ETHICOMP 2002 - Accepted Papers

Socio-cultural implications of virtual organizing

Janusz Wielki (Poland)

Rapid changes have taken place in companies' business environment at the turn of the century. Lowering differentiation of products, splintering mass markets, lowering effectiveness of mass media, shortening product life cycle, rising clients' expectations, changes in their behavior patterns and attitudes, diminishing level of their loyalty and increasing competition accompanied by its rapid globalization are the most important factors.

Operating in this highly unpredictable and quickly changing business environment, where all of the competitors possess comparable professional competencies, puts pressure on companies to diminish continuously overall costs, increase effectiveness of all operations, achieve far greater flexibility as ever before as well as be able to faster response to customers' expectations. In this situation enterprises commonly reach for information and communication technology, as a means which allows them to react almost instantaneously to changes in their business and become a "real-time enterprise". Basing on ICT utilization, they try to implement new business models and establish new organizational forms.

Such a new business model, claimed by Venkatraman and Henderson as "twenty-first century business model", is virtual organization. Although concept of virtual organizing, which is a response of contemporary enterprises to requirements of the marketplace, has been commonly discussed in recent years, not all aspects were given the same attention. The most frequently mentioned issues comprise: role of enabling technologies, stages of virtualization, strengths and weaknesses of virtual organizations, business network strategy, coordination aspects, communication across virtual teams or efficiency of VOs.

It seems that element which is very rarely considered, are socio-cultural implications of employees' work in new business models based on ITC utilization, which virtual organization is the best known example. In fact it is very important and disregarded aspect of virtual organizing approach and attention of this the paper is focused on this issue.

In the first part of the paper business environment of contemporary companies operating in business-to-business segment, has been characterized and the most important trends, which can be observed there have been presented and discussed. Particular attention has been paid to the role of information and communication technology and its impact on enterprises' functioning, their business processes, relations with business partners as well as with customers.

Second part of this article is focused on virtual organizing concept. It begins with defining virtualness as organization's strategic characteristic and next various approaches to virtual organization concept are presented and discussed. Particular heed has been paid to Internet-based virtual organization. Also forms and types of VOs are characterized in this part of the paper. Three virtual organizing vectors are briefly discussed as well.

The following part of the paper concentrates on human aspects of virtual organizing. Since implementation of virtual organization concept with ICT placed in the center requires radical rethinking and redesigning numerous business process, in consequence many social and cultural implications emerge. They relate both to internal groups within a company (own employees) as well as to people outside the organization (vendors, subcontractors, customers etc.). The most important implications relate to changes in:

skills (e.g. ability to operate in electronic environment, utilization of Internet-based tools)
behavior on the job (e.g. changes in workers' scope of responsibilities, work in cross-functional and cross-organizational teams, shifts in so far used procedures)
employees' knowledge (e.g. security issues connected with operating in electronic environment)
organizational culture.

In case of implementing any changes in organization's functioning, extremely important issue is people resistance. Since virtual organizing requires numerous deep shifts in many elements of company's functioning and employees' behavior, this aspect must be also taken into consideration. All those mentioned above issues are widely discussed and considered in this part of the paper.

The next part of the article presents the case study of the modernization company operating in the power industry along with analysis of possibilities of implementation a virtual organization concept in case of this firm. First, the current model of this enterprise's functioning is briefly described. Next, the concept of Internet-based virtual organization is presented and socio-cultural implications connected with its implementation have been identified. Attention is especially focused on two issues, which seem to be the most important. First one are consequences arising from deep redesign of so far used business model. Although from technical point of view creating a virtual organization is a relatively easy process, socio-cultural consequences of radical shifts in the way the work is performed can be quite hard for people involved in it. And these aspects are considered in this part of the paper.

Second issue, which is discussed are psychological barriers connected with implementation of virtual organization concept. Generally three kind of such barriers can be identified and all of them are examined. Namely, they comprise:

internal individual resistance
internal group resistance (formal and informal)
external resistance (i.e. performed by people outside the organization as customers or suppliers).

In the final part of the paper, the most important conclusions and suggestions are provided.

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