When to change a fluid team? Intactness and innovative project performance

In innovation-driven environments such as the video games industry, firms depend on their flexibility and ability to innovate. One way to achieve this is to organize the development of products in projects, headed by management teams that are composed fluidly to meet the potentially varying demands across projects. These teams thus consist of completely or partly different members across projects or have remained intact since the previous project. How does the degree of intactness of these fluid teams affect the performance of game development projects?

We argue that the consequences of fluid team intactness can best be understood from a paradox perspective, as these teams benefit from change, yet also require stability. The simultaneous demands for stability and change need to be balanced for each new project. When a game development is completely new rather than a sequel, demands for change should rise, given the increased innovation requirements this poses, dynamically shifting the equilibrium between stability and change. In a sample of 5,370 video game development projects executed in a period of ten years, we show that the relation between management team intactness and performance (sales, expert reviews, and consumer reviews) is inverted-U shaped, and this finding also extends to the intactness of the fluid leadership relation between the managers and their reports in the project. Controlling for the potential endogeneity of releasing a sequel game, results confirm that the inverted U-shaped curve is indeed steeper and its turning point sooner for completely new as compared with sequel game development projects. We discuss the theoretical and practical implications of this research for fluid teams, along with suggestions for future research.