Virtual Corporation

Virtual companies or corporations are networked businesses characterized by the linking of people and business partners via electronic information and communication systems. Increased globalization, coupled with the widespread application of various technologies, has led to shifts in organizational structures and operating methods. These changes in business strategy have given rise to the innovative notion of the virtual organization, while raising some ethical concerns. As exemplified by such companies as eBay and Dell, Inc., this concept is now considered a standard business model.

During the mid-1990s, when dot-com businesses were flourishing, the virtual organization was understood as a business venture that produced a product or provided a service by electronically networking disparate employees and/or organizations. One individual or core team oversaw the company, often working [Page 2184]out of a home or a small office. Usually, there was no single business location or product inventory held by the company. Though the core constituents, workforce, suppliers, manufacturing units, and marketing services that composed the company were geographically dispersed, the company was perceived by customers as a single entity with an actual location. Later, this business approach was expanded and became a business principle promoting the operational and economic value of internal organizational networks and external business partnerships. The application of this principle is best exemplified by the notion of the virtual company or corporation.

Virtual in this case does not mean pseudo or temporary. It refers to a company's intrinsic sociotechnical and dispersed nature; that is, its weaving together of discrete human resources and technology into a unified system, as well as its reliance on the Internet and computer-based systems for information sharing, communication, and interactive networking. Vital work relationships and business partnerships form and dissolve as needed, enabling work activities to be accomplished regardless of where employees reside and businesses are located.

Many medium to large businesses function in a global arena, drawing on a worldwide workforce. Such companies are dispersed organizations neither confined by traditional organizational boundaries nor limited by time and distance. Though usually having a central or home office location, a core management team, and fulltime employees, they partner with external constituents to provide functions and services that once were part of a company's internal operations. In essence, they are virtual corporations, enterprises that are a structured system of business components operating in different locations characterized by a web of in-house work relationships and contracted partnerships with external businesses. Many employees are teleworkers because they are not confined to doing work on-site or collaborating with coworkers who reside nearby. Teams are often virtual, being composed of globally dispersed members who collaborate and are managed via technology. The organization is understood as the sum total of all the networked components—internal and external.

There are different types of virtual corporations. Some are consortiums of businesses where each constituent contributes equal resources, practical knowledge, professional expertise, and so on, while others are an e-marketplace where several companies collaborate in promoting and distributing various goods or services. Others consist of a core company strategically aligned with satellite organizations. Still others are a group of companies that form a single, coordinated value or supply chain that services customers. Central to each of these corporations is the electronic networking of business units, work teams, production components, suppliers, service providers, logistics companies, customer service staff, and so on, that are dispersed nationally or worldwide.

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