however, the respondents indicated that
institutionally-based trust was only slightly favorable at 2.0 versus a neutral value of 2.5. By
contrast, Company B respondents exhibited the least amount of trust relative to the other two
companies. For Company B, cognitively-based trust showed up as marginally favorable with a
value of 2.0, while personality-based and institutionally-based trust were slightly more neutral at
2.03 and 2.11 respectively. In all three companies, the lowest measured level of trust was
institutionally-based and the highest measured value of trust was personality-based.
         Company A, categorized as the work-hard, play-hard culture, had the highest composite
scores of all three companies with respect to levels of trust. There were also several indicators of
virtual team issues in Company A, found in other components of the survey instrument.
Specifically, there was a perceived lack of emphasis on deliverables coupled with concerns about
dependability among the virtual team members. Due to the belief that the results of their team
efforts would not affect their individual performance rating, it was noted that a general lack of
excitement about the team projects existed. This seems consistent with the low risk nature of a
work-hard, play-hard culture where the fast feedback cycle consists of limited to no immediate
feedback that would otherwise drive action (Deal & Kennedy, 1982).
         Company B exhibited a marginally favorable working environment in all three areas of
trust. Noted was that the team members expressed higher degrees of perceived honesty than
other virtual team members. Institutionally-based trust proved more problematic in that virtual
team members indicated perceived issues related to dividing work responsibilities and
dependability. Issues were less pronounced in the area of cognitively-based trust, though some
virtual team members indicated concern about team organization, dependability, and a lack of
general interest in the projects they were working on. Given that Company B is a process culture
(Deal & Kennedy, 1982), the findings tend to indicate structural problems may exist in the
processes used by the participant’s virtual teams.
         Company D had a relatively high score in the area of personality-based trust, nearly as
high as those of Company A. In the area of institutionally-based trust, respondents were not
overly concerned about the prospects of late deliverables or for getting a good performance
rating which showed in their responses. The respondents also expressed very high levels of
desire to uphold the reputation of the organization, with recorded values that ranked the highest
of any trust question in any of the companies. In the area of cognitively-based trust, Company D
also indicated the highest level of trust among its members related to perceived virtual team
performance organization and dependability. Given the high risk, slow cycle time nature of the
bet-the-company cultural construct (Deal & Kennedy, 1982) represented by Company D, the
focus on reputation, dependability, and team performance is not surprising and is consistent with
the environment that results from this construct.


                                  ANALYSIS OF FINDINGS

        A comparative analysis sought to determine the potential causes for the differences in
levels of measured trust between Company B and the other two companies surveyed. In
reviewing the quantitative survey data relating to measures of trust, several demographic
attributes were identifiable as differentiators. Specifically, Company B tended to have the
youngest respondents of the three companies, the highest number of female respondents, and the
most respondents with the least industry tenure. Company B respondents indicated they spent a



                                                 6
high percentage of time working in the corporate offices as part of a virtual team. In addition,
they indicated they spent the least amount of time and had the least experience with video
teleconferences; and, they expressed the least comfort with technology of the respondents from
the three companies surveyed.
        Despite relatively close proximities in levels of trust, with respect to demographics
Companies A and D were not completely similar to one another. Specifically, nine years of age
separated the average age for Company A from Company D at thirty and thirty-nine respectively.
Similarly at odds was the measure of time spent in their office, with Company A respondents
averaging ninety-nine percent of their time and Company D respondents averaging a much lower
sixty-eight percent of their time spent in an office.
        The quantitative data indicates that these companies, though similar in business were
decidedly dissimilar in composition and in their approach to work. This seems traceable at least
in part to the discretely different cultural constructs each company represented. Furthermore,
based on an analysis of this survey’s responses, no one quantitative factor measured stood out as
a potential indicator of levels of trust (positive or negative). While a combination of factors may
serve that function, it is unlikely they will be indicative of causal elements behind the measured
trust levels. It is worth noting that the respondents from all three companies surveyed clearly
stated a preference, when possible, for working in a traditional face-to-face team.


                                        CONCLUSIONS

         The pattern emerging from this initial survey indicates that the construct of corporate
culture associated with a given company can play a key role in determining the development of
measurable trust in virtual teams, as well as demographic and other quantifiable norms. The
pervasive nature of corporate culture appears to directly affect virtual team trust and, with that,
performance and effectiveness. Consistent with Sims (2000) work, the culture of the organization
reflects generalized personality characteristics that translate into the ability of virtual teams to
perform effectively. It is noteworthy that the effect of corporate culture on the virtual team
environment goes beyond the scope of physical location of a company, corporate culture exists
remotely, as well as from and to other virtual team members. Further, it was clear that the
management framework defined by the culture directly influenced the performance of the virtual
teams, consistent with Pool’s findings in 2000. Based on this study, there is a direct correlation
between corporate culture and trust. Where positive corporate culture exists, greater trust among
virtual teams emanated; where the culture was more restricted, trust likewise diminished. This
speaks to the import of corporate culture with respect to the prevalence of successful and
productive virtual teams within an organization.

