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What is a Virtual Organization - Definition and Characteristics of Virtual Organizations

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Virtual Organizations – Definition and Characteristics

This hub provides definitions of “virtual organization” and “virtual team member” and outlines characteristics of virtual organizaitons as identified by experts in the field. The identified characteristics help form a mental framework for determining the effectiveness of a business venture attempting to function as a virtual organization.

Virtual Organization Defined

Virtual organizations can be defined as groups of geographically and/or organizationally distributed participants who collaborate towards a shared goal using a combination of information and communication technologies to accomplish a task (Bjorn & Ngwenyama, 2009; Workman, 2005; Stoica & Ghilic-Micu, 2009; Moshowitz, 2002; and Nemiro, Beyerlein, Bradley, & Beyerlein, 2008). Harwood (2008) and Hoefling (2008) posit that the ultimate end of effective virtual organizations is the satisfactory accomplishment of the stated-objective or task wherein (a) each member feels they made a significant contribution and (b) that contribution is satisfactorily recognized and appreciated by each of the other members.

Virtual Team Members Defined

First, a member of a virtual organization could be defined as any individual, group of individuals, or formally organized enterprise recruited to serve as a satisfier of an input requirement of the organization (Mowshowitz, 2002). Second, members of virtual organizations are those who reside in geographically dispersed locations i.e. they do not live within reasonable driving distance of each other and are restricted by location from sharing the same physical workspace (Stoica & Ghilic-Micu; Nemiro et al). Often, members of virtual organizations live in different countries and across multiple time zones. Third, members of virtual organizations communicate and coordinate activities through technology media e.g. email and or Internet applications like Skype, Instant Messenger, and GoToMeeting (Stoica & Ghilic; Nemiro et al).

e Leadership

A number of organizational scholars e.g. He (2008); Kissler (2001); Ejiwale (2008); Workman (2005); Harwood (2008); Pulley, Sessa, & Malloy (2002); and Braga (2008) identified e-leadership as an important component variable for effectiveness in virtual organizations. In general, those scholars acknowledged similarities between what constitutes effective leadership in traditional organizations as against virtual organizations. Yet, their observations of virtual organizations revealed some added complexities for leaders due to the lack of proximity and differences in home cultures (Braga; O’Neill, Lewis, & Hambley, 2008; and Kissler, 2001). Amongst others, Harwood (2008) suggested the following value added characteristics and competencies for those chosen to lead virtual organizations including (a) curious learners by nature; (b) relationship focused; (c) experienced and credible in business but not stuck in their ways; (d) emotionally intelligent, showing a mature, even-handed approach in dealing with others; (e) process and outcome focused; (f) able to give positive and constructive feedback; (g) able to teach and coach others to perform their best; (h) adept at giving recognition; and (i) exceptional communicators and listeners (pp. 61-62). Wesner (2008), Bradley (2008) and Freedman (2008) argued effective leadership in virtual organizations must be skilled in cross-cultural relationships and able to communicate and coordinate effectively through proficient use of advancing media technologies. What is more, Braga (2008) posited that leaders of virtual organizations must be accessible and approachable and O’Neill, Lewis, and Hambley contended that leaders of virtual organizations must be able to motivate by providing a compelling vision.

Virtual Workspace

As inherent in the name, virtual organizations are enterprises which are set in the context of a shared network in cyberspace or virtual workspace (Hortensia, 2008). While the individual components of the virtual organization may be situated in physical locations, the work of virtual organizations is generally carried out in the cyber workplace (Hortensia). Thus, Peters and Manz (2008) concluded, “In order for organizations to benefit from virtual collaboration, they first need to adapt their work processes and behaviors to the challenges of working virtually” (p. 106). By nature, the affairs of virtual organizations are conducted over the instruments of media technology invented and advanced in the later quarter of the 20th century and the first decade of the 21st century (Mowshowitz, 2002; Hortensia; ). These media technologies included the inventions and advances of the personal computer, the Internet, email, social media, and telecommunication devices and programs. Accordingly, the proficient use of media technology including the ability to communicate and coordinate activities by way of them has been linked to the effectiveness of virtual organizations (Nemiro et al, 2008; Bradley, 2008; Pulley, Sessa, & Malloy, 2002).

