TEAM-BUILDING EFFECTS ON COMPANY

PERFORMANCE
A Business Game-Based Study

JOSEPH WOLFE
DONALD D. BOWEN
C. RICHARD ROBERTS
University of Tulsa, Oklahoma, USA

The objectives of the research presented here were twofold - to

investigate the effects of team building on the economic performance
of task teams and to understand further the role of group cohesion
within pedagogical gaming applications. Regarding the first objective,
the techniques for improving individual and organizational perfor-
mance are a veritable alphabet soup of panaceas - MBO, OB Mod,

OD, QC, QWL, TA, and Theories X, Y, Z. Unfortunately very few of

these techniques have proven their effectiveness in rigorously applied
research investigations (Cummings et al., 1974; Huse, 1980; Locke et
al., 1980). As a subset of the general organization development (OD)
literature, team building’s advocates have likewise been unable to
prove that team building is a viable strategy for improving an
organization’s performance. Although DeMeuse and Liebowitz
(1981) found positive results in 29 of 36 studies, Nicholas (1982) in
2 of 4 studies, and Woodman and Sherwood (1980) in 19 of 30 studies,
none could make firm statements about the bottom line-the eco-
nomic performance value of the team building applications they
reviewed. Many studies lacked internal validity; subjective or percep-
tual data rather than objective output data were often employed, and
the interventions were described in such obscure or indefinite terms
SIMULATION & GAMES, Vol. 20 No. 4, December ’
01989 Sage Publications. Inc.

388

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that verifying replicating research could not be conducted. When a

or

particular study featured clearly defined interventions and objective

performance criteria, Buller and Bell (1986) found that all interven-
tions were confounded, thereby making it impossible to determine
how the positive results were obtained.
Regarding the study’s second pedagogically based objective, much
recent interest has been focused on the creation of highly cohesive
decision-making teams in business games. This has been done in an
honest effort to enhance the quality of the learning experience, and to
demonstrate to participants the necessity for openness and nondefen-
sive behaviors in task-oriented situations. In this effort many game
administrators go to great lengths either to manipulate a team’s com-
position based upon a priori notions as to what leads to high team
cohesion, or to allow teams to self-select their members in the belief
that high team cohesion will ensue. As with the OD literature cited
here, however, the results have been mixed. Therefore, these overt
team composition efforts may be at least unnecessary, or at worst
misguided and pedagogically harmful.

RELEVANT BUSINESS-GAME LITERATURE

Three studies have used business games for laboratory-type inves-

tigations of the effects of team building company performance. All
have produced negative results. The first study by McKenney and Dill
(1966) determined that student teams retained from a prior MBA
human relations course did not outperform newly formed teams from
the same previous course. No direct measures of either cohesion or
the interpersonal effects of human relations training were taken,
although it was presumed that retained teams would be more cohesive
and have better attitudes toward each other than would the newly
formed teams; therefore they would be more economically effective
in the very complex simulation employed. Given the negative outcome
obtained by McKenney and Dill (1966: 30) the authors concluded their
&dquo;results cast doubt on arguments for training managers as teams unless
the team training makes direct and specific reference to the environ-

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ment and challenges that the team will face when it returns to its
regular job.&dquo;
The following year Deep et al. (1967) presented results from a
similarly designed study. The performance of a set of intact teams
trained via a &dquo;quasi-T&dquo; group experience was compared to the perfor-
mance of a set of randomly assigned teams that had also undergone
the same group training experience. The groups were referred to as
quasi-T groups because they were leaderless, and the training sessions
were conducted within an extensive, 15-week format rather than in the
more usual intensive one- or two-week time frame. Although the intact
teams expressed higher levels of familiarity, mutual admiration, and
ease of contact, their superior cohesion was negatively related to
economic performance as measured by profits, stock prices, and
planning costs in the very complex Carnegie Tech Management Game
(Cohen et al., 1964). The authors concluded that a T-group experience
may hinder rather than help the generation of superior business-type
decisions and that trained teams are reluctant to initiate and enforce
the interpersonal controls that are necessary for high economic
performance.
The last study in this group, by Hand et al. (1975), tested the
effectiveness of the Data Survey and Feedback method as an organi-
zation development strategy. A large number of undergraduate busi-
ness students (n = 216) were randomly assigned to six-member firms
for 75 percent course credit within INTOP (Thorelli and Graves,
1964), a relatively complex multinational simulation. The change
agents or interventionists were doctoral students enrolled in an ad-
vanced organization development course where their role was to
implement the Data Survey and Feedback method. The overall OD
treatment was designed to facilitate information processing and inter-
personal communications with a focus on efficient and effective
decision making. As in the Deep et al. study, the treated groups
realized the interpersonal benefits of team building while failing to
accomplish superior eco nomic results. The conditioned groups exhib-
ited higher levels of self-esteem, self-realization, and social well-
being, while failing to obtain superior economic results in the form of

