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About Us (",)
Learning Objectives
What is Organizational Structure?
Key Elements of Organizational Structure
Work Specialization
Chain Of Command
Span Of Control
Centralization and Decentralization
Forms of Organizational Structure
Matrix Organization
Virtual Organization
Organizing Process




Virtual organization requires a different way of perceiving the world by those who wish to participate in it. There are four key characteristics of virtual organization as process. First, virtual organization entails the development of relationships with a broad range of potential partners, each having a particular competency that complements the others. Second, virtual organizing capitalizes on the mobility and responsiveness of telecommunications to overcome problems of distance. Third, timing is a key aspect of relationships, with actors using responsiveness and availability to decide between alternatives. Last, there must be trust between actors separated in space for virtual organization to be effective. This paper describes the perceptual and social requirements of virtual organization and suggests a research plan for explicating the structure, process and content of any system based on its elements. The structures of individual actors’ perceptions and expectations and the social processes that supply the content of their social experience must be addressed if virtual organization and its advantages are to be understood.




The topic of virtual organization brings together theories about the nature of work in the information age, the organization of social behavior, and the role technology plays in the evolution of social structures. Virtual organizations are seen as the emerging standard in business, resulting from technological advances and changing expectations on the part of consumers and collaborators. Authors such as Goldman, Nagel, and Preiss (1995) and Davidow and Malone (1992) argue that virtual corporations are here to stay. With information processing and telecommunications networks continuing to expand, corporations that use these technologies to their full potential will succeed, and in the process raise the standard for competition higher than traditional forms of organization can achieve. The question for organizational researchers is how the process of virtual organization changes perceptions of relationships and interpretations of time and space. This paper seeks to answer this question and provide a direction for research on virtual organization as process.

Virtual corporations are motivated by the economic realities of the information revolution to organize their patterns of relationships around goals or interests that complement those held by other actors regardless of location. Information processing is a value-added activity, which means corporations can profit by making virtual organization possible and profitable for others as well as themselves. Davidow and Malone (1992: 38) provide the example of American Airlines’ SABRE reservation system. SABRE makes money for American by providing more information about its customers to members and by giving customers faster response and more choices. This is a core competency that American can use to enter profitable partnerships with other airlines. In virtual organization, the work needed to meet a given goal is divided between various other entities based on the perceived competencies of the other actors involved. The information processing made possible by computer microprocessors can be a core competency, and the ability to access information from anywhere via computer networks makes many non- proximate others available for partnerships.

Davidow and Malone (1992: 7-8) describe the distinguishing characteristics of a virtual corporation as a focus on change, being customer-driven and managed, and the presence of highly skilled workers working in a collaborative climate. Virtual corporations succeed when they develop relationships with their clients that last three to four product generations and include a broad variety of services related to a product. Goldman et al. (1995: 87) agree with these characteristics and build on them, proposing a structure defined by the alliance of distinct core competencies distributed among discrete entities. To be successful, argue Goldman et al. (1995), each firm must focus on achieving world-class excellence in one area, its core competency (but see Chesbrough and Teece, 1996, for a caveat). Market success follows from opportunistic alliances with other firms to design, manufacture and market a product in a given niche. By building a virtual web (Goldman et al., 1995: 221) of relationships with other corporations, including competitors, suppliers, and clients, a corporation enables itself to efficiently and effectively pull together the resources needed to develop and deliver profitable solutions to client problems. By integrating their complementary core competencies, virtual corporations can reap the benefits of interdependence - reduced overhead, increased profits, greater commitment from members and customers, an increased array of opportunities for future collaborations (Goldman et al., 1995; Davidow and Malone, 1992).

In their books, Goldman et al. (1995) and Davidow and Malone (1992) alternate between the terms virtual corporation and virtual organization, using both to refer to an entity. However, by describing virtual organization as a noun these authors reify the idea of the virtual organization as object at the same time that they define it as a corporate entity nested in a continually shifting pattern of cooperative relationships that swiftly capitalizes on opportunities for new products and services. Instead of reifying the pattern’s participants as the constructs of interest, the focus should be on the processes that make the patterns possible and change them over time. The theoretical focus of this paper, therefore, is on relationships rather than the entities in relationships. The patterns of relationships are not the outcomes of individual characteristics but evidence of the processes by which corporate and individual success is achieved and maintained. To move beyond description to explanation, the focus of research on virtual organization must shift from the static entities called virtual organizations to the fluid process through which positive outcomes are achieved.