                                    STUDY LIMITATIONS

       This study was constrained by the finite of companies involved in the web-based survey
process. Because only three companies participated, the number of respondents was limited
which may have skewed the data. While culture has been shown to play a major role in virtual
team performance, there was no clear delineation of cultural differences and their impact on the
trust within the virtual teams. Nor was the potential influence of the nature of the work being
performed contemplated. Since the sample population only included US-based companies within



                                                 7
the insurance industry, there is certainly room for additional scope and magnitude of additional
participant to assure a representational population. Finally, this report only includes the
respondents’ answers to Sarker et al.’s survey which may or may not be a true measurement of
trust issues with respect to virtual teams (Karpiscak, 2007).

                     RECOMMENDATION FOR FUTURE RESEARCH

         We recommend several areas to consider for future study. First, we propose that future
studies be conducted examining other companies involved in the same line of business, both in
the US and beyond to expand the reliability and generalizability of the data (Miles & Huberman,
2002). We suggest that future studies examine trust in virtual teams in other industries, both
within and outside of US borders. We urge that future studies seek qualitative approaches to
understand more about how productivity, effectiveness and corporate culture affects trust in
virtual teams. Based upon this research, it appears that generational issues, leadership style, and
familiarity with technology are likely influencing factors that need to be contemplated.
Demographics were incorporated into the study, but there is a notable lack of overall diversity
that would likely bring additional complexity to the findings and as such is worthy of additional
research. Delving deeper, are there specific personal or functional attributes that create better
performing virtual team members, and what training can be used to increase the effectiveness of
the team. It would also be interesting to determine which blends of corporate cultures best lend
themselves to fostering the highest and lowest levels of virtual team trust, and whether the type
of business affects levels of trust.

                                           SUMMARY

        Trust has been identified as the pivotal element of a virtual team, and the effectiveness of
a virtual team directly correlated with trust. The data gathered in this study indicates that virtual
team trust varies from company to company within the same industry and with these companies
there appears to be a direct correlation between virtual team trust and the company’s corporate
climate. The influence of organizational dynamics on the effectiveness of the team is implied
through the varying results in trust associated with different cultural frameworks. While the trend
towards greater use of virtual teams continues, there remains a strong preference for some form
of face-to-face interaction during the formation of the team as well as throughout the team
process. There also remains confusion as to the nature, intent, and associated roles involved in a
virtual team even within teams that have existed for some time, profiling the importance of roal
clarity and goals definition. Management practices indicate a current tendency to apply
traditional leadership practices in a virtual team environment, profiling the opportunity for
additional training and education on the topic. Hopefully additional studies of this nature will be
performed to further confirm this initial finding and examine its accuracy and applicability to
other business both within the US and around the world, bringing with them added depth in
terms of diversity, function, and situational context.


                                         REFERENCES




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Morgan, M. (1993). How corporate culture drives strategy, Long Range Planning 26(2), 110-118.

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                                                AUTHORS

Dr. John Karpiscak graduated with a Ph.D. from Capella University. Dr. Karpiscak is employed by the U.S.
Army Topographic Engineering Center. john.karpiscak.III@usace.army.mil.

Dr. Jean Gordon received her DBA in Business from Nova Southeastern University. She is Interim Chair of the
Human Resource Management and Organizational Development specialization in the School of Business and
Technology at Capella University. Dr. Gordon’s speaking, consulting and authorship focuses on change
management through practices of human resource management, organizational, and cultural leadership in 21st
century knowledge age organizations. jean.gordon@capella.edu.

Dr. Toni Buchsbaum Greif earned her Ph.D. in Human & Organizational Development from The Fielding
Graduate University. She is Core faculty in the leadership and organizational development specialization in the
School of Business and Technology at Capella University, and serves as a consultant and business coach in her



                                                          10
role as CEO of Sound Beach LLC. Dr. Greif consults in the areas of leadership, research, finance, strategic
analysis, entrepreneurship, and organizational behavior. tbgreif@yahoo.com.