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 391

rates of return on investment (ROI) and lower sales forecast errors

(Hand and Sims, 1975; Hand and LaFollette, 1973).

Turning to the role of team cohesion in pedagogical applications,
three studies have employed peer selection as a method for creating
instantaneously cohesive teams. Norris and Niebuhr (1980) compared
the performance of self-selected versus instructor-selected teams play-
ing 12 decision rounds of The Executive Game (Henshaw and Jackson,
1972) for 10 percent credit in a senior-level business policy course.
Self-selection did not create initially cohesive teams as measured by
a game-related version of the Seashore (1954) group cohesion scale,
nor did those teams obtain superior economic performance. Cohesion
was strongly related to economic performance, although high cohe-
sion was obtained over the course of game play and not as a result of
the initial selection procedures employed. A study by Miesing and
Preble (1985) used 12-13 member teams in The Management Game
(McFarlan et al., 1970). The two highest-performing teams were the
most cohesive, whereas the lowest-performing team was the least
cohesive, based on subjectively assessed group interviews. Hsu (1984)
also employed self-selection with the presumption that higher cohe-
sion would result. No measures of the existence of initial levels of
cohesion were taken, but economic performance differences were not
found between self-selected teams versus instructor-assigned teams.
Three other studies have recently investigated cohesion directly or
the determinants of cohesion as it is related to team performance.
Gosenpud et al. (1984) placed seniors from a business policy course
on 2- to 5-member teams playing the relatively simple The Executive
Game for eight decision rounds and 10 percent course credit. Cohesion
was not related to each team’s rate-of-retum on equity (ROE) although
a factor analysis at the simulation’s midpoint found cohesion was a

major contributor to a factor labeled &dquo;strategic management.&dquo; The

following year Gosenpud et al. (1985) conducted a longitudinal study
using the moderately complex Tempomatic IV (Scott and Strickland,
1980) for three simulated years. Four-member teams were instructor-
assigned for 25 percent course credit in an undergraduate business
policy course. Cohesion was not measured directly, but many of

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392

cohesion’s theorized antecedents were related to the team’s success-

fair and equitable workloads, enjoyable working relations, and agree-
ment on job responsibilities. One last study by Wolfe and Box (1988)
found a strong relationship between a team’s cohesion measured in
Deep et al.’s (1967) terms and its economic performance as measured
in profits, ROI, and ROE. Undergraduate students (n = 162) were
randomly assigned to 36 teams in six separate industries playing the
moderately complex The Business Management Laboratory (Jensen
and Cherrington, 1977) for 40 percent grade credit in a senior-level
business policy course. In addition to the positive relationship found
between cohesion and performance, cohesion was strongly related to
the similarity of each team member’s grades (but not the team’s mean
grade-point average) as well as the leader’s economic contribution to
the team.
Based on the literature just reviewed, one could draw four conclu-
sions : (1) Highly cohesive teams playing fairly complex games in
teaching applications obtain superior economic performance; (2) the
use of self-selection or prior association does not guarantee high

cohesion; (3) cohesion can develop over time; and (4) either previous
or concurrent OD interventions are dysfunctional, although partici-

