The software development team is a key factor in software projects, however, achieving and maintaining positive team dynamics in software development project especially when the software companies have fewer resources in term of people, money and time is a remarkable challenge. This paper explores the dynamics of software development teams (structure, process, communication, learning and sharing) and its impact on Software Process Improvement (SPI) in very small software organization, in order to understand the impact between these two variables. We undertook a series of interviews and focus groups with very small software companies and our results show that very small companies have a high level of team dynamics although their SPI initiatives are conducted on a small scale and in an informal and indirect manner. The results also indicated that this situation occurs due to the working and social relationship, willingness to share, having a good interpersonal skill and work closely each others. © Springer-Verlag Berlin Heidelberg 2011.