Steven Callahan is pursuing his Ph.D. in Organization and Management with a specialization in Leadership from
Capella University. He is a Senior Consultant and Practice Development Director with The Robert E. Nolan
Company, a management consulting firm specializing in the financial services industry. Steve helps clients
achieve measurable improvements in service, quality, and productivity while helping lead the development and
leveraging of intellectual capital. stevecallahan@technologist.com

Dr. Lee StJohn earned her PhD in Clinical Psychology from The Fielding Graduate University. She teaches
online for Capella Univeristy and Thomas Edison State College, and consults in her role as vice president of
Sound Beach LLC. She is involved in research concerning life-span development, hope, culture, positive and
transpersonal psychology. drleestjohn@earthlink.net




                                                         11

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200910 iabpad virtual-teamacademicresearch

  • 1. AN EXAMINATION OF TRUST AND ITS RELATIONSHIP TO PRODUCTIVITY, EFFECTIVENESS, AND CORPORATE CULTURE IN VIRTUAL TEAMS John Karpiscak, U.S. Army Topographic Engineering Center Jean Gordon, Capella University Toni Buchsbaum Greif, Sound Beach LLC & Capella University Steven Callahan, The Robert E. Nolan Company Lee StJohn, Sound Beach LLC & Capella University ABSTRACT Based on Sarker’s research (Sarker, Valacich, & Sarker, 2003), a quantitative survey instrument was administered to employees of three companies within the insurance industry that utilize virtual teams as part of their business operations. Results indicated a direct relationship between corporate culture and the observed levels of trust as well as an extension of corporate culture into the virtual environment. Findings indicated that corporate culture directly affects personality, institutional and cognitive based trust, and, therefore, the effectiveness of virtual teams. By improving corporate culture with respect to the three modes of trust, the level of productivity and effectiveness within virtual teams is improved; conversely, if corporate culture remains static or declines, trust and effectiveness within virtual teams similarly remain static and/or decline. With the rapid expansion in the use of virtual teams across business operations, it is paramount for management to assess and address deficiencies in the associated cultural elements that foster trust as a means to increase productivity and effectiveness. INTRODUCTION This research espoused the theory that personality, institutional, and cognitive based trust influences corporate culture (Sarker, Valacich, & Sarker, 2003) and directly relates to effectiveness and productivity of virtual teams (Zucher, Darby, Brewer & Peng, 1996). The researchers proposed that positive influences of corporate culture positively affect company virtual team trust, efficiency, and productivity; conversely, negative influences create negative impacts. This serves as additional validation of Ernst (2001), who determined that performance gaps are present between organizations despite their seemingly identical formal organizational structures. In addition, based upon the findings of this research, corporate culture and its associated elements of trust, appear related to the generation of these performance gaps. CORPORATE CULTURE Organizational culture represents the shared values and beliefs that influence the member’s of an organization’s presentation, behavior, and interactions (Schein, 2004). Culture translates its reflection of an organizational member’s level of engagement, satisfaction, and commitment expressed in the form of collaborative personality (Harris & Mossholder, 1996; Sims, 2000). From a performance perspective, culture directly links to the effectiveness of the organization (Berrio, 2003; Lamond, 2003) and by providing the management framework may in fact be a stronger influence than leadership itself (Pool, 2000). Corporate culture lies at the heart 1
  • 2. of strategy (Bolman & Deal, 2008), acting as a catalyst to drive performance or to create a stifled environment based on the resulting shared value system (Lamond; Morgan, 1993). With respect to virtual teams, the lack of physical proximity provides a complicating factor that may be measurable based on the degree of trust that exists. In evaluating the relationship between trust and culture in virtual teams, a common framework is necessary. Deal and Kennedy (1982) as well as Hofstede (1991) describe various measurement sets for evaluating corporate culture. Deal and Kennedy (1982) use thirty-two variables to describe corporate culture while Hofstede (1991) uses thirty-six variables; each set of measurements contain a different orientation. Hofstede’s research in particular has held up under the rigors of review and replication, acting as a basis for comparison to alternative scales even in contemporary research (King, 2007; Maznevski, Distefano, Gomez, Noorderhaven, & Wu, 2002; Sondergaard, 1994). The difficulty in applying these descriptions within an organizational context is that their influences tend to vary from industry-to-industry; affected by environmental factors, such as national and regional social cultures. Given the predisposition of corporate culture as a reflection of national culture (Schneider and Constance, 1987) this research focuses at the national level without substantive consideration of potential localized influences. The basis for the framework used to evaluate the impact of trust on virtual teams will be Deal and Kennedy’s (1982) work, which uses thirty-two descriptive variables categorized into six meta-groups: history, values and beliefs, rituals and ceremonies, stories, heroic