pants feel good about themselves despite their relatively poor perfor-
mances. When taken in total this literature leads to a set of conclusions
that are damaging to those advocating team building interventions.
The study by Deep et al. is particularly damaging because of the
presentation of its negative results in the influential volumes by
Campbell et al. (1970) and Eddy (1985).
It is possible, however, that such damaging conclusions should not
be drawn, as each of the laboratory-type studies just cited compro-
mised the ideal team-building intervention to some degree. The Hand
et al. (1975) study employed six doctoral students as interventionists
whose skills and experience with the particulars of the Data Survey
and Feedback technique, as well as with OD in general, can be suspect.
In addition, the doctoral students may have been unbelievable or
unacceptable resources to the 17 junior-level teams that were invol-
untarily subjected to their ministrations. For both the McKenney and
Dill (1966), and Deep et al. (1967) studies it was merely presumed

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 393

that prior association would bring about the levels of team cohesion
considered necessary for firm success. No pregame cohesion mea-
sures were taken, nor were any other measures taken of other attributes
associated with highly cohesive work teams. It is possible that these
qualities did not exist given the general human relations training
applied to the McKenney and Dill subjects, and the extensive, leader-
less nature of the quasi-T group experience delivered to the Deep et al.
subjects.
The study presented here employed a practiced interventionist who
implemented a team development effort within an intensive format.
The effort was based on Beer’s (1976) interpersonal model operating
under the assumption that interpersonally competent people function
better as a team, especially after they have been trained as a team.
Team development in this application consisted of opening commu-
nications by increasing mutual trust, interpersonal cooperation, and
group cohesiveness, which in turn was expected to result in more
effective decision making, less management conflict, and more cre-
ative and efficient problem-solving sessions.

HYPOTHESES

Six hypotheses were employed. HI stated that firms receiving team

building would be more cohesive after the treatment and would exhibit
qualities supportive of high teamwork and fruitful interpersonal rela-
tionships throughout the course of the experiment. This hypothesis
also determined the equality of starting conditions and whether the
team-building experience changed the experimental teams from their
pretreatment state. H2 stands at the study’s core and states that treated
teams would outperform untreated teams.
H3 stated that treated teams would become chauvinistic, would
overestimate their abilities to succeed, and would otherwise be less
censoring of themselves after the findings of Janis (1972), Janis and
Mann (1977), and Leana (1985) on the relationship between high
cohesion and groupthink. Hypotheses 4-6 tested for the subjective
qualities invariably found in team-built groups regardless of their

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394

actual ability to bring economic rather than personal benefits to the

organization. It was hypothesized that treated teams would express
higher levels of satisfaction with their group, would consider the group
to be a meaningful source of learning, and would express greater
intrateam openness and communication. The following summarizes
the six hypotheses that were tested:

Hl Conditioned teams will be more cohesive than will unconditioned

teams.
H2 Conditioned teams will outperform unconditioned teams.
H3 Conditioned teams will overestimate their team’s performance.
H4 Conditioned teams will believe they have learned more from the
simulation experience.
H5 Conditioned teams will express higher levels of self-disclosure.
H6 Conditioned teams will express higher levels of satisfaction with their
group learning experience.

METHODOLOGY

A total of 32
end-program MBA candidates in a business policy
course were randomly assigned to eight four-member management
teams at the beginning of the fourth week of classes. The teams
engaged in complex and interactive decision making for 10 business
quarters in an enhanced version of The Business Management Labo-
ratory (Jensen and Cherrington, 1984) for 55.0% grade credit. The
simulation allowed up to 68 decisions per round and is a relatively
complex game (Keys, 1987; Wolfe, 1978a) although not as complex
as the game used by Deep et al. (1967). Teams in The Carnegie Tech

Management Game can make over 200 decisions per round, although
in practice 60 to 90 decisions are usually submitted.
Through random selection, four teams were chosen for the team-
building experience. These teams were exposed to the program out-
lined in Table 1 in an intensive weekend retreat atmosphere at the
beginning of the fifth week of classes and two weeks before the
simulation began. All sessions were conducted by the second author.
The entire program lasted 20 hours, which was the arbitrary cutoff

