Virtual Organizing as a Strategic Approach to Stay Competitive - A Conceptual Analysis and Case Study

Abstract

Organizations are faced with a great challenge when trying to compete in the complex and unstable business environment of the twenty-first century. One of the potential solutions to this challenge is the new organizational form known as a Virtual Organization (VO). The aim of this chapter is to clarify VO as a phenomenon, and to discuss different degrees of virtuality. A conceptual analysis of the phenomenon is presented, focusing on the characteristics of VO and institutional and functional views of it. This chapter shows that the institutional view fails in many ways, and that the concept of VO should be understood rather as an organizational dimension than as a specific form. This chapter emphasizes the ongoing process nature of virtual organizations, and therefore proposes to use the term ‘virtual organizing’ than ‘virtual organization.’ An empirical study seeks to find out how the key principles of Venkatraman and Henderson’s descriptive VO model have been applied in a target organization. At the same time, the model is also evaluated. The empirical study shows that the model used provides a useful vehicle for analyzing the competitive effect of the target organization.