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There is still a gap in understanding the relationship between fully virtual teams and subgroup formation. This paper presents a state-of-the-art picture on what is currently known regarding distributed Agile teams working on software development, focusing on what has been raised so far as part of subgroup formation and their impacts on the project and the overall team. Based on a systematic literature review, results show the degree of virtuality a team is exposed to, the characteristics of team members, how the team members are distributed across its locations, and the type of methodology adopted by it can affect faultline activation and subgroup formation, as well as the strength they carry and the effects they will have on the project and the overall team. This paper adds to the literature a better understanding on fully virtual teams and subgroup formation and introduces an agenda to drive research on global software development.



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