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 395

employed by Smith (1975) for evaluating viable group training stud-

ies. Beer (1976) has divided team-building interventions into four
models-the goal-setting model, the interpersonal model, the role
model, and the managerial grid model - although Woodman and
Sherwood (1980) have observed that in practice these models are often
integrated or mixed. Such was the case with the content and objectives
associated with the weekend program used in this study. Certain
program components were fairly standard (the trust walk; sharing
something important) although another component (the use of a soccer
game as a device for examining male and female role relationships
and the fostering of camaraderie through the sharing of an intense
competitive experience) were unique to the skills and insights of the
interventionist (Bowen and Bowen, 1982). As suggested by Argyris
(1970) a heavy emphasis was placed on building relationships through
self-disclosure because of this study’s use of newly formed and
unsocialized teams. While the treatment group was undergoing their
weekend experience, the control teams were free to use their time in
any fashion they chose although it was suggested that they should
work on the simulation as vigorously as possible.
All teams started from equal financial and operating positions to
simplify the determination of comparative economic performance;
teams received their company’s historical or game start-up informa-
tion one week before game play began during the sixth week of classes.
The instructor, but not the interventionist, was freely available for team
counseling and two weeks of class time was specifically devoted to
counseling sessions. Once the simulation began, all firms submitted
oneset of decisions per week for four consecutive weeks, after which
game play was accelerated by having all teams submit two sets of
decisions per week for the next three weeks. Only eight quarters or
two years’ worth of operating results were used in the quantitative
analysis of the study to eliminate possible endgame strategy effects.
Game performance was measured solely in economic terms and
was a highly intercorrelated weighted index composed of total earn-

ings (55.0%), and rates of return in investment (25.0%) and equity

(20.0%). Company perceptions regarding cohesion, effectiveness es-
timates, group-derived learning levels, and the ability to engage in

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396

TABLE 1
Team-Building Program and Schedule

self-disclosure were collected individually and averaged by team.

Team cohesion measures were obtained through a game-oriented
version (Norris and Niebuhr, 1980) of Seashore’s (1954) Index of
Group Cohesiveness, while three scales measuring satisfaction with

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 397

TABLE 2
Scale Characteristics and Reliabilities: Prestudy Data
(N =
30)

the team, amount of perceived learning derived from the group expe-
rience, and the amount of self-disclosure provided were developed
specifically for this study. Satisfaction with the team was measured by
three items, such as, &dquo;How satisfied do you feel about the performance
of your group in recent weeks?&dquo; using five-point Likert scales. Per-
ceived learning was measured via six items, such as, &dquo;This team has
been a source of personal learning and growth for me,&dquo; whereas
self-disclosure employed five items, including, &dquo;There is a high level
of openness and sharing between members of my team.&dquo; The reliabili-
ties and other characteristics for all four scales are presented in Table 2.
As expected with groups formed to learn from each other, fairly high
intercorrelation levels existed between the variables.
Measurements were taken (Form a) when the teams were first
created to establish their initial condition and to assure that all groups
were identical and randomly composed, after the team-building expe-
rience had been completed (Form b), and after the first (Form c) and
second (Form d) year of company operations. In Campbell and Stanley
(1966) terms, the study used a controlled Pretest-Posttest multiple
time-series design with random assignment as follows:

Rt Oa X Ob Oc Od
Rc Oa Oc Od

In his review of the research conducted in the experiential area,

Shaw (1981) found that many failed to specify the exercise’s learning

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398

TABLE 3
Seashore Cohesion Index Scores by Treatment Group

objectives or that the objectives could not be stated in measurable

terms. The business game used in this study was placed in the course
to (1) facilitate an understanding of the organizational strategist’s
decision-making environment, (2) force a working integration of the
typical business enterprise’s functional areas, and (3) allow the appli-
cation of decision-making concepts, tools, and aids to an ongoing,
task-oriented situation. Within the course’s requirements, high eco-
nomic performance connoted the accomplishment of the learning
objectives because the game used in this study had been found to be
functionally unbiased (Wolfe, 1978b), economically motivating
(Wolfe, 1975), and internally and externally responsive to academic
achievement (Wolfe, 1978b; Wolfe and Roberts, 1986).