figures, and informal cultural network. These six meta-groups combined form four cultural constructs: work- hard, play hard; tough-guy macho; process; and, bet-the-company (Deal & Kennedy). The work- hard, play-hard culture manifests as having a rapid feedback/reward cycle with relatively low risk, leading to stressors originating from the quantity of work, rather than uncertainty. The high- speed action of this culture leads to high-speed re-creation typically found in restaurants and software companies. The tough-guy macho culture identifies itself as having a rapid feedback/reward cycle operating in a high-risk environment. The high-risk nature of this culture leads to stressors originating from the potential loss/gain of reward. These cultures focus on the present rather than the longer-term, with typical examples including police units, surgeons, and sports participants. In the third construct, known as the process culture, there is a slow feedback/reward cycle and relatively low risk. The slow cycle and low risk leads to work that labeled as plodding which provides a sense of comfort and security. In this culture, stressors may arise from internal politics and/or frustration with systemic issues perceived as unnecessary or counterproductive. The process culture tends to be bureaucratic in nature, concerned with maintaining the status quo while ensuring the security of the past and future. Process cultures typically operate in national governments, banks, and insurance companies. The last cultural construct is the bet-the-company culture. This culture has a slow feedback/ reward cycle and functions amidst high risk. Stressors arise from the elements of high risk combined with the extended delays that occur before it is clear if the actions taken have generated the expected results and associated rewards. By necessity, this culture takes a long-term approach, counterbalanced by investing extensive resources into ensuring that things happen as planned. TRUST 2
  • 3. Snow, Snell, and Davidson (1996) proposed that the issue of trust is pivotal in the context of virtual teams where the lack of direct interpersonal engagement can be influenced trust issues. Familiarity, shared experiences, common goals, conversational reciprocity, and consistent respect shown over time play key roles in defining the depth and breadth of trust that exists (Dani, Burns, Backhouse, & Kochhar, 2006). These influences can translate into improved performance, as the greater the level of trust between members of a virtual team, the greater the effectiveness of the team (Lipnack & Stamps, 2000; Solomon, 2001; Zucher et al., 1996). Yet virtual teams by their very nature are challenged in achieving the necessary relationships and bonds requisite to establishing trust (Lipnack & Stamps; Solomon). Sabel (1993) linked trust to productivity by demonstrating that increased trust reduces costs through increased creativity or the need for reduced control where there is a high level of trust. This establishes trust as an antecedent to reducing costs and improving the productivity of a virtual team. Conversely, Jarvenpaa and Shaw (1998) showed the existence of an increased tendency towards reduced project performance in virtual teams due to the difficult in sustaining commitment and role clarity over time and distance. With the increasing frequency of virtual teams, whether due to convenience, economic necessity, or competitive advantage, trust among team members for reliable and productive performance is critical. Sarker, Valacich and Sarker (2003) defined virtual team trust as the degree of dependence individuals have with respect to remotely located team members, when taken collectively. They distinguished three specific streams of trust components: personality-based trust, institutionally- based trust, and cognitively-based trust. Personality-based trust develops due to a person’s trusting nature, institutionally- based trust develops as a function of an individual’s belief in intuitional norms/procedures, and cognitively-based trust is derived from social cues and impressions that an individual receives from the other (Sarker et al.). Within this framework, levels of trust in several different companies engaged in the same line of business, participated in a study focused on determining characteristics attributable to membership in virtual teams. METHODOLOGY The examination of trust within the subject companies utilized an established survey instrument developed by Sarker, Valacich, and Sarker (2003) to evaluate virtual team trust. Voluntary participation from three separate companies within the insurance industry was obtained (Companies A, B, and D). Company C was based outside of the USA and showed initial interest in participating; however, they chose not to participate in the survey. The study consisted of two parts: one, an Internet based survey using summated ratings along with numerical and short answers; two, a series of voluntary semi-structured telephone interviews conducted with a subset of participants from each of the companies. In addition, a basic set of demographic questions supplemented Sarker et al.’s survey questions. In total, the survey consisted of thirty summated ratings questions; five dealing with personality-based trust, five relating to institutional-based trust, and twenty relating to cognitive-based trust. Scales were valued from one through four, with lower values representing greater agreement/more positive levels of trust and higher values representing less agreement/more negative levels of trust. No neutral values were sought which required respondents to make a values based (Kerlinger & Lee, 1999) assessments in their responses. 3
