A Process-Based Explanation of the Psychic Distance Paradox: Evidence from Global Virtual Teams

Previous research has found evidence of a counter-intuitive positive relationship between psychic distance and performance, which has been labeled the “psychic distance paradox”. However, there is a dearth of literature explaining the causal mechanisms that elucidates such a positive relationship. Studying the effect of team-level psychic distance on the performance of global virtual teams, we build on the input-process-outcome framework of team research, which allows the integration of process variables to provide new insights into the underlying coherences of the psychic distance paradox. These variables include the team members’ expectation of challenges as well as the level of team effort toward the task. The team members’ motivational cultural intelligence is introduced to the model as a moderating factor. The data support the hypothesized causal path. The findings start unveiling the psychic distance paradox through the integration of the literatures on psychic distance and global virtual teams.