RESULTS

HI stated that conditioned teams would be more cohesive than

unconditioned teams. As shown in Table 3 this hypothesis was sup-

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 399

TABLE 4
Mean Cumulative Earnings by
Treated Versus Untreated Groups

ported throughout the simulation’s run. All groups were equally cohe-
sive before the simulation began as demonstrated in the pretest mea-
sure. Although not displayed, Form b found the conditioned group’s
weekend training sessions were effective as their mean cohesion score
moved from 3.84 to 4.84. Thereafter, the conditioned teams were
always more cohesive although both groups became more cohesive
throughout the simulation.
H2 stated that conditioned teams would outperform unconditioned
teams. This hypothesis was tested with an analysis of variance in
cumulative earnings over all decision rounds. Table 4 shows that the
effect of conditioning on team performance was initially significant
but that the effect lessened as the simulation progressed into its second
year of play. At the end of the first year of play, the average treated
team had earned approximately $157,870, and its untreated counter-
part had earned $82,890. During the second year, the untreated teams

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400

Figure 1: Cumulative Earnings by Group

earned $404,220, and the treated teams earned the nonsignificantly

lower amount of $360,980. Figure 1 demonstrates the rates at which
earnings were accumulated in the simulation. The conditioned teams
obtained an early lead, which they were able to maintain but not
increase throughout the rest of the simulation. A regression analysis
of the cumulative earnings of both groups was conducted to further
clarify the nature of the effect of conditioning on group performance.
The sample evidence suggests that both groups accumulated earnings
at the same rate over time but that the conditioned groups made better
initial decisions and then proceeded to maintain their advantage over
the length of the simulation.
H3 stated conditioned teams would overestimate their team’s per-
formance. The data was analyzed through the use of a hierarchical
loglinear approach. Table 5 presents a cross-tabulation of groups and
their estimates of performance by year. After the first year of play no
significant association between group membership and estimates was
apparent although a significant association did appear in the second

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 401

TABLE 5
Cross-Tabulation of
Performance Estimates by Treatment Group

NOTE: First-year results L2 = 3 687, n. s; second-year results: L2 7.067; p 0292.

= =

year. Thus this hypothesis is supported only for the second year of
play.
Hypotheses 4-6 tested for elements supportive of group self-learning,
teamwork, and nondefensive communications. It was found the team-
building experience did not produce higher levels of expressed self-
learning or greater personal satisfaction with the team experience. H5
regarding the expression of higher levels of self-disclosure, however,
was supported. Table 6 shows no differences between the
groups at
the pretest stage as expected, but that significant differences appeared
at the end of both the first and second years of play. These differences
also appeared to be diverging while the variability of attitudes within
groups remained the same throughout.

DISCUSSION

Although it has been found that the treated teams that had under-
gone the team-building experience outperformed the untreated teams
only during the early stages of the simulation, their early lead was an
enduring one. A question still remains, however, regarding the rela-
tionship between a team’s cohesion and its performance regardless of
its initial degree of cohesion. A regression of cumulative earnings on

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402

TABLE 6
Self-Disclosure Scores by Treatment Group

corresponding team cohesion scores recorded at three intervals during

the simulation for each of the eight teams was conducted. Figure 2
shows that a significant association existed with nearly 22.94% of the
total variance in cumulative earnings explained by a team’s cohesion
regardless of the cohesion’s source. Accordingly cohesion, which was
the major goal sought by the team-building activity, was associated
with team performance, although high cohesion was also obtained by
the successful untreated teams, but by some other less overt or manip-
ulative process.
A in this study demonstrated that perfor-
prior analysis presented
mance estimates were associated with groups at least in the second
year of play. A further analysis tested for the degree of estimation bias
with the belief that treated teams would be more positively biased than
would untreated teams, after the work of Janis (1972), Janis and Mann
(1977), and Leana (1985), which showed that highly cohesive groups
not only increased their own feelings of value but also denigrated the

