Chapter 1: The Virtual Organization: Definition, Description, and Identification

The term, virtual organization, has made its way into the lexicon. Although the term has been used differently by various individuals, most appear to agree that it describes the new relationships among organizations and individuals and is enabled by technology and driven by the internationalization of business. In this chapter, we attempt to identify the essential characteristics of virtual organizations which include a focus on flexibility, partnerships, projects, and core business activities. To understand virtual organizations, we also provide an exemplar and discuss the thought process that led to its implementation and the challenges with which it has had to deal. Finally, because virtual organizations necessarily involve individuals working across traditional organizational boundaries, we explore the importance of developing a shared social identity among the participants of a virtual organization and speculate on the ways in which leaders might enhance this identity.