  • 4. COMPANY OVERVIEWS Company A is an industry leader insuring more than 25 million people. It is a multi-line, and multi-subsidiary, publicly traded stock-based national insurer with products distributed through career exclusive, broker, employer group, and direct marketing methods appealing to a wide range of markets. It has grown through acquisitions of other large and has a divisional presence overseas in the European market as well. The company participants surveyed included a mix of corporate HR employees located in Northeastern United States (U.S.) and a similarly located call center servicing a select, and distributed, subset of clients. These participants came from a shared service set of functions in a dynamic, relatively high stress environment consistent with the work-hard, play-hard cultural construct (Deal & Kennedy, 1982). Executives come from a wide range of places including within the company, from acquisitions, and external talent attracted to the company by its opportunities and success. Although management is working to create a unified culture focused on delivering profitable results and increased market share, because of recent merger activity, there is no consistently identified organization-wide culture, . Company B is a top-twenty multi-line mutual insurer based in the Central U.S., serving personal, commercial, life, and health insurance markets. Products are distributed through a network of dedicated career agents that are non-employees with exclusive contracts. The company is super-regional (versus national) with a presence in over 15 states clustered around the Upper-central U.S. The company has a long history of customer focus and service quality concentrated on serving America’s middle market clientele with a strong employee focus that works to avoid layoffs, resulting in a large population of long tenured (20+ years) employees. With the exception of large shared-service functions (e.g., IS, HR, Finance, Education, and other related corporate entities) the participants surveyed came from the life insurance division of the company, which operates as a separate part of the larger company, While a relatively small percent of the total revenue, the life company is a very profitable segment of the parent company. The life insurance division has operated as a semi-independent but controlled subculture within the larger overall company culture. With all of the senior management team having come up through the ranks, promotion from within has been the primary means of advancement, Recent turnover at the executive level due to retirements resulted in promotions from within and a mix of new executive hires. Company B functions as a process culture (Deal and Kennedy, 1982) where employees know Human Resources sees as one of its primary roles as protection of employees, and acts to alleviate necessary reductions through natural attrition, redeployment, and relocation of resources, avoiding non-performance related terminations as much as possible. Company D is a privately held boutique management consulting firm focusing on the financial services industry, specifically banking (typically regional), health care, and insurance (casualty, life/annuity, and health). Almost all of the employees, including management, come from the financial services industry, many with ten to fifteen years of direct line experience in the operational areas of a financial service company. The client engagements focus on operational effectiveness, assisting companies in optimizing business processes and resource utilization, although a secondary tier of services includes strategic planning, organizational alignment, and market development. The participants surveyed included a mix of management, sales, and consultants. The company has home offices for shared-service functions (e.g., IS, Marketing, and HR), while the consulting staff all work virtually out of home offices from which they travel to client engagements on a weekly basis. Approximately one third of the staff has 20 years tenure with the company, and 80% have been with the company for over 5 years. All 4
  • 5. employee levels work as teams with a focus on delivering measurable results in realized expense savings, enhanced services, increased growth, or improved strategic alignments. The culture is very open, and as delineated by Deal and Kennedy (1982) are seen as a bet-the-company (Deal & Kennedy, 1982) culture, respectful of the individuals as successful previous executives, and focused on delivering client value by developing trusted advisor relationships that last beyond a given engagement. SURVEY RESULTS The administration of surveys occurred over a thirty-day period during the summer of 2008. Solicitation for participation came by email from each company’s management seeking participation in the survey, providing a link to a confidential Internet address operated by Survey Monkey. Potential respondents received periodic reminder notices via e-mail of survey availability as well as the timeframe remaining for completion. Data was gathered and reviewed late summer, with the results of the study indicating noticeable differences in trust levels between the three participating companies. Only fully completed surveys were included in the data and analysis. Of the three companies participating in the study, Company B, was the most pronounced as having the lowest levels of trust in all three categories of institutionally-based, personality-based, and cognitively-based trust (see Figure 1). Figure 1: Trust Measures by Company Company A Company B Company D Aggregate Personality-Based 1.779411765 2.026785714 1.602941176 1.842741935 Institutionally-Based 2.000000000 2.111680912 1.832352941 2.003056405 Cognitively-Based 1.852573529 2.000000000 1.748529412 1.888371538 The measures of trust presented in Figure 1 (above) utilized a weighted value for each response where a lesser value indicated greater agreement, translating to a greater degree of trust. The selection of ‘strongly agree’ is represented by a value of 1.0, ‘agree’ by a value of 2.0, ‘disagree’ by a value of 3.0, and ‘strongly disagree’ by a value of 4.0. Using this scale, a statistically neutral average (i.e., neither agree nor disagree) is represented by a value of 2.5. FINDINGS Companies A and D had nearly identical levels of trust, with Company D exhibiting the highest levels of agreement in each trust category. These results indicated respondents were experiencing a generally favorable environment of trust in their virtual teams. Company A also 5
