Contemporary businesses are rapidly embracing virtual collaboration as a flexible, cheaper, and more efficient method for conducting group work. Past research has shown, however, that virtual groups operate quite differently than face‐to‐face groups. In this study, Social Impact Theory provides a framework to investigate whether virtual collaboration heightens social loafing—the tendency for individuals to contribute less than full effort to a group. The theory predicts that member distance, inherent in virtual collaboration, increases the propensity of group members to loaf, and decreases group performance. Two hundred seventy‐nine participants assigned to face‐to‐face or virtual groups completed a business resources allocation task. Results suggest that virtual collaboration negatively affects group performance and that social loafing behavior may partially explain this result. The findings imply that organizations should carefully consider whether virtual collaboration can be seamlessly substituted for face‐to‐face group interaction.

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