Closing the Psychological Distance: Effect of Social Interaction on Team Performance

Abstract

Social interaction in workplaces fosters mutual understanding and narrows psychological distances between team members. We model this interdependence in team production with complementary efforts, examining how social interaction improves team performance. Our theoretical framework predicts that social interaction enhances performance by reducing the prosociality gap-the differences in how much teammates care about each other-among team members, with stronger effects in teams with higher effort complementarity and risk aversion. We tested these predictions in a pre-registered experiment with 74 two-person teams performing a collaborative typing task. Treatment teams engaged in a structured pre-task social interaction, while control teams worked individually. Results confirm that social interaction significantly reduced the prosociality gap and improved team performance. We find that the reduction in the prosociality gap mediates the effect of social interaction on performance improvement. Furthermore, emotional perceptiveness---the ability to accurately infer a teammate's feelings-emerged as a particularly strong and positive mediator of the effect of social interaction, facilitating convergence in prosociality between teammates. Moderation analyses demonstrated that these positive effects were stronger in same-gender teams and teams with higher risk aversion. Our findings contribute to the team effectiveness literature by identifying specific psychological mechanisms through which social interaction enhances performance, offering implications for team composition and management practices.

Keywords: team production, social interaction, prosociality, peer effects, emotional perceptiveness, lab experiment

JEL Classification: C72, C92, D91, M54, J24