Abstract:  Subgroup is the subset that is triggered by faultlines and is formed by the differences among team members in identification and information processing methods. As subgroup exists widely in a team, it has drawn more and more attention gradually because of its positive and negative effects on the working of teams. By examining the positive and negative effects of subgroup on team operations, this paper discusses its moderating factors and proposes a regulatory mechanism for this process. Future researches should do further exploration from more perspectives, such as dynamics of subgroup, team leader`s participation, consideration of intra-subgroup processes, subgroup distance, and social relations.

Key words: subgroup, positive and negative effects, moderating factors, regulatory mechanism