ICT Adoption by Virtual Organizations in the Developing Countries: A Case of SME Clusters in Pakistan

ICT Adoption by Virtual Organizations in the Developing Countries: A Case of SME Clusters in Pakistan

Muhammad Yasir (Hazara University, Pakistan), Abdul Majid (Hazara University, Pakistan) and Naila Tabassum (University of Peshawar, Pakistan)
DOI: 10.4018/978-1-4666-9814-7.ch029
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This chapter empirically explores ICT adoption by virtual organizations in developing countries, taking the case of small and medium enterprise clusters in Pakistan. Virtual organizations consist of internally independent parties linked by ICTs to collaborate for the accomplishment of common objectives. Effective communication is a key to develop social relationships, ultimately leading to the improvement of trust and collaboration among parties in a virtual organization. ICT is considered as a vital element for communication, collaboration and trust building in virtual organizations. However, this research explains that ICT adoption by virtual organizations in the developing countries would be different mainly due to the lack of advanced ICTs, strong inclination of organizations toward face-to-face communication, strength of social system, and the weakness of the legal system in these societies.
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With the advancements in globalization and ICTs, new organizational structures based on flexibility, efficiency and market mechanisms have emerged (Hamel & Prahalad, 1994; Hagel & Singer, 1999). Virtual organization is considered as the most flexible among these structures, which is based on temporary relationship of parties to exploit the emerging market opportunities (Hughes, O’Brien, Randall, Rouncefield & Tolmie, 2001; Lee, Eom, Kim & Katerattanakul, 2007; Travica, 1997). In his definition of virtual organization, Travica (1997) emphasizes upon geographical dispersion of parties and the importance of electronic communication to run the production processes. Malhotra, Majchrzak, and Rosen (2007) and Webster and Wong (2008) also present it as an organization with geographically distributed members, working together through electronic means of communication and information sharing. Whereas, Wang (2000) presents mutual objectives of participant organizations, ICT infrastructure, and dynamic relationships built on various standards and rules as distinguishing characteristics of virtual organization. A relatively broader definition of virtual organization is given by Lipnack and Stamps (1997) who define it as “groups of people interacting through interdependent tasks guided by common purpose that work across space, time, and organizational boundaries with links strengthened by webs of communication technologies” (p. 7).

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