The collaboration capability of global virtual teams: relationships with functional diversity, absorptive capacity, and innovation

Global virtual teams (GVTs) are increasingly utilized in industry given their ability to bring together diverse knowledge and experience from individuals who are not geographically proximal. Having diverse knowledge resources within the GVT benefits innovation outcomes; yet, how such resources create innovation-related value remains to be fully explored. In this study, we use a sample of GVT members from an organization in Silicon Valley to examine the direct and indirect effects of GVT functional diversity on innovation outcomes. Using a capability perspective, we find that one means through which diversity creates value and delivers innovation outcomes is via the team’s absorptive capacity. Additionally, we introduce the role of GVT collaboration capability and find that the collaboration capability positively moderates the effect of functional diversity on innovation outcomes and absorptive capacity. The implications of the findings are discussed and recommendations are offered for organizations using GVTs.