Firms and institutions of higher education alike emphasize the value of teamwork in increasing organizational performance. In this empirical study, the role of social ties on team performance is examined. The results indicate that there is an inverted-U relationship between average number of friends in a team and team performance, and that this relationship is negatively moderated by level of conflict. Based on the findings and assessment of extant approaches (random, self-formed, assigned), the authors propose a hybrid, two-stage team formation methodology to improve team performance while successfully satisfying relevant formation criteria.