Software firms are increasingly distributing their software development effort across multiple locations. In this paper we present the results of a two year field study that investigated the effects of dispersion on the productivity and quality of distributed software development. We first develop a model of distributed software development. We then use the model, along with our empirically observed data, to understand the consequences of dispersion on software project performance. Our analysis reveals that, even in high process maturity environments, a) dispersion significantly reduces development productivity and has effects on conformance quality, and b) these negative effects of dispersion can be significantly mitigated through deployment of structured software engineering processes. Categories and Subject Descriptors D.2.9 [Management]: productivity, programming teams, software process models, software quality assurance General Terms Economics, Management Keywords Globally distri...