  • 6. had a generally favorable environment of trust; however, the respondents indicated that institutionally-based trust was only slightly favorable at 2.0 versus a neutral value of 2.5. By contrast, Company B respondents exhibited the least amount of trust relative to the other two companies. For Company B, cognitively-based trust showed up as marginally favorable with a value of 2.0, while personality-based and institutionally-based trust were slightly more neutral at 2.03 and 2.11 respectively. In all three companies, the lowest measured level of trust was institutionally-based and the highest measured value of trust was personality-based. Company A, categorized as the work-hard, play-hard culture, had the highest composite scores of all three companies with respect to levels of trust. There were also several indicators of virtual team issues in Company A, found in other components of the survey instrument. Specifically, there was a perceived lack of emphasis on deliverables coupled with concerns about dependability among the virtual team members. Due to the belief that the results of their team efforts would not affect their individual performance rating, it was noted that a general lack of excitement about the team projects existed. This seems consistent with the low risk nature of a work-hard, play-hard culture where the fast feedback cycle consists of limited to no immediate feedback that would otherwise drive action (Deal & Kennedy, 1982). Company B exhibited a marginally favorable working environment in all three areas of trust. Noted was that the team members expressed higher degrees of perceived honesty than other virtual team members. Institutionally-based trust proved more problematic in that virtual team members indicated perceived issues related to dividing work responsibilities and dependability. Issues were less pronounced in the area of cognitively-based trust, though some virtual team members indicated concern about team organization, dependability, and a lack of general interest in the projects they were working on. Given that Company B is a process culture (Deal & Kennedy, 1982), the findings tend to indicate structural problems may exist in the processes used by the participant’s virtual teams. Company D had a relatively high score in the area of personality-based trust, nearly as high as those of Company A. In the area of institutionally-based trust, respondents were not overly concerned about the prospects of late deliverables or for getting a good performance rating which showed in their responses. The respondents also expressed very high levels of desire to uphold the reputation of the organization, with recorded values that ranked the highest of any trust question in any of the companies. In the area of cognitively-based trust, Company D also indicated the highest level of trust among its members related to perceived virtual team performance organization and dependability. Given the high risk, slow cycle time nature of the bet-the-company cultural construct (Deal & Kennedy, 1982) represented by Company D, the focus on reputation, dependability, and team performance is not surprising and is consistent with the environment that results from this construct. ANALYSIS OF FINDINGS A comparative analysis sought to determine the potential causes for the differences in levels of measured trust between Company B and the other two companies surveyed. In reviewing the quantitative survey data relating to measures of trust, several demographic attributes were identifiable as differentiators. Specifically, Company B tended to have the youngest respondents of the three companies, the highest number of female respondents, and the most respondents with the least industry tenure. Company B respondents indicated they spent a 6
  • 7. high percentage of time working in the corporate offices as part of a virtual team. In addition, they indicated they spent the least amount of time and had the least experience with video teleconferences; and, they expressed the least comfort with technology of the respondents from the three companies surveyed. Despite relatively close proximities in levels of trust, with respect to demographics Companies A and D were not completely similar to one another. Specifically, nine years of age separated the average age for Company A from Company D at thirty and thirty-nine respectively. Similarly at odds was the measure of time spent in their office, with Company A respondents averaging ninety-nine percent of their time and Company D respondents averaging a much lower sixty-eight percent of their time spent in an office. The quantitative data indicates that these companies, though similar in business were decidedly dissimilar in composition and in their approach to work. This seems traceable at least in part to the discretely different cultural constructs each company represented. Furthermore, based on an analysis of this survey’s responses, no one quantitative factor measured stood out as a