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Several studies have found an inverted U‐shaped relationship between stress and performance levels for individuals. The present study determined whether such a relationship exists between stress and the perceived effectiveness of formal organization groups. Analysis of data from four firms provided no support for the existence of such a relationship. Instead, a negative relationship between stress and perceived organizational effectiveness was found. The results suggest that the type of stress moderates the stress and effectiveness relationship. Dysfunctional stress was the dominant type of stress in all four firms. Further, the level of dysfunctional stress provided a better explanation of variations in effectiveness levels than total stress levels.
ALLEN et al. (Tue,) studied this question.