Researchers have been challenged to specify the processes that quality improvement (QI) practices could be expected to generate and to explain how they might contribute to organizational effectiveness. This research article meets that challenge through a study of 97 teams in the health care field. The authors developed a ‘Quality Improvement Practices Index’ and showed that QI practices could be differentiated from traditional team-level variables, and that such practices affect both directly and indirectly (through team-level variables) team effectiveness. Two models were tested using structural equation modelling. It was found that the perceptions of the impact of QI practices on team effectiveness varied depending on who was assessing the team's performance—members of the team or managers who were external to the team but responsible for the team's performance. The authors discuss the implications of these results both for researchers and practitioners. Copyright © 2002 John Wiley & Sons, Ltd.