Common Purpose and Vision

The adoption of a common and compelling purpose and vision has been linked to effectiveness of virtual organizations (Harwood, 2008; Hinrichs, Seiling, & Stavros, 2008; O’Neill, Lewis, & Hambley, 2008). Harwood likened setting a common purpose and vision to creating a sense of destiny and posited that “helping people become part of a vision is the essential building block in the design process” (p. 66). Additionally, Hinrichs, Seiling, and Stavros (2008) observed that gaining clarity and commitment to a shared purpose is critical and can create energy, especially when the participants share a purpose that is worth their best thinking and imagination.

Member Selection

Member selection has also been linked to effectiveness in virtual organizations (Orvis & Zaccaro, 2008). In his seminal research project examining eleven business organizations, Collins (2001) found hiring the right people essential to leading fortune 500 organizations to high performance and achievement. Orvis and Zaccaro (2008) argue the same for effectiveness of virtual organizations. They observed that selecting the right people with the right mix of skill sets, attitudes, personality, and values would optimize teamwork effectiveness and group cohesion (p. 255).

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Cross-cultural Sensibilities

Possessing an adequate level of cross-cultural sensibilities is another component variable often linked to effectiveness in virtual organizations (Wesner, 2008; Freedman, 2008). In many cases, virtual organizations are composed of members from different cultures around the world. Accordingly, the various members enter the virtual team with their own sets of culturally defined norms, values, and assumptions. Freedman (2008) identified four culturally-based misconceptions or attitudes that can cause confusion and hinder effective collaboration in virtual organizations including: (a) they are our subordinates or suppliers who need to learn our language and our way of work; we do not need to learn theirs; (b) people are pretty much the same everywhere; (c) I’ve been working with team members from a variety of cultures; it’s not a problem for me; I can work with anybody; and (d) we have been an international company for over 75 years; we know how to work with people of other cultures. Wesner (2008) showed that in order to combat those types of ethnocentric tendencies members of virtual teams must be trained in cross-cultural skills.


Communication is another component variable often connected to effectiveness in virtual organizations (Beyerlein, Nemiro, & Beyerlein, 2008; Francovich, Reina, Reina, & Dilts, 2008; Baan & Maznevski, 2008; Freedman, 2008). Francovich et al. (2008) observed, “Communication is the very fabric of an organization and that communication is the most important element of effective organizational commitment” (p. 168). Similarly, Beyerlein, Nemiro, & Beyerlein (2008) wrote “ownership of shared goals does not happen without intentional and effortful communication” (p. 32). Baan and Maznevski (2008) summarize effective communication as the successful transfer of meaning from a sender to a receiver in a way that the sender intends and posit that effective communication requires active participation by the receiver with questioning to ensure that implications and insights are well understood (Harris, Moran, & Moran, 2004). Ultimately, Baan and Maznevski observed that effective communication results in shared understanding, depth of relationships, and trust which Francovich et al (2008) and Peters and Manz (2008) linked to effective collaboration in virtual organizations. However, Nemiro, Bradley, Beyerlein, and Beyerlein (2008) acknowledge that, due to lack of proximity and face-to-face contact, communication is more of a challenge in virtual organizations and that team members must be more diligent and disciplined about keeping in touch and sharing information (Baan & Maznevski).

Universal Language

The concept of universal language entails the notion of every team member operating from the same set of rules and processes (Harwood, 2008; O’Neill, Lewis, & Hambley, 2008) . As mentioned above, team members selected for virtual organizations are often from different cultural backgrounds and thus come into the team with differing sets of assumptions, expectations, and assigned meanings. Freedman (2008) observed that such assumptions, expectations, and assigned meanings can cause confusion in virtual organizations and hinder effective collaboration. Yet, Harwood (2008) observed that trust, confidence, and outcomes are stronger when all people operate under the same principles and standards which she terms “a common language.” O’Neill, Lewis, & Hambley (2008) showed that adopting a common language can lead to a common team identity and stronger collaboration among members.

