A virtual organization is a temporary collection of geographically dispersed individuals, groups, organizational units, or entire organizations that depend on electronic linking in order to complete the production process (working definition). Bob Travica, 1997. The Design of the Virtual Organization: A Research Model in Gupta, Jatinder N.D., Association for Information Systems Proceedings of the Americas Conference on Information Systems, August 15–17, 1997, Indianapolis, IN, 1997, pp. 417-19 Businesses come together to share skills or core competencies and resources in order to better respond to business opportunities, and whose cooperation is supported by computer networks.JANUŠKA, M. Communication as a key factor in Virtual Enterprise paradigm support. In Innovation and Knowledge Management: A Global Competitive Advantage. Kuala Lumpur: International Business Information Management Association (IBIMA), 2011. s. 1-9. JANUŠKA, M., KURKIN, O., MILLER, A. Communication Environment for Small and Medium Enterprises. Ibima Business Review, 2011, s. 1-8. JANUŠKA, M., CHODŮR, M. Virtual Enterprise Network. ISSE 2009: 32nd International Spring Seminar on Electronics Technology: Hetero System Integration, the path to New Solutions in the Modern Electronics, Brno, 2009., JANUŠKA, M., PÁLKA, P., ŠŮLOVÁ, D., CHODŮR, M. Value chain of virtual enterprise - Possible modern management concepts and value drivers identification. In Annals of DAAAM for 2009 and 20th International DAAAM Symposium "Intelligent Manufacturing and Automation: Focus on Theory, Practice and Education". Vienna: Danube Adria Association for Automation and Manufacturing, DAAAM, 2009. s. 469-470. , Handy, C., “A Glimpse of the Invisible Organization,” Director, October 1994, p. 101. It is a manifestation of distributed collaborative networks. A virtual enterprise is a particular case of virtual organization. Virtual organizations do not represent a firm’s attribute but can be considered as a different organizational form and carries out the objectives of cyber diplomacy.
Definition The term "virtual organization", which emerged in reference to the phrase "virtual reality" lacks a widely-accepted fixed definition., Afsarmanes, H. and Camarinha, M., 2004. Processes and Foundations for virtual organizations. USA: Kluwer Academic Publisher The term virtual organization implies the novel and innovative relationships between organizations and individuals. Technology and globalization both support this particular type of organization., Greenberg, D. and Heneman, R., 2002. Human Resource Management in Virtual Organizations. USA: Information Age Publishing
Virtual can be defined as "not physically existing as such but made by software to appear to do so", Oxford University Press, 2014. Oxford Dictionary [online]. Accessible at: http://www.oxforddictionaries.com [Accessed 14 October 2014] in other words "unreal but looking real". This definition precisely outlines the leading principle of this unconventional organization, which holds the form of a real (conventional) corporation from the outside but does not actually exist physically and implicates an entirely digital process relying on independents web associates. Burn, J., Barnett, M., Marshall, P., 2002. e-Business strategies for Virtual Organizations. Oxford: Taylor & Francis Ltd Thus, virtual organizations are centred on technology and position physical presence in the background. Virtual organizations possess limited physical resources as value is added through (mobile) knowledge rather than (immovable) equipment.The Economist, 2009. The virtual organisation. [online] Accessible at: <https://www.economist.com/news/2009/11/23/the-virtual-organisation> [Accessed 13 October 2014]
Virtual organizations necessitate associations, federations, relations, agreements and alliance relationships as they essentially are partnership webs of disseminated organizational entities or self-governing corporations.
