This paper explores the effects of virtual development on product quality, from the viewpoint of ‘conformance to specifications’. Virtual Development refers to the development of products by teams distributed across space, time, and organization boundaries (hence virtual teams). Specifically, causes of defect injection and non- or late-detection are explored. Because of the practical difficulties of obtaining hard project-specific defect data, an approach was taken that relied upon accumulated expert knowledge. The accumulated expert knowledge based approach was found to be a practical alternative to an in-depth defect causal analysis on a per-project basis. Defect injection causes are concentrated in the Requirements Specification phases. Thus defect dispersion is likely to increase, as requirements specifications are input for derived requirements specifications in multiple, related sub-projects. Similarly, a concentration of causes for the non- or late-detection of defects was found in the Integration Test phases. Virtual development increases the likelihood of defects in the end product because of the increased likelihood of defect dispersion, because of new virtual development related defect causes, and because causes already existing in co-located development are more likely to occur. The findings are important for virtual development environments and (1) allow further research focusing on a framework for lowering residual defects, and (2) give insights that can be used immediately by practitioners to devise strategies for lowering residual defects.