Teleworking and Virtual Organization in the Urban and Regional Context

Transcription

1 Networks and Communication Studies NETCOM, vol. 14, n 3-4, 2000 p Teleworking and Virtual Organization in the Urban and Regional Context Anastasia Stratigea 1 and Maria Giaoutzi 2 Abstract. The globalization process taking place in the context of information society provides a broad range of opportunities to the actors involved in more efficient organizational forms, new trading opportunities, restructured educational perspectives, new employment challenges, etc. Employment patterns so far have been dramatically influenced by the rapidly evolving technological innovations and their potential role on spatial structuring both at the urban and regional level. One prominent application of the newly offered possibilities is teleworking which alters considerably traditional patterns of work, mobility patterns, energy consumption patterns, personal relationships, etc. While teleworking has induced new forms of work organization, technological developments have also advocated radical changes in the structure of firms, where virtual organization is emerging as a response to increasing competition and need for efficient use of resources. Virtual organization is characterized by three distinct elements, namely : new organizational forms, being active beyond the limits of the traditional company model, a network function support, where various firms are trying through networking to seize business opportunities, which none of them would be able to realize on their own and the ability to overcome time and space barriers in a rapidly changing global marketplace. The focus of the paper will be to explore the new perspectives opened to spatial restructuring due to the introduction of virtual firms. Key words. Teleworking, virtual organization, spatial restructuring, impacts at the individual, business and spatial level. INTRODUCTION The globalization process taking place in the context of information society provides a broad range of opportunities to the actors involved in more efficient organizational forms, new trading opportunities, restructured educational perspectives, new employment challenges, etc. 1. Dr Anastasia Stratigea, National Technical University of Athens, Dept. of Geography and Regional Planning, Iroon Polytechniou str. 9 Athens , stratige@central.ntua.gr, Fax Prof. Maria Giaoutzi, National Technical University of Athens, Dept. of Geography and Regional Planning, Iroon Polytechniou str. 9 Athens , giaoutsi@central.ntua.gr, Fax

2 332 NETCOM, vol. 14, n 3-4, 2000 Employment patterns so far have been dramatically influenced by the rapidly evolving technological innovations and their potential role on spatial structuring both at the urban and regional level. One prominent application of the newly offered possibilities is teleworking, which alters considerably traditional patterns of work, mobility patterns, energy consumption patterns, personal relationships etc. While teleworking has induced new forms of work organization, technological developments have also advocated radical changes in the structure of firms where virtual organization is emerging as a response to increasing competition and need for efficient use of resources. The focus of the paper will be to explore the new perspectives in spatial restructuring due to the introduction of virtual firms. Therefore, chapter 2 elaborates on the various types of teleworking as these may relate to virtualization. In chapter 3 the concept of the virtual organization has been presented, concentrating on its main aspects and characteristics. Chapter 4 elaborates on the various types of virtual organization, while chapter 5 explores the megatrends driving towards increasing virtualization of society and their impacts upon spatial structures. Finally, in Chapter 6 some conclusions are drawn. TYPES OF TELEWORKING The new organizational forms introduced by teleworking can be associated with both the domain of the work organization (teleworkers) and the domain of the organizational structures involved (the companies) (Korte, 1988b). The work organization domain is the subject of this chapter, as it provides the means to elaborate on the restructuring of the firms organization. Working patterns is one aspect of people s everyday life, which has been dramatically altered by the radical technological developments of the last decades. The new technological potential offers possibilities for new patterns of work and new spatial structures characterized by decentralization trends, where workers are producing and distributing the outcome of their efforts through modern communication channels. A widely accepted definition of teleworking does not really exist. Various types of definitions have been adopted by different researchers in describing the concept of teleworking such as electronic cottage, telecommuting, flexiplace, remote work, distant work and networking. Various definitions of the above terms can be found in the literature, wherein as most prominent appears the one formulated by Olson (1987). Olson claims that the term teleworking has been used in order to describe organizational work performed outside the normal organizational limits of space and time supported by computer and communication technologies. In this respect most of the researchers agree on the fact that the essence of teleworking cannot be presented in terms of just one single dimension e.g.