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 403

Figure 2: Team Cohesion and Performance

Number of observations: 24
Intercept: - 623.23
Slope: 196.88
(95% Confidence Interval: 37.34-356.42)
Variance explained: 22.94%
Significance level: p 0.018
=

abilities of outside groups. Table 7 presents a set of cross-tabulations

of estimated versus actual performance ranks by year and treatment
group. It can be seen that an interaction exists between grouping and
actual performance for both years. A strong interaction also exists
between estimated performance and actual performance in the second
year while a weaker interaction exists between estimated and actual
performance in the first year. Table 7 also shows that the treated teams
were pessimistic and highly inaccurate estimators of their perfor-
mance after the first year of play, but this pessimism and error factor
was corrected by the end of the simulation. Alternatively, the untreated

players were optimistic estimators of their performance after the first

year of play. As expected, the unconditioned group was a more
accurate estimator of its performance in both years. It is possible that
the treated groups initially possessed a less-firm grip on the objective
reality existing in their simulated industry, and their delusions led to
an initial pessimism that was later corrected by the objective feedback

provided by the business game.

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404

TABLE 7
Cross-Tabulation of Actual versus Estimated Ranked
Performance by Treatment Group by Year

NOTE: Year 1: Interaction of estimated versus actual performance: L 2 8.816;

p 0.0659. Year 2: interaction of estimated versus actual performance: L2 27.424;
= =

p = 0.0000.

Given that conditioned teams were more competitive in the simu-

lation,one would have expected the gap between the two groups to
increase rather than remain the same over time. Although it has been
found that highly cohesive work teams set their goals more easily
(Festinger et al., 1950) and offer a wider variety of self-administered
rewards for goal accomplishment (Shaw and Shaw, 1962), a question
remains as to why the conditioned teams did not establish successively
higher goals for themselves (or increase their initial leads) after being
rewarded early in the simulation by superior results. Bettenhausen and

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 405

Murnighan (1985) found that newly formed laboratory groups use

output standards from previous settings to guide their initial behaviors,
but both Myers (1962) and Sherif (1967) have found that competition
can raise a group’s norms. As already shown in Table 5 treated teams
established a high presimulation aspiration level for themselves but it
was a level that was not significantly higher than that expressed by the
untreated teams.
Another way to evaluate the effectiveness of the team-building
effort used in this study would be to apply a cost-benefit or utility
analysis as has been suggested and employed in the training and
management development literature (Cascio and Gilbert, 1980; Keys
and Wolfe, 1988; Mathieu and Leonard, 1987; Wexley and Baldwin,
1986). Although the study’s time span was too short to determine the
external validity or long-term benefits of the effort, 16 participants,
not including the interventionist, expended 320 labor hours during one
weekend to obtain marginal economic superiority plus a subjectively
assessed feeling of greater self-disclosure. Viewed alternatively, those
not receiving the team-building effort obtained slightly lower overall
economic results by merely engaging in the simulation itself without
expending any additional effort. It should be noted, however, that the
quarterly performance of the untreated teams was far more variable,
thus categorizing them as a less desirable investment risk. In total, the
team-building effort was marginally efficacious and the qualitative
outcomes it produced were perhaps personally valuable to the partic-
ipants, although this long-term benefit was not measured.

CONCLUSION

This study found that team building created initially more cohesive
teams that obtained superior economic performance during the early
stages of an industrial simulation. Their superiority was later chal-
lenged, but not surpassed, as several of the industry’s untreated firms
became more cohesive over their natural life course. Research should
be conducted into the goal-setting and norm development processes
operating in task-accomplishing and goal-attaining decision-making
situations. Additional research should also be conducted to determine

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406

the mechanisms employed when making trade-offs between higher

task accomplishment and greater expenditures of effort given likeli-
hood estimates of success and/or failure. From a pedagogical perspec-
tive, team building produced marginally superior economic perfor-
mance, therefore research is warranted regarding the possibly more
important personal, group support aspects obtained through team-
building experiences.

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