Knowledge Sharing

Knowledge sharing has also been linked to effectiveness in virtual organizations (Beyerlein, Nemiro, & Beyerlein, 2008; Obradovich & Smith, 2008). Knowledge sharing is the process by which members of the virtual organization share what they know for the common good of the team. In virtual organizations in particular, creating a team with members from different geographical locations is often precipitated by the need to connect with people with diverse knowledge sets (Beyerlein, Nemiro, & Beyerlein). When members converse together and freely share their knowledge and expertise, such open transference of knowledge can lead to shared mental models, shared understanding, and better decision-making (Obradovich & Smith).

Well-defined Processes

Well-defined processes was also cited in the literature as linked with effectiveness in virtual organizations (Beyerlein, Nemiro, & Beyerlein, 2008; Harwood, 2008; Obradovich & Smith, 2008; Workman, 2005; Peters & Manz, 2008). Biehl (1996) defined work processes as mapped out procedures for disseminating tasks and accomplishing goals and objectives. Harwood (2008) argued that clearly defined work processes helps (a) organize work flows step-by-step to accomplishment and (b) facilitate periodic review of results to identify opportunities for improvement. Workman (2005) observed that members of virtual teams that concentrate on process structures outperform members of teams that concentrate on results.

Shared Understanding

Shared understanding has also been identified in the literature as a component variable of effectiveness in virtual organizations (Peters & Manz, 2008; Baan & Maznevski, 2008; Bjorn & Ngwenyama, 2009). Peters and Manz defined “shared understanding” as “a clear sense of strategic direction for all team members” (p. 107). Furthermore, they posited that shared understanding involves seeing the big picture and “a comprehensive understanding of the team’s capacities and objectives, including knowledge of the expertise each member possesses and how they plan to interact in order to realize the team’s overall strategic goal” (p. 113; Baan & Maznevski).

Depth of Relationships

Depth of relationships refers to the extent members of a virtual organization feel connected to one another (Peters & Manz, 2008; Hinrichs, Seiling, & Stavros, 2008). Building deep relationships among members has been seen as a major obstacle in virtual organizations due to the lack of proximity and or face-to-face contact between team members (Peters & Manz). Moreover, depth of relationships can be hindered by the dynamic nature of virtual organizations i.e. virtual organizations are often characterized by constant change which includes being formed for short durations and then disbanded (Hinrichs et al). The short duration of a virtual organization can be disconcerting to some team members precipitating aloofness and hinder cohesiveness within the organization. Still, Peters and Manz posited that strengthened relationships enable teams to effectively work with each other from afar which can result in better collaboration and conflict resolution.


Trust is another component variable often linked to effectiveness in virtual organizations (Nemiro, Bradley, Beyerlein, & Beyerlein, 2008; Francovich et al., 2008; Peters & Manz, 2008; and Baan & Maznevski, 2008). Peters & Manz describe trust as “a state involving confident positive expectations about another’s motives with respect to one’s self in situations entailing risk and the extent to which a person is willing to act on the basis of the words, actions, and decisions of another” (pp. 106-107). Nemiro et al. argued that trust is more difficult to develop in virtual organizations due to the separation in distance and time which slows the development of a common shared identity. Francovich et al. observed the importance of trust in organizations in general and cited two studies by Watson Wyatt Worldwide (2002) and the University of British Columbia (2005) linking trust to higher return on shareholder value and greater employee job satisfaction. Baan and Maznevski (2008) wrote of heart trust and head trust by which virtual team members genuinely care for one another and fully recognize the competence of their fellow members and conclude that trust is the glue that holds the team together and propels it forward (pp. 351-352).

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deeksha on October 12, 2014:

Nice org.

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