3 TELEWORKING AND VIRTUAL ORGANIZATION 333 distance from the organizational structure. Instead, several other dimensions should be taken into account. Korte (1988b) proposed a definition, which involves the three following dimensions : Location : the geographical site where work is carried out, which is independent from the location of the organizational structure. This site can be determined on the basis of both the needs of teleworkers and the desires of the organization involved. Use of IT : being the main tool for storing and exchanging information. Communication link of the employee to the employer/contractor : this can be seen in either a narrow view (high level of IT&T use) meaning that there exists a communication link between the employee and the employer/contractor, via which work results can be transmitted or a broader view (low level of IT&T use) where there is no electronic communication link used for data transmission, but work results are stored on a disk and delivered by traditional media such as mail, courier etc. The organization of work domain (teleworkers either employees or independent) can be distinguished into several categories depending on the work location as follows : Home-based telework: the most popular type of teleworking, which can be applied either on a full time or on a part time basis, having home as a base location. Alternating work : refers to the situation where the workplace of the teleworker alternates between an office-base and the home-base situation, as a result of the changing needs of the teleworker or the company. Work peak buffer: refers to teleworkers who are hired by companies in cases of overloading periods of work. This type of teleworking appeared to be very popular in the early 80 s, especially for certain labour categories, while in the 90 s it has been facing a serious decline. Mobile teleworking : refers to a quite recent type of teleworking, which is the result of the the evolving facilities provided by mobile computer systems and telecommunications. Thus portable systems, computers and telecommunications advances enable teleworkers to principally work anywhere. Most of the above types of teleworking are related to the individual conditions of work of teleworkers at a certain location (home or else). As opposed to that, teleworking centers have been developed, which are common workplaces offering all the necessary infrastructure, shared by groups of teleworkers. These centers can be classified into the following types (Korte and Wynne, 1996) : Satellite offices : these are organizational divisions offered by a firm at a certain location, usually separated by the parent firm. The location of these offices is influenced by several factors like the convenient distance of a large number of employees, which will use them for their work, the proximity to newly recruited staff with scarce skills highly demanded from the employing organization, etc.

4 334 NETCOM, vol. 14, n 3-4, 2000 Neighbourhood offices : these are work centers, which are created and supported by several organizations/firms. In these centers, the employees of the founding organizations share space and equipment in locations near to their home. Supervision of work in this context can be carried our remotely, in contrast to the case of satellite offices. Telecottages : known also as Telehouses or Community Teleservice Centers, which are usually established by public funds. The scope of these centers is to support individuals and SMEs by providing them a fully equipped location, which they would not be able to afford by themselves. In these centers, training and education facilities for the users are also provided. Televillages : it is the counterpart of neighbourhood centers, but it operates in rural areas and on a larger scale. In televillages, teleworkers are living in a specific site and they are having the opportunity to work either from their home or from specific telecottages within this site. Offshore offices: these are offices created by the parent company in order to take advantage of lower cost labour at a certain location. In this case a certain company establishes a system of telesales and teleservice activities at a reasonable cost, via which it succeeds a much better proximity at a certain market. THE CONCEPT OF VIRTUAL ORGANIZATION The various organizations nowadays are forced to operate in a complex and unstable business environment. The capabilities offered by the rapid changes of information and communication technologies (ICT) have been the basis upon which various novel strategies have been build to cope with this problem. A great advantage offered by ICT is related to the ability to share information easily and effectively through networks and more specifically through the World Wide Web (WWW). As a consequence, the importance of physical location has to a large extent been diminished and led to flexibility in spatial terms. This has advocated the rise of new forms of businesses organization, such as virtual organization (Lockett and Holand, 1996), strategic web (Lorenzoni and Baden-Fuller, 1993), network organization (Powell, 1990), strategic/co-operative alliances (Holm et al., 1996) etc., as a response to their need to increase business s flexibility and effectiveness, access to a global market etc. in order to meet the requirements of the new era. The impacts of technological advances upon the organizational structure of firms are quite eminent. In the management literature many new forms of organizational structures are discussed during the last decade. The central topic of this discussion concerns the virtual organization (Schwarzer and Kremar, 1994), meaning an organization defined by its product-market strategy, network structure, information systems and business communication patterns (Holland, 1998).

5 TELEWORKING AND VIRTUAL ORGANIZATION 335 A considerable debate has been focused on the understanding of what is meant by the term virtual organization. The study of various organizational schemes described as virtual organizations points to the fact that they are only variations of traditional organizational models. In this respect, corporations with a high degree of horizontal structuring, i.e. flat hierarchies, low formalism and strong team orientation can by no means be considered as virtual corporations. These corporations, although they follow the trends of new flexibility patterns, they still remain in the traditional frame of property rights, right of ownership and patterns of centralized leadership (Szyperski and Klein, 1993). According to Winand (1997), the notion of virtualization can be attributed to a broad range of activities via which it is possible to reach certain objectives in a non-traditional, somehow unusual way. In this context, services which are traditionally offered by companies with legal structure, organizational structure and management structure are now being offered by loosely coupled, time-restricted networks of partners, each of them representing a certain competence. Venkatraman et al. (1996) claim that : virtualness is the ability of an organization to consistently obtain and coordinate critical competencies through its design of value-adding business processes and governance mechanisms involving external and internal constituencies to deliver differential, superior value in the market place. Bultje and van Wijk (1998) in their work present four different views of the notion of virtualization, which are inherent in all different definitions presented in the literature until now. According to their view, the term virtual is referring to : something which is unreal but looking real; something which is immaterial and is greatly supported by ICT e.g. virtual classroom, virtual library etc. ; something which is potentially present i.e. as soon as a certain opportunity comes along ; and finally something that is existing but rapidly changing. As Skyrme (1998) claims the three dimensions of virtuality, which are crucial for the organizations are related to space, time and structure. According to the spatial dimension, organizations are now able to adopt more dispersed organizational schemes. This makes it economically viable to separate operations from people that were previously together. Also it provides certain ways of reconfiguring organizations through the spatial dimension in the sense of dispersed teams as well as individuals who telework from remote locations. In the context of time independence, organizations can gain flexibility by either shifting operations to time zones, e.g. pass work in progress from one location to another around the world to do 24 hours a day design or by introducing teleworking and thus merging business duties with workers life style and domestic needs.

