This paper explores the effects of knowledge homogeneity (shared or common) and knowledge heterogeneity (distributed) on team outcomes and processes. An experiment was conducted in which teams made resource allocation decisions while physically dispersed and supported with a shared virtual work surface and chat. The task required teams to learn and recognize patterns and then collaborate to allocate their resources appropriately. Dependent measures included process (chat, movement, conflict), and outcome quality. All teams received significant financial rewards in direct proportion to their performance. Teams with common knowledge significantly outperformed teams with distributed knowledge. Heterogeneous teams appeared to use the leader/follower paradigm.