This paper reports on observations from teaching an undergraduate information-based organization (IBO) course and builds on past research to explain the findings in student issues, achievement motivation, and small-group effectiveness in information management teaching. The paper has three purposes: (1) to describe the development of a new course dealing with the integration of managerial and organizational behavior (OB) knowledge and information management (IM) knowledge; (2) to demonstrate the role and usefulness of groupwork in undergraduate teaching and its implications on motivation and learning; and (3) to discuss four stages of student motivation and intellectual development observed during the course. Two large sections of an undergraduate core course in information-based organizations (IBOs) were taught with a teaching approach based on small group interactions (i.e., using in-class experiential exercises) and involving self-directed learning. The course had two goals: to introduce the students to management and OB principles, and to help them understand the role of IM, as well as information technology's (IT) impact on organizational structure, culture, change, and development. Findings show that collaborative environments in the classroom induce much higher degrees of learning than environments based on the traditional teacher-dependent or lecture-based models. Furthermore, groupwork and role taking can both increase motivation and improve learning, enhance intellectual development and the confidence of the students, as well as increase the excitement and rejuvenation of the instructor. A chart outlines small group activities and their respective academic impacts, and a figure illustrates the stages of student intellectual development in the IBO course. (Contains 13 references.) (MAS)