Closing the Psychological Distance: The Effect of Social Interactions on Team Performance

Social interactions in the workplace can generate reciprocal peer effects and narrow the psychological distance for team prosociality among coworkers. Incorporating such a psychological interdependence into a team production model, we investigate how the optimal social interactions characterized by the type of task the team is performing (complementary or substitutable tasks) and the vertical and horizontal structure of the team (with or without leadership). We find that in the case of complementary tasks, social interactions can enhance team performance not only for horizontal teams but also for vertical teams led by more prosocial leaders, by narrowing the prosociality gap among members and resolving task bottlenecks. On the other hand, in the cases of horizontal and vertical teams performing substitutable tasks and vertical teams performing complementary tasks supported by a more prosocial follower, social interactions can actually decrease team performance. Our results provide important implications for organizations in considering when, for what type of team, by whom, and to what extent to promote social interaction within teams that bring members' personal (psychological) distances closer, as a means of enhancing organizational effectiveness.