Virtual Organization

Conceptual Overview

The idea of the VO is still relatively young in organizational studies. The term was initially introduced in the English-language literature in 1993, and it appeared for the first time in German scholarly literature in 1995. The concept itself has subsequently garnered enormous interest and relevance, and it is especially associated with increasing globalization, today's highly dynamic environment, and the hype of ICT that began in the late 1990s. VOs are normally classified as a form of network organization.

From a technical perspective, VOs can be seen as project-oriented partnerships, although they are often spontaneous and lack one of the main characteristics of traditional projects, which are usually planned ahead with defined starting and ending dates. In addition, many VOs specialize in the development of customized products or services, so that their life span is also defined by a function of project duration and product life cycle.

As Abbe Mowshowitz, one of the pioneers of the VO form, pointed out as early as 1994, ICT is the vital component of a VO's existence and the key contributor to virtuality. ICT enables swift formation of VOs. It becomes easier to find a potential partner globally, for example, if one uses Internet platforms, online services, or online forums or interest groups. Communication, especially during the formation stage, is typically via e-mail and mobile phones. Moreover, e-mail and the use of personal digital assistants (PDAs) allow VO members to cross time barriers, while integration of information facilitates fast and accurate information exchange.

Another facilitator of VOs is associated with the less formal and bureaucratic environment in which they exist. For example, legal regulations, financial issues, and personnel issues usually play only a minor role in VO start-ups, facilitating their swift formation. For this reason, VOs can react with greater agility than traditional organizational forms to changes in the environment. Of course, government regulators are slowly developing legal frameworks (e.g., with respect to Internet trade), but there is still no common regulation on the formation or fiscal issues in regard to these types of collaboration.

A necessary precondition, both for the members of a VO and for its customers, is that the VO must appear to be as a single organization unit. Thus, in order to create a mission identity, the members agree upon a common name, logo, and/or design for the VO, the product, or the service. To the customer, however, product identity is the central issue rather than the organization design of the producer. In this respect, the focus of the VO's members will be the swift creation of a brand identity. This is much easier and faster to establish than an organizational identity with a strong organizational culture, and it will then serve as an alternative coordination mechanism amongst the members or between the members and customers.

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