Int. J. of Human Resource Management 16:9 September 2005 1583- 1599 Global virtual teams: a human resource capital architecture Michael Harvey, Milorad M. Novicevic and Garry Garrison Abstract As organizations continue to globalize their operations, it will become evident that most organizations do not have the resources to 'fully man' operations throughout the world. Therefore, management will be examining organizational options that reduce the demand on an already depleted pool of global managers. One of the options being examined by companies is the global virtual team (GVT). These complex teams are being considered as a bridge mechanism to allow multinational organizations to expand rapidly without taxing present global managerial skills. This paper uses a theoretical foundation based upon competency theory as the motivation for the formation of GVTs and to explain how they function. Four critical capitals (i.e. human, social, political and cross-cultural) are deemed to be essential for effectiveness of GVT and are discussed in the paper. In addition, a process for assessing the stock of capital in a GVT team is also developed in the paper. Keywords Global virtual teams; human capital; social capital; political capital; crosscultural capital; management of global virtual teams. The growing popularity of inter-organizational alliances, combined with the growing tendency to atten organizational structures and globalization, has accelerated the need for rms to coordinate activities that span geographic, as well as, organizational boundaries through the use of global virtual teams. (Townsend et al., 1998) Introduction Rapid globalization, disruptive technological innovations and radical deregulation have proled a new competitive landscape in a global context (Lei et al., 1996). This novel performance environment requires strategic exibility of global organizations generally and their management human resource systems in particular (Zander and Kogut, 1995). Global strategic exibility augments the importance of human resource heterogeneity, their supporting HR systems, and their managing architecture (Lepak and Snell, 2002). The development of such HR architecture and HR systems should be conducive to the effectiveness of global virtual teams (GVTs) in terms of their contribution to the intellectual capital base of the rm. The HR systems and architecture enabling GVTs to function as a knowledge agent of the rm allow the rm to maintain a degree of exibility in its structure and permits Michael Harvey, School of Business Administration, University of Mississippi, Mississippi 38766, USA (tel: 662 915 5830; fax: 662 915 5820; e-mail: mharvey@bus.olemiss.edu). The International Journal of Human Resource Management ISSN 0958-5192 print/ISSN 1466-4399 online q 2005 Taylor & Francis http://www.tandf.co.uk/journals DOI: 10.1080/09585190500239119 1584 The International Journal of Human Resource Management feasible restructuring of its interconnected relationships within and outside its global networks on an on-going basis (Poppo, 1995). The unexamined issue this paper addresses is what specic HR systems and architecture are needed not only to develop GVTs into intelligent agents of knowledge creation and transfer across multiple projects within the exible global organization, but also to create an effective HR capital base capable of contributing to the overall intellectual capital of the rm. Because such architecture could be relevant to the rm dynamic capabilities derived from a GVT context, it is imperative to determine the means to gain and maintain capital in a GVT. The purpose of this paper is to examine the various types of HR capital that are accumulated at a GVT level and to propose a programme of assessing HR capital in these teams. First, a competency based view of HRM for GVTs is presented and related to the HR architecture of the rm. Second, the four components of the HR capital (i.e. human, social, political and cross-cultural) are discussed to explain how they are engendered by the utilization of GVTs. Finally, a programme of assessing and improving the HR capital architecture of GVTs is proposed. Developing the concept of global virtual teams Henry and Hartzler (1998: 78) dene virtual teams as: 'Teams of people who work closely together even though they are geographically separated and may reside in different time zones throughout various parts of the world'. Additionally, virtual teams can be characterized as 'transitory structures', since membership is often temporary and frequently requires members to participate in multiple teams when new tasks emerge (Scott and Einstein, 2001). Virtual teams prove to be a viable asset in organizations as they tend to increase productivity, exibility, dynamism and can adapt to a wide variety of task environments (Townsend et al., 1998). GVTs are teams that are used to impart these advantages to organizations competing in a global context. Although the potential for GVT appears to be promising, there are fundamental 'socio-technical' problems inherent within these teams, since they are characterized as being comprised of both geographically and organizationally dispersed team members who communicate primarily via computer-mediated communication (CMC) (Daft and Lengel, 1986). Therefore, effective collaboration can be much more difcult to develop and maintain than collaboration found in conventional team structures (Townsend