In the USA groups of people can assemble online and enter into an agreement to work together toward a for-profit goal, with or without having to formally incorporate or form a traditional company. A virtual corporation (S corporation or LLC) may be required to maintain a registered agent with a physical address but it can be started, operated and terminated without any of the principals ever being in each other's physical presence. Global Healthcare Marketing and Communications, LLC (Global HMC) is an example of a virtual corporation operating worldwide sans bricks or mortar. The company provides medical education services to major pharmaceutical companies and the business model differs significantly from traditional medical education agencies with a physical presence.Global Healthcare Marketing & CommunicationsA haven for virtual companies, Inc.com, July 2008
Apparition and evolution The emergence of outsourcing in the 80s unquestionably played a significant role as its aim is to eradicate unproductive internal services and transfers the difficulty outside of the organization. Afsarmanesh, H., Camarinha-Matos, L. and Ollus, M., 2005. Virtual Organizations: Systems and Practises. Boston: Springer Science + Business Media. Outsourcing necessarily implies partnerships as companies resort to other establishments. Thus, this method highlighted the necessity of alliances and networking in a business and provoked a great interest for new disciplines. Indeed, this process has dramatically changed the way organizations consider partners and has raised their awareness concerning the benefits smart alliances can offer. Though, until the early 1980s, this extremely bureaucratic organization arrangement (involving challenging, complex and slower decision-making) was considered adequate to manage a vast number of employees. Thomas, G., n.d. Virtual Organizations [online] Accessible at: <http://www.referenceforbusiness.com/management/Tr-Z/Virtual-Organizations.html> [Accessed 14 October]
The term was first utilized in the early 1990s as demonstrate the work of Jan Hopland, Roger N. Nagel, William H. Davidow and Malone. BusinessWeek Archives, 1993. The Futurists Who Fathered The Ideas. [online] Available at: <http://www.businessweek.com/stories/1993-02-07/the-futurists-who-fathered-the-ideas> [Accessed 15 October 2014] The table below allows us to understand more specifically their faintly distinctive theories:
+ Virtual organizations' views Jan Hopland Roger N. Nagel William H. Davidow and Malone Position Digital Equipment Corp. executive Management expert Authors of The Virtual Corporation Virtual organization’s depiction A company that knows how to utilise partnerships both inside and outside its boundaries in order to mobilise more assets than it presently has on its own Take advantage of market openings thanks to technology which allow enterprises to form temporary partnerships A broad and catch-all term comprising numerous management ideas and trendy terms
As mentioned before, there is not yet a universal definition of the term virtual organization. Even though this concept started to evolve a long time ago it is still progressing nowadays. We can observe below the innovative virtual organization's model focusing on quickly and efficiently creating first-class products (using each partner core competence).
Projects Virtual organisations have become increasingly common in the area of research and development, with often far-flung organizations forming alliances that amount to a "Virtual Research Laboratory."Russell, M.G., “The ‘Virtual Laboratory’: Alliances for Technology Transfer,” Proc. Twenty-Seventh Annual Hawaii International Conference on System Sciences, 1994, pp. 478–482.Kobrin, S.J., J.T. Battenberg, P. Hewitt, P.J. Jennings, J. Joerres, S. Kumar, F. Mer, “Worldsourcing’s Next Frontier: R&D,” World Economic Forum Annual Meeting, Davos, Switzerland, 2004. Vassiliou (2007)Vassiliou, Marius (2007), “The Virtual Research Laboratory,” Proc. 2007 IEEE Aerospace Conference. outlined a broad continuum of possible virtual laboratory relationships, ranging from relatively simple outsourcing by a central organization to tightly knit consortia of collaborating entities.
Several European Union projects in the Framework Programmes for Research and Technological Development focused on virtual enterprises:
Business Integrator Dynamic Support Agents for Virtual Enterprise (BIDSAVER) from January 2000 through June 2002 Working group on Advanced Legal Issues in Virtual Enterprise (ALIVE) from January 2000 through December 2002 Legal issues for the advancement of information society technologies (LEGAL-IST) from April 2004 through March 2007 European collaborative networked organizations leadership initiative (ECOLEAD) from April 2004 through March 2008 Secure Process-oriented Integrative Service Infrastructure for Networked Enterprises (SPIKE) from January 2008 through December 2010 Glocal enterprise network focusing on customer-centric collaboration (GloNet) from September 2011 through August 2014 Business Innovation and Virtual Enterprise Environment (BIVEE) from September 2011 through August 2014 Some virtual businesses operate solely in a virtual world. Environments such as Second Life have enough economical activity to be viable for commerce and one can make a living from sales of virtual property, products and services to virtual customers in these virtual worlds.Tapscott, Don., & Williams, D. Anthony. (2006). Wikinomics. London England: Penguin Group.
Another example of virtual organisation is found in the United States Army Research Laboratory's Federated Laboratories, or "Fedlabs." These began in 1996, and represented close partnerships between ARL and several industrial and academic organizations, as well as various non-profit entities. The first three FedLabs were in Advanced Displays, Advanced Sensors, and Telecommunications. Each FedLab was a large consortium, with both an overall industrial leader and an ARL leader. The cooperative agreements forming the FedLabs were somewhat unusual in that the ARL was not a mere funder of research, but an active consortium participant.Brown, Edward (1998). Reinventing Government Research and Development: A Status Report on Management Initiatives and Reinvention Efforts at the Army Research Laboratory. Report ARL-SR-57.Vassiliou, Marius (2007), “The Virtual Research Laboratory,” Proc. 2007 IEEE Aerospace Conference.
An overview of related projects (up to 2005) can be found in a book by Camarinha-Matos et al. (2005).L.M. Camarinha-Matos, H. Afsarmanesh, M. Ollus, Editors (2005). Virtual Organizations: Systems and Practices. Springer
Communities Since 1999 the International Federation for Information Processing (IFIP) and Society of Collaborative Networks (SOCOLNET) sponsored an annual conference called the Working Conference on Virtual Enterprises (PRO-VE).