potential indicator of levels of trust (positive or negative). While a combination of factors may serve that function, it is unlikely they will be indicative of causal elements behind the measured trust levels. It is worth noting that the respondents from all three companies surveyed clearly stated a preference, when possible, for working in a traditional face-to-face team. CONCLUSIONS The pattern emerging from this initial survey indicates that the construct of corporate culture associated with a given company can play a key role in determining the development of measurable trust in virtual teams, as well as demographic and other quantifiable norms. The pervasive nature of corporate culture appears to directly affect virtual team trust and, with that, performance and effectiveness. Consistent with Sims (2000) work, the culture of the organization reflects generalized personality characteristics that translate into the ability of virtual teams to perform effectively. It is noteworthy that the effect of corporate culture on the virtual team environment goes beyond the scope of physical location of a company, corporate culture exists remotely, as well as from and to other virtual team members. Further, it was clear that the management framework defined by the culture directly influenced the performance of the virtual teams, consistent with Pool’s findings in 2000. Based on this study, there is a direct correlation between corporate culture and trust. Where positive corporate culture exists, greater trust among virtual teams emanated; where the culture was more restricted, trust likewise diminished. This speaks to the import of corporate culture with respect to the prevalence of successful and productive virtual teams within an organization. STUDY LIMITATIONS This study was constrained by the finite of companies involved in the web-based survey process. Because only three companies participated, the number of respondents was limited which may have skewed the data. While culture has been shown to play a major role in virtual team performance, there was no clear delineation of cultural differences and their impact on the trust within the virtual teams. Nor was the potential influence of the nature of the work being performed contemplated. Since the sample population only included US-based companies within 7
  • 8. the insurance industry, there is certainly room for additional scope and magnitude of additional participant to assure a representational population. Finally, this report only includes the respondents’ answers to Sarker et al.’s survey which may or may not be a true measurement of trust issues with respect to virtual teams (Karpiscak, 2007). RECOMMENDATION FOR FUTURE RESEARCH We recommend several areas to consider for future study. First, we propose that future studies be conducted examining other companies involved in the same line of business, both in the US and beyond to expand the reliability and generalizability of the data (Miles & Huberman, 2002). We suggest that future studies examine trust in virtual teams in other industries, both within and outside of US borders. We urge that future studies seek qualitative approaches to understand more about how productivity, effectiveness and corporate culture affects trust in virtual teams. Based upon this research, it appears that generational issues, leadership style, and familiarity with technology are likely influencing factors that need to be contemplated. Demographics were incorporated into the study, but there is a notable lack of overall diversity that would likely bring additional complexity to the findings and as such is worthy of additional research. Delving deeper, are there specific personal or functional attributes that create better performing virtual team members, and what training can be used to increase the effectiveness of the team. It would also be interesting to determine which blends of corporate cultures best lend themselves to fostering the highest and lowest levels of virtual team trust, and whether the type of business affects levels of trust. SUMMARY Trust has been identified as the pivotal element of a virtual team, and the effectiveness of a virtual team directly correlated with trust. The data gathered in this study indicates that virtual team trust varies from company to company within the same industry and with these companies there appears to be a direct correlation between virtual team trust and the company’s corporate climate. The influence of organizational dynamics on the effectiveness of the team is implied through the varying results in trust associated with different cultural frameworks. While the trend towards greater use of virtual teams continues, there remains a strong preference for some form of face-to-face interaction during the formation of the team as well as throughout the team process. There also remains confusion as to the nature, intent, and associated roles involved in a virtual team even within teams that have existed for some time, profiling the importance of roal clarity and goals definition. Management practices indicate a current tendency to apply traditional leadership practices in a virtual team environment, profiling the opportunity for additional training and education on the topic. Hopefully additional studies of this nature will be performed to further confirm this initial finding and examine its accuracy and applicability to other business both within the US and around the world, bringing with them added depth in terms of diversity, function, and situational context. REFERENCES 8