et al., 1998). In addition, the basic social foundation (i.e. social, political and cultural capital) may be very difcult to develop in a GVT context and even more problematic to maintain in the uid context of GVTs. The premise behind the development of GVTs is to tap the abilities and creativity of people distributed throughout the organization and to culminate individual expertise that spans organizational boundaries culminating in the efforts of a GVT (Townsend et al., 1998). It is a commonly held belief that these temporary teams allow global managers to handle a greater number of projects that may be more contextual and complex than other organizational congurations without the costs and time associated with employee travel (Nemiro, 2001; Potter et al., 2002). Fundamentally, the success of GVTs is similar to the practices of conventional, face-to-face teams, but without the physicality associated with conventional teams. In fact, GVTs' dominant mode of communication may be through the use of telecommunications and various information technologies used to accomplish organizational goals (Townsend et al., 1996). Although GVTs show enormous promise for global organizations, opportunities for non-conformance and dysfunctional team activities/performance are always present. Some of the complexities with this global collaboration effort are the difculties working Harvey et al.: Global virtual teams 1585 with others not only from differing cultures, but also, with others from differing functional backgrounds (Jarvenpaa et al., 1998; Townsend et al., 1998). Second, the transitory nature of virtual teams means that members can participate in multiple teams simultaneously. This reduces the ability for GVT members to have the opportunity to build social/cultural capital within the team. These temporary situations make the reward system and maintenance of the social operating procedures increasingly difcult, especially since virtual teams are short-lived, which is recognized by the members prior to entering the team (Hatch, 1997). Third, the ability to measure individual effort or job performance is likely to be difcult to assess in GVTs because hierarchical and bureaucratic controls may be non-existent or lack the ability to monitor these situations effectively (Bal and Foster, 2000). Finally, virtual meetings lack the physical cues present in face-to-face meetings, making it difcult if not nearly impossible for GVT members to observe those behaviours used to establish informal rules or norms, thereby increasing the opportunities for misunderstanding and non-conformance within the confounds of the team (Finholt and Sproull, 1990). A competency based view of HRM for global virtual teams A competency based view of organizations competing on innovative teamwork in a global context posits that multiple competencies at different phases of value creation process operate interdependently, thus creating the potential to generate a sustained competitive advantage (Lado and Wilson, 1994). This perspective explicitly suggests that the organizational set of competencies should be renewed by the development of new competencies based on prior assessment of existing competency set and the appropriate means of augmenting this set. The renewal involves the need to discover and develop new competencies of employees and teams that are complementary to the rm technological and organizational competencies and supplementary to those possessed in the past (Eisenhardt and Martin, 2000). Specic to global virtual teams (i.e. GVTs) and their members, the value-creating competencies of include the following: The base skills and innate characteristics of GVT members that are attributable to the individuals themselves (e.g. intellect, experience base, education, emotional stability, etc.). These individual competencies also include not only specic characteristics that make a GVT member more socially appealing for collaboration to other members, but also skills that help in increasing the ability of a GVT member to address complex problems and ill-structured problems. To address and solve such problems, specic interpersonal skills that enable a GVT member to learn and share knowledge, as well as to gain recognition and inuence over others are critical (Lado and Wilson, 1994). Self-related competencies Team context-related competencies The ability and skills of GVT to exhibit the capacity for cognitive and social differentiation and integration of task-relevant variables in the context of innovation in the organization (i.e. including specic knowledge and human capital of GVT members to build informal (cross) cultural networks that result in social/cultural capital, as well as political skill to promote a culture of trust and to suppress conict in accomplishing the task of the GVT). These contextual competencies of GVTs are particularly valuable to provide institutional bridges across the cultural, social, and political divide between the headquarters and foreign subsidiaries that is associated with various knowledge management initiatives in the rm (Novicevic and Harvey, 2001). Such competencies may reshape the thinking and actions about globally distributed knowledge 1586 The International Journal of Human Resource Management management initiatives to inuence the worldview of the top management of the global organization, providing it ultimately with a global mindset (Kafelas, 1998; Poole, 