According to Hatim Tyabji, retired CEO of VeriFone, "A virtual organization is a company that operates continuously through traditional barriers of time and distance. The entire company communicates around the clock via electronic mail and other information systems and tools. Managers converse via email, or by the transmittal of internal documents or by the company wide combined usage of a single informational database."
One can also view a virtual organization as a network of independent organizations linked together by information systems and information technology to exploit market opportunities by sharing skills, costs, and market access. Some virtual organizations operate on a project-only, temporary basis. Many so-called virtual organizations operate as permanent companies.
According to Vine (1995), "a virtual organization uses technology to create new arrangements among employees, suppliers, customers, and others to quickly gain new opportunities with greater efficiency and lower cost".
A Simple Example of a "Virtual Organization"
A small consulting firm might use the Internet to faciliate collaboration by its employees who are professionals working at home offices and at client sites. Even the owner of the consulting firm could work in a home office and communicate and collaborate with the other members of the firm.
Employees could perform their work and send Email memos and reports to the owner, who in turn would supervise the operation and meet with the other members face-to-face, at a weekly breakfast meeting or as needed. Team members might subscribe to a listserv mailing list or another information resource to obtain advice or even locate specialists for project work. This strategic use of the Internet reduces overhead and commuting time while increasing flexibility, speed, and overall effectiveness.