Understanding the concept and structure of virtual organizations
Globalization and the tremendous increase in cross-cultural contacts between individuals in organizations and between cooperating organizations on a global scale, have led to new web-based communication methods and the formation of virtual organizations. Virtual organizations have developed in many shapes and sizes. For example, as a particular organizational design, created from different organizations for more or less temporary purposes in order to accomplish a certain objective. Or as a “capability “of joining core competencies, outsourcing or of meeting production requirements by using alternative satisfiers. It is obvious that virtual organizations are different than the conventional (hierarchical or matrix) organizational structures, but why? What exactly is a virtual organization and how are they structured?
Key characteristics and identifiers
Virtual organizations have six key characteristics:
1. It is a borderless organization, located in Cyberspace (web-based)
2. Geographically spread (multi sites)
3. Interchangeable partners given a similar business culture
4. A combination of complementary resources to accomplish a specific goal
5. Spread power amongst the partners
6. Electronic communication through ICT
Virtual organizations can also be identified in terms of 4 basic management activities that depend on separating requirements from satisfiers:
• Formulation of abstract requirements (e.g., request for information)
• Tracking and analysis of concrete satisfiers (e.g., information services)
• Dynamic assignment of concrete satisfiers to abstract requirements on the basis of explicit criteria and:
• Exploration and analysis of the assignment criteria (associated with the goals and objectives of the organization)
Structured through virtual links
Virtual organizations are structured and connected through virtual links by utilizing IT. They are also linked to a variety of seemingly disparate phenomena, including virtual memory, virtual reality, virtual classrooms, virtual teams and virtual offices. Virtual teams are in this sense “as of teams” that meet into an “as of office”. Virtual teams allow managers to assemble groups of employees to meet transient, unanticipated needs.
Airbus
A good example of a very successful virtual organization is Airbus. Airbus is an Aero-Space Consortium operating on a commercial aircraft market. This organization is characterized by strong cooperation on a large scale, with the objective to maximize market opportunities and gain competitive advantages through shared resources and capabilities.
These large dynamic virtual organizations have the following properties:
• Real from the outside, unreal from the inside
• Own identity, or no own identity
• Semi-stable or temporary cooperation between independent organizations
• Distributed ownership, power and loyalty
At any time, at any place
Virtual organizations can be seen as distributed and independent organizational units that are supported by and structured and connected through virtual links by utilizing information technology. The focus of virtual organizations is on the virtuality, which means “at any time and “at any place”. A conceptual organization is abstract, unseeing and exists within the minds of those who form a particular organization. Virtual organizations are a special case of an organization network, which is structured and managed in such a way that it operates vis-a-vis customers and other stakeholders as an identifiable and complete organization. They can be dynamic and agile, web-based and shared knowledge based. These organizations represent strong cooperation on a large scale with the objective to maximize market opportunities and gain competitive advantage through shared resources and capabilities to offer products and services on a worldwide scale.
Virtual Organizations 