1998). Vision-related competencies The GVT competencies to transform symbolically the vision of its goals into the reality of its actions, which underscore collective adaptability and learning capacity of GVT members to envision 'new commons' for organizational members and other stakeholders (Bluedorn, 2002; Harvey et al., 1999). These transformational competencies reect the capacity of GVT to develop a vision of innovations and shape the decisions and actions necessary to blend the patience of the collaboration with the passion of realizing that vision (Lado et al., 1992). Such a broad set of competencies may also include the capacity to engage in alliance-based innovations that facilitate new product and customer relationship development (Lado et al., 1992). Similarly, these competencies also include the capacity to create a learning experience and/or support for customers by enacting a context of collaborative culture conducive to learning and sharing knowledge. As such culture is socially complex it is difcult for competitors to replicate and therefore can be the source to create a relative competitive advantage over global rivals (Roth and O'Donnell, 1996; Taylor et al., 1996). These three types of distinct competencies should be bundled in order to be valuable for organizations fostering global virtual teamwork and innovations in today's hypercompetitive global markets (D'Aveni, 1994, 1997, 1999). Given the increase in intense rivalries among rms that is based on integrating globally distributed innovation through teamwork, it is necessary to explore if HR architecture may positively inuence this competency set of GVTs and GVT members (i.e. self, contextual and vision-related) and contribute to an organization's dynamic capabilities in innovative undertakings (Desouza and Evaristo, 2003; Peterson and Cheng, 1998; Zander and Kogut, 1995). Figure 1 illustrates how HR architecture may facilitate timely transfer and sharing of knowledge to increase the global organization's dynamic capabilities to compete effectively against the increasing complexity of global competitors. The architectural conceptualization of HR capital for GVTs is a useful vehicle in the analysis of how the management of corporate HR architecture can add value in balancing two competing demands: (1) the development of a rm knowledge base; and (2) the knowledge sharing by collaborating GVT members (see Figure 1). Figure 1 HR systems and capital architecture in global virtual teams Harvey et al.: Global virtual teams 1587 Human capital viewed in the context of GVT competency The essence of competitive advantage emanating from the unique bundling of human resources embedded in GVTs rests on the global organization's investments in human capital through the training and development of globally competent managers and teams. As GVTs add value to the global organization, the skills and knowledge captured in the GVTs enhance productivity (Snell and Dean, 1992). As more organizations evolve into a global strategic orientation and expand into emerging markets, the integration and sharing of knowledge about under-served emerging markets (Garten, 1997) become essential (Harvey and Buckley, 1997). The success of a global organization will be predicated on its ability to develop efcient GVT capital across the network of relationships that is strategically aligned and at the same time, may develop independent effective initiatives for local competitive positioning via GVTs (e.g. thinking globally and acting locally) (Amin and Cohendet, 1999; Kefalas, 1998; Woolcock, 1998). It is important to recognize that the radical change in the competitive environment from developed to emerging markets may necessitate a re-examination of the prole of talent to be used on GVTs. As has been documented by strategy researchers, a radical change in environment may require more appropriate competencies of team members collaborating in the new environment (Guthrie et al., 1991; Pfeffer and Salanick, 1978). The renewed interest in measuring the value/quality of human capital and its impact on organizational performance that has occurred over the last several years (Beatty et al., forthcoming; Becker and Huselid, 1999; Huselid and Barnes, 2002) highlights these issues. The intent of these and other studies is to cast HRM into a strategic rather than a tactical role in the competitive posture of global organizations. These authors identify the characteristics of an environment where human capital measurement systems (HCMSs) are of most importance, they are: (1) uncertain and rapidly changing environments; (2) knowledge intense industries; (3) when human capital is used to differentiate the organization from the competition (i.e. unique intangible resource); (4) complex product/service offerings; (5) divisionalized or network organization structure; (6) lengthy time to introduce new products; and (7) where 'competent' human capital is depleted (Huselid and Barnes, 2002). It should be noted that these environments often require the use of GVTs. In addition to explicitly measuring the value of human capital it is signicant to note that the perceived 'value' or importance of human capital can vary between employees and management (see Figure 2). The perspective on augmenting human capital is consistent in the upper left-side box and the lower right-side of the matrix. The disagreements over the enhancement or reduction in human capital