  • 9. Berrio, A. A. (2003). An organizational culture assessment using the competing values framework: A profile of Ohio State University Extension. Extension Journal, 41(2). Retrieved from http://www.joe.org/joe/2003april/a3.php Bolman, L.G. & Deal, T. E. (2008). Reframing organizations: Artistry, choice and leadership (4th ed.). San Francisco: Jossey-Bass. Dani, S. S., Burns, N. D., Backhouse, C. J., & Kochkar, A. K. (2006). The implications of organizational culture and trust in the working of virtual teams. Deal, T., & Kennedy, A. (1982). Corporate cultures. Reading, MA: Addison-Wesley. Ernst, H. (2001). Corporate culture and innovative performance of the firm. Management of Engineering and Technology, Portland International Conference (Supplemental Issue- Vol. 2), 532 - 535. Harris, S. G., & Mossholder, K. W. (1996). The affective implications of perceived congruence with culture dimensions during organizational transformation. Journal of Management, 22(4), 572- 547. Hofstede, G. (2004). Cultures and organization: Software of the mind (2nd ed.). New York: McGraw- Hill. Jarvenpaa, S. L., & Shaw, T. R. (1998). Global virtual teams: Integrating models of trust. In Sieber, P. & Griese, J. (eds), Organizational Virtualness Proceedings of the V O Net - Workshop, April, 1998. Bern: Simowa Verlag: 35–51. Karpiscak, J. (2007). The Effects of new technologies on the performance of virtual teams. Capella University, MN (Doctoral dissertation). AAT 3266273. Kerlinger, F. N. & Lee, H. B. (1999). Foundations of behavioral research. Stamford, CT: Cengage. King, W. (2007). A research agenda for the relationships between culture and knowledge management, Knowledge and Process Management, 14(3), 226-236. Lamond, D. (2003). The value of Quinn’s competing values model in an Australian context, Journal of Managerial Psychology, 18(1/2), 46-59. Lipnack, J. & Stamps, J. (2000). Virtual teams: People working across boundaries with technology. New York: John Wiley & Sons. Maznevski M. L., Distefano J. J., Gomez C.B., Noorderhaven N. G., & Wu P,-C. (2002). Cultural dimensions at the individual level of analysis: the cultural orientations framework, The International Journal of Cross Cultural Management 2(3), 275–298. Miles, M. B., & Huberman, A. M. (2002). The qualitative researcher's companion. Thousand Oaks, CA: Sage Publications. 9
  • 10. Morgan, M. (1993). How corporate culture drives strategy, Long Range Planning 26(2), 110-118. Pool, S. W. (2000). The learning organization: Motivation employees through integrating TQM philosophy in a supportive organizational culture, Leadership & Organizational Development Journal, 21(8), 373-396. Sabel, C. (1996). Studied trust: Building new forms of cooperation in a volatile economy, Human Relations, 9(3), 346 - 375. Sarker, S., Valacich, J., & Sarker, S. (2003, April-June). Virtual team trust: Instrument development and validation in an IS educational environment, Information Resources Management Journal 16(2), 35-55. Schein, E. H. (2004). Organizational culture (3rd ed.). San Francisco: Jossey Bass. Schneider, S., & Constance, B. (1987). National vs. corporate culture: Implications for Human Resource Management. Singapore: International Personnel and Human Resource management conference paper, December 14-17. Solomon, C. (2001). Managing virtual teams,Workforce, 80(6), 60-65. Snow, C., Snell, S., & Davison, S. (1996). Use transnational teams to globalize your company. Organizational Dynamics, 24(4), 50-67. Sondergaard, M. (1994). Research note: Hofstede’s consequences: A study of reviews, citations and replications, Organization Studies, 15(3), 447–456. Zucher, L., Darby, M., Brewer, M., & Peng, Y. (1996). Collaboration structures and information dilemmas in biotechnology: Organization boundaries as trust production. In R. Kramer and T. Tyler (eds.), Trust in organization: Frontiers of theory and research. Thousand Oaks, CA: Sage. AUTHORS Dr. John Karpiscak graduated with a Ph.D. from Capella University. Dr. Karpiscak is employed by the U.S. Army Topographic Engineering Center. john.karpiscak.III@usace.army.mil. Dr. Jean Gordon received her DBA in Business from Nova Southeastern University. She is Interim Chair of the Human Resource Management and Organizational Development specialization in the School of Business and Technology at Capella University. Dr. Gordon’s speaking, consulting and authorship focuses on change management through practices of human resource management, organizational, and cultural leadership in 21st century knowledge age organizations. jean.gordon@capella.edu. Dr. Toni Buchsbaum Greif earned her Ph.D. in Human & Organizational Development from The Fielding Graduate University. She is Core faculty in the leadership and organizational development specialization in the School of Business and Technology at Capella University, and serves as a consultant and business coach in her 10
  • 11. role as CEO of Sound Beach LLC. Dr. Greif consults in the areas of leadership, research, finance, strategic analysis, entrepreneurship, and organizational behavior. tbgreif@yahoo.com. Steven Callahan is pursuing his Ph.D. in Organization and Management with a specialization in Leadership from Capella University. He is a Senior Consultant and Practice Development Director with The Robert E. Nolan Company, a management consulting firm specializing in the financial services industry. Steve helps clients achieve measurable improvements in service, quality, and productivity while helping lead the development and leveraging of intellectual capital. stevecallahan@technologist.com Dr. Lee StJohn earned her PhD in Clinical Psychology from The Fielding Graduate University. She teaches online for Capella Univeristy and Thomas Edison State College, and consults in her role as vice president of Sound Beach LLC. She is involved in research concerning life-span development, hope, culture, positive and transpersonal psychology. drleestjohn@earthlink.net 11