Subgroup Formation in Diverse Virtual Teams: The Moderating Role of Identity Leadership

Background: As today's organizations are becoming increasingly globalized and adding the impetus to a more remote form of working due to the present COVID-19 pandemic, new ways of collaboration-like virtual teams-have gained importance. In the present study, we aim to investigate how virtual team outcomes are linked to perceived diversity and subgroup formation and attempt to gain some initial insight into the role of the social identity approach to leadership in virtual teams.Method: In the present cross-sectional study, a total of 102 virtual team members participated in an online survey measuring perceived diversity, identity leadership, subgroup formation, perceived performance, and team satisfaction, to examine the factors moderating the relationship between perceived diversity and subgroup formation as well as between perceived diversity and team performance and satisfaction.Results: Moderation analysis revealed that perceived diversity had a negative influence on performance ratings when subgroups were highly perceived to be present, but not if subgroup formation was rated as low. The relationship between perceived diversity and team satisfaction was not moderated by perceived subgroup formation. Furthermore, identity leadership was found to be positively related to team satisfaction and perceived performance, while subjective diversity was negatively associated with both team outcomes. Identity leadership moderated the relationship between perceived diversity and subgroup formation, in that high levels of identity leadership weakened the positive relationship.Conclusion: This study provides first evidence to the importance of the team leader's role as a manager of a shared social identity in virtual teams where perceived differences can lead to subgroup splits, as identity leaders may hinder the emergence of subgroups in virtual teams.