occur in the two other cells in the matrix. Management expectations can augment human capital by expanding the pool of GVT candidates and by limiting the membership from any one pool of employees. While at the same time, the employees want to gain/maintain their level of importance and value to the organization by remaining critical to the success of the organization. Human capital has become so important for the dynamic capabilities of global organizations that HR managers need to develop dynamic means to measure the value of their organization's human capital. Recent ndings suggest one specic approach to measuring the implicit impact of human capital that is divided into six steps. HR managers must rst focus on the impact and/or productive results of human capital rather than the process oriented cost perspective of managing the HR process. Second, they must develop an awareness of human capital 'alchemy' or recognizing that measuring historic measures of the 'value' of human capital are somewhat awed in that they focus attention on the input nature rather than the output impact of human resources. Third, both the human capital value and relationships 1588 The International Journal of Human Resource Management Figure 2 GVT and employee perceptions of human capital development (i.e. recognizing the impact of human capital on the drivers of an organization's nancial performance) need to be explored to insure that measures illustrate the value of human capital on business results. Fourth, to recognize the limitations of using historic benchmarking methods to determine the value of human capital, in that human capital has a unique impact on results based upon the rm's strategy and the inuence of the blend of human capital on results. Fifth, assessing the value of human capital should not start with the measures themselves but rather measuring the contribution of the human capital in accomplishing the strategy of the organization. Sixth, metrics of human capital should be placed in an overarching human capital 'architecture' or examining the impact in a systemic manner rather than looking at human capital as an entity in and of itself (Becker and Huselid, 1999). In sum, human capital is no longer a simple task of 'counting' the number of employees and their backgrounds. Rather, human capital has become both a strategic tool of management that can directly inuence dynamic capabilities of the global organization as human capital can play a signicant role in the superior performance of the organization (Becker et al., 2001; Hitt et al., 2001; Huselid, 1995). Social capital viewed in the context of GVT competency Social capital is dened as an asset that is engendered via social relations that can be employed to facilitate action and achieve above-normal rents (Adler and Kwon, 2002; Baker, 1990; Hunt, 2000; Hunt and Morgan, 1995; Leana and Van Buren, 1999). In a global management context, social capital has been primarily conceptualized as a resource reecting the character of social relations within a rm (Hunt, 2000; Kostava and Roth, 2003) that extends beyond rm boundaries providing a basis for inter-rm action. Although the term 'social capital' has received considerable attention in the literature, consensus on its theoretical domain and tenets have yet to be achieved (Leana and Van Buren, 1999). In a review of the social capital literature, Leana and Van Buren (1999) note that the literature presents a variety of perspectives on the levels of analysis and the dimensions of this concept. They further indicate that two productive underlying dimensions are common to existing conceptualizations of social capital: associability and trust. Associability is dened as the willingness and ability of participants to subordinate individual level goals and associated actions to collective goals and actions (Leana and Van Buren, 1999). The inherent subornation of individual goals through participation in the collective however is not a relinquishment of individual goals, but rather an active mechanism Harvey et al.: Global virtual teams 1589 that individuals employ to pursue individual goals (Leana and Van Buren, 1999). Through participation in efforts to meet group objectives, the individual is able to achieve his/her individual goals. This is not to imply a self-serving purpose, but rather through identication with the group the individual works toward the group objective, and residually toward his/her own goals (Leana and Van Buren, 1999). Given the nature of associability, it has both affective (i.e. collectivist feelings) and skill-based components (e.g. ability to co-ordinate activities). A second component of social capital is trust. Trust is evident when one has condence in another's reliability and integrity (Das and Teng, 1998; Leana and Van Buren, 1999; Morgan and Hunt, 1994). It has been asserted that co-operative, long-term relationships are dependent upon the fostering of trust (Das and Teng, 1998; Morgan and Hunt, 1994). Researchers have proposed that trust can be considered in terms of a risk - reward relationship (Mayer, 1995; Williamson, 1993), where predictable actions by one party allow the relationship to operate more effectively. The value of trust is derived from a reduction in risk of opportunistic behaviour on the part of one's exchange partner thus reducing the costs of the relationship (Williamson, 1993). Further, when someone is trusted, others are more