This article puts forward a thesis on the effectiveness of virtual organizations for profit, along with a preliminary test and discussion. In all likelihood, effectiveness is strongly influenced by ethical features stemming from universal values (see Damon, 2004; Küng, 2002; Seligman 2004). It is widely believed that the main problem in virtual organizations concerning ethics is reliability and its psychological equivalent—trust, both within the organization and among its electorate.
Key Terms in this Chapter
Corporate Cultedness: The way in which members of a given organization think about the organization and about their membership in the organization. This way is described, for the purpose of management, with the tools borrowed from studies on religious groups (Arnott, 2000).
Virtual Organization: Virtual organization has not been given one definition that would suit everybody. One can say that it was born in the wake of virtual reality. Virtuality is described by the nature of ownership and not by existing physical features. That is why we talk about virtual organization, virtual services, virtual travel, and virtual actions. From that perspective, virtual organization is an organization, which is formed voluntarily, and its members enter into diverse relations to achieve a common goal. The duration of the relation is set by each member of the organization. A decision to liquidate the organization may be taken by the member who as the first decides that it is no longer beneficial and quits. Virtual organization operates in the so-called cyberspace and its existence rests on computer network (Kisielnicki 2002, 2003).
Virtual Organizations Electorate: The general term for varied groups (e.g., suppliers, potential employees, bank employees, investors, state administration employees, and business students), which are or potentially could be involved in e-business.
Reliability: The ability of a system or component to perform its required functions under stated conditions for a specified period of time.
Trust: A complex belief and a relatively stable feeling presuming honesty and reliability of interactions with a partner--a person or an institution. According to various authors, trust involves many components such as a feeling for security, reliability, personal relationship, and others (see e.g., Clases et al., 2003). Grabner-Kraeuter (2002) sees trust as a mechanism to reduce the complexity of human conduct in situations where people have to cope with uncertainty. It bears important functions for the consumer- it reduces information complexity and lowers the perceived risk of transaction.
Ethical Issues in Business: On the basis of studies run by Küng (2002), Seligman (2004), and Damon (2004) one can define these issues as the way in which multicultural, universal human moral rules influence the formation of business organization together with its effectiveness, and how the rules are perceived by organization founders and their clients.
Effectiveness: Effective management is the one which gives profit to owners and good jobs to employees. The relation between expenditure and result in this context is called effectiveness.