Virtual Corporations

Virtual Corporations

Sixto Jesús Arjonilla-Domínguez, José Aurelio Medina-Garrido
DOI: 10.4018/978-1-60566-026-4.ch637
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At the end of the 20th century, many authors tried to predict what new structures companies would be likely to adopt in the 21st century. Now, in the 21st century a clear tendency is emerging: the virtual organization (Agrawal & Hurriyet, 2004; Alsop, 2003; Bekkers, 2003; Camarinha-Matos & Afsarmanesh, 2005; Heneman & Greenberger, 2002; Lee, Cheung, Lau, & Choy, 2003; Talukder, 2003; Vakola & Wilson, 2004). This type of organization offers the most promising response to an increasingly complex business reality. In this respect, current organization theory is beginning to change its focus to new, flexible, and virtual organizational forms. This article is organized as follows: The background section defines different concepts of virtual organization. The first model equates the virtual corporation to a temporary network of firms that quickly comes together to exploit temporary market opportunities. The second model focuses on the manufacture of virtual products by means of stable and trusting relationships with suppliers and customers. The third model of virtual corporation tries to turn the fixed workforce costs into variable costs. The third section points out the shared characteristics of this type of organization and the role of the manufacturing function, information and information technology, the network structure, and a new type of worker. The final sections discuss future trends and our conclusions.
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Characteristics Of Virtual Corporations

As we mentioned in the previous section, there are three different perspectives of the concept of virtual corporation. Among the characteristics shared by these three models of virtual corporation, we would stress: excellence, technology, trust, opportunism, and absence of borders:

Key Terms in this Chapter

Virtual Product: A product that adapts to the customer’s changing needs.

Teleworking: Professional activity that takes place in a firm and that is independent of the firm’s physical location. The person who does this work at a distance—the teleworker—keeps in contact with the firm using information technology.

Information Component of Products: All that the buyer needs to know to obtain and use the product, and hence achieve the desired result (information about product characteristics, instructions for use, and maintenance).

Virtual Corporation that Manufactures Virtual Products: Stable and trusting relationships with suppliers and customers to manufacture products that adapt to each customer’s changing needs.

Strategic Network: Agreements by which firms establish a web of close, stable relationships to provide products and services in a coordinated and flexible way.

Variable Cost Virtual Corporation: These firms turn fixed personnel costs into variable costs. They make use of freelance teleworkers, who can be called in or sent home at the employer’s convenience, and outsourcing ( Coates, 2005 ).

Virtual Corporation as Temporary Network: Set of firms that come together quickly to exploit temporary opportunities appearing in the market, using each firm’s best resources and capabilities.

Lean Manufacturing: “A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise” (APICS Dictionary).

Variable Geometry Structure: Dynamic network of firms whose main components can be assembled and reassembled again and again to adapt to the complex and changing environmental conditions.

Knowledge-Based Economy: An economy characterized by the recognition of knowledge as a source of competitiveness; the increasing importance of science, research, technology, and innovation in knowledge creation; and the use of computers and the Internet to generate, share, and apply knowledge.

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