willing to commit (Das and Teng, 1998; Leana and Van Buren, 1999; Morgan and Hunt, 1994). Through the development of trust in the relationship, repetitive transaction sequences occur, thereby reducing transaction costs. Trust extends beyond dyadic relations via generalization through afliation and reputation (Leana and Van Buren, 1999). Putnam (1993) argues that trust can reside at the generalized level via the development and adherence to generally accepted norms and behaviours. Thus, an individual or rm that adheres to the generally accepted norms and behaviours embedded within set social relations can be trusted even though a member joining the rm's associations does not have personal knowledge of, or interaction with, the rm. The dimensions of associability and trust are both attributes of the group as well as the individual. Therefore, social capital can be conceptualized as an attribute of a collective, as well as the sum of the individual relations. Leana and Van Buren (1999) argue that acts that enhance individual social capital benet the collective directly and the individual indirectly, thus tying individual level social capital to team and rm level capital. Political capital viewed in the context of GVT competency The concept of political capital relates to the capacity of GVT members to develop political skill during their global assignments. The dimensions of political capital include: (1) reputational capital (i.e. the GVT members that are known in the global network as having the political skill for 'getting things done' expediently); and (2) representative capital (i.e. reecting the constituent support and/or legitimacy the GVT members may be granted for discretionary initiatives) (Lopez, 2002). Political capital is not the same as the 'social grease' attributed to social capital but is a capacity that rests among some GVT members to exhibit leadership in removing co-operative barriers and build political goodwill by creating a shared 'team-rst' mentality. The six leadership behaviours of GVT members that can inuence the formation of political capital are: . social approximation: the degree of interaction synchronicity between the leader and those in the GVT and the organization with whom the leader has developed political capital; . level/type of interaction: access to the leader and the type of interaction (i.e. face-toface, electronic or other) between the leader and GVT members; 1590 The International Journal of Human Resource Management . scope and reach: the breadth of the network of members who perceive the leader as having political capital; . dispersion of knowledge: the knowledge level within the leader's political network; . durability: the leader's 'lasting' or residual capacity of political capital; and . degree of formality: the degree to which the leader's political capital is legitimized in the GVT and in the organization via position or formal authority. Therefore, it is important to recognize these individual behaviours when attempting to formalize development programmes for global leaders and augment political capital at the rm level. Political capital of GVT members, accumulated in global relationships internally as well as externally to the organization, can reduce the level of conict and dysfunctional consequences between the GVT and its interacting parties/entities within the global environment. With an adequate level of political capital, others (i.e. peers, subordinates, and even superiors) in the global network organization will tend to acquiesce to the GVT leader who has demonstrated political skill (i.e. established 'bankable' political capital). Once political capital has been established for the GVT leader, it reects his/her reputation to represent diverse interests within the global organization. However, given the lack of portability of some social capital and social networks across national borders and organizational boundaries, GVT members' political and social ties may be of limited across some settings (Burt, 1992; Brass, 1995; Coleman, 1998). The composite effect of an alien setting and the temporary nature of GVTs' interactions can dramatically reduce the teams' self-efcacy and the ability of the GVT leader to effectively leverage his/her reputation (Bandura, 1982, 1995; Litt, 1988, Wooldridge and Maddox, 1995). Therefore, organizational settings can reduce the political effectiveness of the GVT leader, particularly in the short term (Ogbonna and Harris, 2000; Reichers and Schneider, 1990; Schein, 1996). In many settings, GVTs have to operate at the interface between two organizational levels (i.e. headquarters and regional centres) (Florin, 1997; Gomes-Casseres, 1996; Lorange and Roos, 1992). Thus, the political skill and capital of GVTs need to be attuned to both the organization's levels and their distinct knowledge management initiatives (Parkhe, 1993; Sagrero and Schrader, 1998). The internal cultures at the two levels may sometimes be dramatically different, thus increasing the complexity of the political skill set needed in the GVT. In addition, given the limited time to build social capital at these two levels, GVTs often need to rely on the political skill or capital of their leaders to effectively reach their goals. Otherwise, the absence of trust between the GVT members and other managers in the network of organizations reduces the team's capabilities and the overall effectiveness of the GVT (Aulakh