Understanding virtual organization as process entails a focus on how relationships are perceived by the individual actors whose communication behaviors constitute them. In effect, virtual organization can only occur if the participants accept a mindset different from the traditional perspective on the formality, proximity, and functions of relationships. There are four key characteristics of virtual organization relevant to communication theory and research. First, virtual organization entails the development of relationships with a broad range of potential partners, each of which has a particular competency that complements one’s own. The phenomena of interest are the fluid patterns of communication and partnership that develop between social entities. Having multiple alternatives allows corporations to quickly assemble the resources and expertise necessary to take advantage of an emerging market. To keep these options open, partnerships are not static, but rather continuously evolve to bring in new information and keep abreast of relevant changes in a turbulent environment. Second, virtual organization capitalizes on the mobility and responsiveness of the telecommunications infrastructure to transcend the obstacles of space. This makes corporate and individual partners and clients from around the globe available for inclusion in the virtual web. Physical proximity is no longer the defining factor in what relationships develop and flourish, because distance is no barrier when everyone can access everyone else wherever they might be.

These elements raise the importance of two factors in relationship success. Time becomes the critical variable in a virtual web. Davidow and Malone (1992: 23-24) describe virtual corporations as time-based, rating responsiveness to clients as important as cost and quality. The same is also true of their collaborative relationships with other corporations: rapid response is required to take advantage of the market. With clients valuing responsiveness and potential partners’ availability in deciding between alternatives, a corporation that is slow to respond to its clients or to opportunities for partnerships will not be able to compete with corporations that are quick to act. This expectation of responsiveness is essential to the success of the participants, and highlights the need for trust between partners and clients separated in space to facilitate the responsiveness of corporations to opportunities. A violation of trust by any party will force the imposition of control mechanisms that make flexible and quick responses impossible (see Handy, 1995), and the exile of the offender from the virtual web. Without trust, corporations will be unable to quickly pull together the necessary resources to take advantage of an emerging market, and clients who do not trust a corporation will simply go elsewhere to satisfy their needs. Thus, participants in a virtual web must be able to trust each other’s competency and responsiveness for virtual organization to succeed.

Virtual organization can be distinguished from hierarchical and network forms of organization by its rejection of status boundaries and the lack of importance it ascribes to proximity. Formal hierarchies may connect distant offices and plants in a flow of information and material resources, but they enforce distinctions between departments as part of a system of top-down command and control (Bush and Frohman, 1991) and rely on the proximity of management and workers within departments and offices to develop the trust necessary for a functional system (Handy, 1995). Network organization differs from formal hierarchies in its emphasis on the informal patterns of communication that bring more and richer information and expertise to bear on problems and opportunities (Bush and Frohman, 1991; Miles and Snow, 1995; Hanssen-Bauer and Snow, 1996). However, network organization does not require the mobility and freedom from place that are defining features of virtual organization. The fundamental distinction is that neither hierarchies nor networks can approach the flexibility of the interdependent relationships across space, time, and formal boundaries that characterize virtual organization because they rely on the physical proximity of their staff to maintain an effective structure. Virtual organization is different because it capitalizes on telecommunications technology. Hardison (1989) distinguishes between a classical use of a new technology, using it to do better what was done before, and an expressive use, which takes advantage of the unique aspects of the new technology to create new structures and processes. Virtual organization occurs when actors use telecommunications technology expressively; under network and hierarchy organization, the use is primarily classical, supplementing proxemic factors. As technology makes it unnecessary for staff members to encounter each other face to face, this freedom is exploited to lower overhead costs, place agents in the field, and improve accessibility to a variety of information resources. Thus, virtual organization involves the development and maintenance of interdependent relationships between (1) physically separated actors (e.g., different offices, different countries), (2) temporally separated actors (e.g., different time zones, different schedules), (3) actors with different but complementary needs (e.g., employees and customers, marketers and engineers), and (4) actors and communication technologies (e.g., voice mail systems, the World-Wide Web, email accounts). Through the processes of virtual organization, the relationships between organizational entities, their representatives and extensions (e.g., Web pages, voice mail banks, offices) are developed and maintained regardless of the location and time schedules of their participants.

The defining characteristics of virtual organization raise two questions that this paper will address. First, the cognitive structures of the individual actors who perceive and enact the relationships must be explicated to identify the processes that transform shared experience into content and content into expectations for action. Second, given these cognitive processes and structures, the specific cues related to timing and trust in the relationship can be investigated and their import across different situations assessed.




The act of perception involves a punctuation of the continuous flow of experience (Weick, 1995). That is, perception does not make an actor aware of everything going on in the current situation, but rather highlights some aspects as relevant and disregards others as irrelevant. The human mind can only handle a certain amount of incoming stimuli, and to do so it must filter the raw data. The filters applied are developed through interaction with the environment, which often includes other actors with their own filters. This suggests a problem: How do actors who share experience but not the same cognitive representations of that experience effectively communicate? While experience can be shared, the retrospective meanings developed by individual actors are not (Weick, 1995). Explaining social content as the result of negotiation between the meanings of individual actors suggests that actors must share some identical meanings in order to be able to communicate at all. This requires the researcher to explain how every possible misperception can be controlled by the actors involved - an impossible task. The solution is to view the content of individual actors’ schema as the outcome of actors’ learning theories and data through social experience. Social structures are not rigid entities but flexible pools of related symbols, what Giddens (1984) calls stocks of knowledge, suggesting tangible resources neatly ordered in a cognitive library of resources. The question is not whether identical meanings can be assumed, but whether the exchange of symbols is seen as serving the discrepancy reduction goals of each participant. Precision and accuracy are helpful but not required: "’Tree’ or ‘stone’ is enough to decide whether to use a saw or a hammer" (quoted in Weick, 1995: 42). As long as understandings are good enough to suggest actions that will result in discrepancy reduction, the interaction sequence will be remembered as effective and the relationships as valuable. The structuration processes of categorization and regionalization are especially relevant for understanding how available relationships are constructed because they focus attention on how actors recognize a set of alternatives as options for discrepancy reduction.

