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Looks at new communications technologies, such as videoconferencing systems, which have enabled the creation of “virtual organizations” and “virtual teams”. Investigates the hypotheses that both “social presence” and “media richness” associated with a communication medium used to support geographically‐dispersed software development teams, will have a significant impact on team productivity, perceived interaction quality, and group process satisfaction. Results supported the predicted superiority of the face‐to‐face setting over the videoconferencing setting with regard to team productivity. They also indicated that a communication medium characterized as high in both “media richness” and “social presence” can engender a greater sense of interaction quality. There were no significant differences between the face‐to‐face and videoconferencing settings for group process satisfaction.

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