et al., 1997; Inkpen and Currall, 1997; Sarkar et al., 1997). Another issue that must be taken into consideration when assessing/developing the political capital of GVT members is the limitation on the team's decision-making discretion in settings of foreign joint venture organizations. Moreover, when overseas operations are jointly owned by a number of organizations (i.e. strategic alliances) from different countries and, therefore, the limit of a GVT and its leader to exercise control and/or inuence is shaped by the relative ownership positions of the participants (Florin, 1997; Casmir, 1999). Because these confederations of organizations typically have very complex operating cultures, they require specic political agility that can be exhibited by few GVTs and their leaders (Harvey and Lusch, 1995). Therefore, the GVT leader's political skill is critical in a shared ownership position of the various foreign organizations (Hamel, 1991). Harvey et al.: Global virtual teams 1591 Cross-cultural capital viewed in the context of GVT competency Recently, there has been renewed interest in cross-cultural research in organizations with respect to the impact of individual managers and team members on how to effectively manage in a cross-cultural manner (Early and Ang, 2002; Earley and Gibson, 2001; Earley and Mosakowski, 2000; Earley and Singh, 2000). The key concept coming from this stream of research is cultural intelligence of individuals (i.e. individual capability to adapt effectively to new cultural context and/or to be able to effectively bridge issues and activities between two cultures) (Early and Ang, 2002). Cross-cultural intelligence can inuence the cultural capital of GVT members in terms of the teams' ability to implement knowledge initiatives in the global marketplace. Envisioning cross-cultural competence, Earley and Ang (2002) have identied three interrelated facets of cultural intelligence, which are relevant for GVT members: . cognitive dimension: self-awareness, external scanning, inductive reasoning and the resulting cultural strategy developed by the individual; . motivational dimension: self-efcacy, persistence, enhancement of self and/or 'face' and values; and . behavioural dimension: repertoire (i.e. past cross-cultural experiences), practice or level of interaction cross-culturally, habits (i.e. culturally related reading, study, and knowledge development), and mimicry of varying observable cultural habits/nuisances. Applying these facets or dimensions to cross-cultural intelligence, one can identify the key resources needed by GVT members to build cross-cultural capital. This competence is of importance because of the very nature of the GVTs on-going function, that being interfacing and building cultural bridges between the global organization and its internal and external constituents. The accumulated (cross) cultural capital allows the GVT members to gather and interpret information and to enact response to the multitude of cultures in which the team may interact. This cultural capital becomes an important stock when the leaders of the GVT are attempting to have a strategic impact on entities in the foreign country and the team must adapt to the cultural nuisances of the local country (Kayworth and Leidner, 2002; Pauleen, 2003). While cross-cultural capital may have a common foundation, the GVT members must develop and maintain cultural competence in each of the unique environments that the GVT faces during its various assignments. Cross-cultural capital emanates from the composite cultural intelligences of GVT members and their ability to store the capital for future use by the team. The team's ability to discern the typical patterns from the cultural settings in which the GVT may operate and the GVT members' experience in addressing later similar situations can be construed as a quick measure of cultural intelligence in a GVT context. In addition, the team's 'self-efcacy' determines its willingness (i.e. motivation) to effectively engage in new cultures and process the novelty found in each culture (Earley and Ang, 2002). The inherent motivation to succeed and reach the GVT goals provides the impetus for the formation of cross-cultural capital. The repertory breadth and past experience thus serve as the cross-cultural skill of the GVT to adapt to individual cultural settings (Earley and Gibson, 2001; Gibson et al., 2000). In general, cross-cultural capital grows in importance as the global organization becomes more dependent on GVTs to open new frontiers of knowledge management as the web of organization's relationships expands. 1592 The International Journal of Human Resource Management Assessment programme for HR capital architecture of GVTs It becomes imperative that human resource managers recognize that GVTs are a unique organizational conguration and to have them function effectively, various types of capital must be generated and then built over time. The process for developing and monitoring the successful development/maintenance capital in GVTs is outlined in this section (see Figure 3). Establishment of GVT capital assessment process The initial stage in the assessment process for monitoring capital in GVT is to formalize the process and to institutionalize it, so that it becomes a standard operating procedure (SOP). This stage enables management to identify the basic infrastructure, resources and timetable of the assessment