Since leading a virtual team has its difference in nature compared in leading a traditional team, different kinds of leadership skills and practices are required to be effective in a virtual context. Therefore, the purpose of this paper is to study the leadership challenges concerning virtual teams and to build a theoretical concept that gives recommendations on how leaders can be effective in a virtual context.

Despite the growing relevance of virtual teams, relatively little is known about this new form of leadership. Thus, the study offers an extensive literature review with definitions of leadership and virtual teams followed by a structured analysis of the present knowledge of virtual teams and their leadership. Empirical data for this thesis is collected from qualitative interviews with key informants from two companies, which have extensive experience in leading virtual teams. By comparing theory and collected data, it is identified how a virtual leader can apply effective leadership practices.

The client received from the authors recommendations concerning the best practices applied for a virtual leader. This is based on the importance of the leader to build trust among the virtual team members, providing goal and role clarity at the beginning of a virtual work arrangement and by having clear communication while working virtually. Furthermore, a leader is said to empower virtual team members to make them aware of their own responsibility in a virtual work setting and also motivate and inspire them. The client will, after considering this research, think about ways to create office concepts, which facilitate the work of remote workers.