Virtual interaction and failure learning—The crucial role of team LMX composition

Abstract

The COVID-19 pandemic has highlighted the importance of virtual work. Enabled by the pandemic, the present study addresses the consequences of virtual interaction among regular work teams. Building on and expanding prior research, we develop lines of reasoning to suggest that virtuality negatively affects team failure learning. Additionally, we argue that team LMX quality and team LMX differentiation can help mitigate this effect. We test our hypotheses based on survey data from 73 teams working for a service unit at an international bank. In line with our theorizing, the results reveal that virtuality hampers team failure learning. Moreover, we find that team LMX quality and team LMX differentiation can serve to alleviate the negative consequences of virtuality. We discuss the theoretical and practical implications of our study to support HR managers and propose some areas for future research.