process. The infrastructure entails detailing who is going to conduct the process, when the process is going to be evaluated and a full delineation of the precise steps to be taken in each stage of the assessment process. The resources are the managers who will be involved as well as the cost of collecting the information to make a clear assessment of the condition of capital in each GVT. It is important to note that there will/could be a number of GVTs in a company that may have different stocks of capital. The next step is to determine who is going to conduct the assessment (to be discussed in more detail in stage two of the assessment process) and what training/background the assessment group needs. Ideally, the assessment group should match the importance/complexity/diversity of the types of GVTs. The last step in this stage of the assessment process is to have a standardized set of milestones that are Figure 3 Step-by-step GVT capital assessment Harvey et al.: Global virtual teams 1593 agreed upon by the top management of the organization to report the information related to the capital maintained in each GVT. Establishment of monitoring assessment team In this stage, the number of assessment group members is determined and the diversity desired on the assessment group identied. The number of group members is contingent to a degree on the number of GVTs that the company is using in its knowledge management initiatives. The complexity of the assessment process is compounded by the number and diversity of the GVTs. In addition, the functional expertise and experience in the measurement of intangible assets, such as GVT capital, is ultimately a determining factor in the size of the assessment team. Therefore, it is envisioned that the group assessing the GVT capital will have to incorporate at times more ad hoc members to augment professional skills needed in the assessment group. The issue of additional skills needed in the assessment group should be addressed once the demands for the level of expertise and experience are determined. However, it is imperative to have a diverse set of 'auditing' skills represented on the assessment group. The domains of specic expertise would include: accounting, logistics and legal areas. In sum, the skill set and experience should be the driving factors in the selection of the assessment team members. Establishing of effective monitoring metrics for GVT capital Developing an appropriate set of measurements for monitoring GVT capital will require extensive knowledge of the GVT and the assessment of intangible assets. The metrics should be based upon the following principles relative to the capital within each GVT: (1) imitability (i.e. the difculty of competitors to duplicate the capital of an organization's GVT) increases the sustainability of the income stream gained from the capital; (2) durability, the expected resource life of the capital, its length of usefulness to the GVT; (3) appropriability, the ow of value from the capital held in the GVT; (4) substitutability, uniqueness of the capital to sustain value with key global stakeholders; and (5) superiority, relative value of the capital source among other assets of the GVT (Collins and Montgomery, 1995; Harvey and Lusch, 1995). There are two primary dimensions of GVT capital measurement. First is the value assignment aspect, which reects the need to assign value to GVT capitals and their potential impact/benets on the performance of the GVT. Second would be to determine what causes value of the capital and how much value is derived from each of the capitals contained in the GVT. Given these two considerations it is possible to start developing the specic metrics for each type of GVT capital. There appears to be no shortage of metrics to be used to measure knowledge and/or intellectual capital that could be 'converted' to be used in the measurement of GVT capital (Barsky and Marchant, 2000; Bontis et al., 1999; Boudreau, 1991, 1996, 2002; Low and Seisfeld, 1998; Roos and Von Krogh, 1996). Two metrics that appear to be adaptable to measuring the GVT capital stocks are: (1) economics value added (EVA) can provide a fundamental GTV performance measure which is computed by the spread between the return on capital and the cost of capital, and multiplying by the capital outstanding (i.e. the value of the capital the pervious year) at the beginning of the year; and (2) market value added (MVA), the difference between a GTV market value of capital and the capital that was contained in the GVT when operationalized. MVA is the measure of the value that the GVT has created in excess of the tangible resources already committed to the team (Stewart, 1997a, 1997b). If the MVA is positive, it suggests that superior returns on existing GVT capital are being earned (Harvey and Lusch, 1997). 