Supervisors who belittle and ridicule workers not only negatively affect those workers' attitudes and behaviours but also cause team members to act in a similar hostile manner toward one another, it adds.
"That is the most disturbing finding because it is not just about individual victims now, it is about creating a context where everybody suffers, regardless of whether you were individually abused or not," explained Crystal Farh, assistant professor of management from Michigan State University.
For the study, Farh and Zhijun Chen from University of Western Australia studied 51 teams of employees from 10 firms in China.
Average team size was about six workers and the teams performed a variety of functions including customer service, technical support and research and development.
The study looked at non-physical abuse such as verbal mistreatment and demeaning emails.
Employees who directly experienced such abuse felt devalued and contributed less to the team.
At the same time, the entire team "descended into conflicts", Farh said, which also reduced worker contributions.
"Teams characterised by relationship conflict are hostile toward other members, mistreat them, speak to them rudely and experience negative emotions toward them," researchers noted.
The study was replicated in the US where nearly 300 people participated.
It found that the toxic effect of non-physical abuse by a supervisor is much broader than believed.
"The efforts should be made to fix the team's interpersonal relationships by re-establishing trust and harmony," researchers concluded in a paper published online in the Journal of Applied Psychology.