Categorization (Turner, 1988) is the process of recognizing specific patterns of stimuli as requiring a given category of response. Categories are the lens that actors take on the world, lenses that highlight different aspects for each actor. This applies for both organizations and actors; the culture of an organization determine what options its members perceive as available in a given situation (Schein, 1992), just as an individual’s schema encourage some options and obscure others (Fiske and Taylor, 1991). Actors usually focus on the abstract level of program (e.g., negotiating a business plan; Carver and Scheier, 1982) at the same time that they are involved in the component behaviors whose aggregate impact is discrepancy reduction at the program level. When progress in any of these action loops is impaired, the effects reverberate through the hierarchy to the level of attention, forcing the actor to focus his attention on the lower levels in order to resolve the problem. However, much of virtual organization involves perceiving relationships that are usually enacted through mediated channels as available. The problem is that some cues are missing (e.g., frowns and fidgeting indicating discomfort). Using mediated channels for significant communications requires the development of cue substitutes (Walther, 1992) to identify discrepancies. Cue substitutes are simply alternative stimuli that alert the actor to discrepancies using different patterns of data. Walther (1992) provides the examples of emoticons such as :) substituting for actual smiles and acronyms like ROTFL (for rolling on the floor laughing) substituting for guffaws. When contact is made over mediated channels, cue substitutes can be negotiated over time (Walther, 1994). The problem is that these substitutes require all parties to be paying attention and accessible via the selected channels for these cue substitutes to have an effect.

If alternative cues at the same level of control require contact to be made before they can be recognized, the cues that activate categories must be recognized at higher levels of the hierarchy. Obstacles are perceived in calls not returned, delays in responses, and other temporal aspects of interaction. To be a player in a system, actors must make themselves available as well as accessible in new ways that require a reorganization of behavioral patterns across different levels of the hierarchy of control. Under traditional forms of organization, the important indicators of availability were physical: corporate owned buildings, offices and phones assigned to individuals, and appearances in person at various events in the local and professional community. To engage in virtual organization is to reject the concept of possession. Places and objects are no longer owned by specific entities, but are rented or loaned to businesses and people who use them as channels for contact. Voice and electronic mail are stored in computers and allow for the time-shifting of communication. Cellular phones and notebook computers allow people to go where they need to go to work. Rented buildings with generic offices assigned on the basis of need rather than status lower overhead costs by permitting a more efficient use of space. While the information storage is often centralized (e.g., the computer center’s wall of voice mail and email servers), access to it is dispersed throughout an electronic network, whether local (LAN) or global (Internet access). This has consequences both for the members of the organization and for those who wish to contact them in terms of the meaning that is attached to space and the objects within it.

The cue substitutes that activate categories in virtual organization involve different objects than the cues active in other organizational forms that assume proximity. In essence, the new cue substitutes rearrange the meanings attached to common objects and places. This is the domain of regionalization, the evaluation of objects, persons, and the division of space in a physical context (e.g., an office) for their relevance to action (Turner, 1988). Regionalization defines the actor’s interaction space, including (1) the meaning of space, (2) the meaning of objects in space, (3) the meaning of organized space (i.e., regions), and (4) the meaning of interpersonal demography (i.e., patterns of people in a given place). Virtual organization changes the definition of regions and objects within them. The telecommunications technologies that make virtual organization possible improve access to others and facilitate movement by actors. Thus, the location of the media objects becomes as important as the presence and movement of actors in the physical space. The meaning of media objects (e.g., the telephone, computers) in space is increasingly defined by the ways in which they bring distant others into a virtual interaction space without a common physical referent. In some virtual interaction spaces, such as chat rooms, Web page conferences, conference calls on the telephone and email listservers, the interpersonal demography can be similar to meetings where actors can appear and comment freely. The persistent difference is the fact that "lurkers" - media users who observe but do not participate in mediated communication - cannot be perceived as present unless they speak up. Tapping into their ideas and recognizing them as potential resources, partners, or clients requires some empirical pointer - a business card, a Web site, or a signature file on an email sent to a listserv. Lurkers leave few such pointers in the virtual interaction space; the question is less what type of space it is than how far afield actors range within it seeking the elusive pointers. To address the movement of actors and the structures that develop to make them accessible and available at all times, the focus must shift to the expectations that arise for when, where, and how contact is made with other nodes in the system.