1594 The International Journal of Human Resource Management Developing contingency strategies for protecting GVT capital If not formally attended to by the GVT, the capital stock of the team can be depleted. Therefore, a capital security programme/plan must be instituted to project the intangible core of capital in the GVT. It is easy to ignore the security of this fragile intangible capital because: (1) traditional lack of attention by corporate control/auditing personnel (i.e. lacks GAAP accounting value); (2) historic difculty in establishing monetary value of intangible assets like GVT capital; (3) frequently, a lack of formal monitoring/control mechanism in GVT teams or foreign subsidiaries, for that matter, to account for intangible assets; (4) intangible assets such as GVT capital are not germane to management appraisal and compensation; and (5) when capital is depleted or lost there is no immediate economic impact (i.e. loss of capital impacts the GVT over time due to lack of team effectiveness) (Harvey and Lusch, 1997). There are four elements in developing a security programme to protect capital stocks in GVT. First, identication of the various capital stocks (levels) and their importance to the GVT accomplishing its goals/strategies. Second, the location (i.e. which team members possess the capital that is accumulated into the team level) of the capital in the team. Third, a security posture for the GVT team needs to be developed, that being either proactive or reactive to attacks (or potential attacks) on the capital of the team. Fourth, an assessment is to be performed relative to the previous attempts to protect capital stocks from various threats. The protection of GVT capital will need to be a co-ordinated effort using multiple prevention means. Strategic development of means to build/maintain GVT capital Protection of GVT capital provides the team with a means to account for existing capital but does not address the means to build the various capitals in the GVT. Proactive strategies for developing the stock of GVT will need to be developed. Each of the strategies will need to be fashioned to the particular capital stock and the capabilities of the members of the GVT. Given the constraints of this research effort it is not possible to develop the logic for the building of GVT capital but team members should be made aware of the need for not only monitoring but also building GVT capital. Monitoring and auditing GVT capital over time The nal step in the capital assessment process is to institutionalize the need for monitoring and accounting for the various capitals contained in the GVT. This removes the tendency for management of the GVT to take its capital stocks for granted. In addition, capital is transformed into a team asset and not just a human resource characteristic. This distinction is very important in that managers come and go (i.e. ergo attributed capital to individual managers who be mobile and attributed to the manager) but the GVT must maintain a reservoir of capital within the GVT. Therefore, parallel sources of critical capital must be identied and/or built to maintain the capabilities and competencies of the team as a whole. In addition, the bundling of resources into complexes of related capital should also be undertaken to elevate the capital to a team resource and help improve the performance of the GVT. Conclusion As the global environment becomes more hyper-competitive, many organizations will have to develop teamwork-grounded business models in order to address the new competitive landscape (Bettis and Hitt, 1995). Such performance landscape, replete in Harvey et al.: Global virtual teams 1595 disruptive technological advancements, has lead to the rise of innovation-based competition. The complexity and dynamism of the new economy means organizations need innovative ways to cultivate and manage human and technological resources. In particular, the growing importance of global virtual teamwork illuminates the need for the assessment of the HR capital architecture within the organization to allow the rm to renew and recongure its core competencies within the competitive ux of the global arena. In order to stay innovative and ahead of competition, global organizations must pursue a strategic vision addressing the dynamic and complex issues of global virtual teamwork by tapping those HR capital bases that are vital in maintaining or creating a competitive heterogeneity. Global organizations increasingly pursue the implementation of GVTs as a strategic tool in the hyper-competitive environment, since these teams have the potential to increase the speed and efciency in the creation and transfer of knowledge in various knowledge management initiatives pursued by the headquarters and regional centres of a global organization (Kogut and Zander, 1996). The contribution of a GVT to the relationship between organizational knowledge and its competitive advantage lies in its ability to integrate knowledge in a productive manner (Nahapiet and Ghoshal, 1998). Ultimately, the success of a global organization will be predicated on its ability to develop rich HR capital bases across the network of its GVTs and their members. The design of HR capital architecture is needed to expedite the stock and ow of knowledge as a resource, in a manner that is conducive to relating the effectiveness of to the intellectual capital base of the rm. Such HR capital architecture should enable GVTs to function as knowledge agents allowing the global organization to renew and recongure its dynamic capabilities, while enriching its overall intellectual capital base. In terms of the role of GVTs within the relationship between the HR capital architecture and the intellectual capital of the rm, it is critical to maintain and enhance the heterogeneity of human, social, political and cross-cultural capital components through a continuous assessment and reassessment programme. References Adler, P. and Kwon, S. 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