6 336 NETCOM, vol. 14, n 3-4, 2000 As far as the structure is concerned, organizations are able to adopt more flexible structures through networking and bring together different people and competencies to perform specific tasks. A virtual organization refers to an actual organization which, like traditional corporations, aims to supply goods or services by means of a cooperation of independent enterprises. Along the chain formed by the different enterprises participating in the virtual organization, partners bring in their critical core competencies (skills, capabilities, resources, know-how etc.) (Figure 1). The output is the integration of an ideal combination of best-of-class (complementary) core competencies (Zimmermann, 1997) into a best-of-everything organization for the specific purpose (Byrne et al., 1993). Many researchers in their work are classifying any cooperative network as a virtual organization, even if forms of cooperation are totally traditional. It should be noted though that in order to characterize an organization as virtual, it needs to base its cooperation or even existence on the use and application of information technology (IT). According to Skyrme (1995), the term virtual can be attributed to an organization which is geographically dispersed and whose work is coordinated through electronic communications. In fact the use of IT consists a constitutive feature of the virtual organization. In Franke s view a virtual organization is a temporary network of independent companies - suppliers, customers and even rivals - linked by information technology to share skills, costs and access to one another s market (Franke, 1998). In Byrne s opinion, a virtual corporation consists of different companies, where each of them contributes only what it regards as its core competencies, while technology is the key factor in the development of virtual corporation (Byrne, 1993b). Arnold et al. (1995) give the following definition : A virtual organization is a form of cooperation involving legally autonomous companies, institutions and/or individuals delivering a product or service on the basis of a common business understanding. The cooperating units participate in the collaboration primarily with their core competencies and present themselves to third parties as a unified organization, when delivering the product or service. In so doing, they largely dispense with the institutionalization of central management functions for shaping, managing and developing the virtual organization through the use of appropriate information and communication technologies. The specific features of ICT used in the context of virtual organization allow its differentiation from other types of network organizations. As a matter of fact, virtual organization is a network organization but, in addition to other forms of network organization, it is distinguished by the heavy and critical use of information technology. As Winand (1997) points out virtualization does only exist if it is necessarily created by means of media and communication technologies, i.e. the use of media and communication technologies is constituent for virtualization, or

7 TELEWORKING AND VIRTUAL ORGANIZATION 337 Enterprise 1 Enterprise 2 Enterprise 4 Virtual Enterprise Enterprise 3 Core competencies / service process Information system component Core competencies / service process Interface of the information system Information / communication system component channels Figure 1. Virtual Organization as an integration of core-competencies (Source : Zimmermann, 1997 ; Dembski, 1998). according to other researchers it consists the spine or the primary integrator of virtual organizations (Dembski, 1998). A thorough analysis of the relevant literature provides the following characteristics as being the most important aspects in the context of the virtual organization (Appel et al., 1998) : Virtual organization is a cooperation of enterprises. Members of this organizational structure may range from great trusts to small one-person firms.

8 338 NETCOM, vol. 14, n 3-4, 2000 The enterprises involved in virtual organization keep their legal and economic autonomy. The purpose of such a structure is the optimal use of opportunities derived from the market and/or resources (Webwer and Walch, 1994). The main characteristic of the virtual enterprise is the openness to any enterprise willing to participate, i.e. lack of entry barriers. There are no constraints impeding the collaboration, such as special legal form or technical standards. According to its purpose, virtual organization has a certain period of life - the opportunism feature. When its goal has been achieved, it will be decomposed into its components. Virtual enterprises can be built either between enterprises of the same sector or of different industrial sectors. As to its management structure, virtual organizations hold no hierarchical structure, i.e. there is no leading or subordinated enterprise within the structure. The trust between involved enterprises is considered as the bonding agent of the virtual organization. The use of information and communication technologies (ICT) consists a constitutional feature of virtual organizations (Mertens, 1994), with ICT characterized as the enabler or integrator of virtual organizations (Suomi et al., 1996). Goldman et al (1995) summarize the above characteristics in the following main principles of virtual organization (Figure 2) : Opportunism : Excellence : Technology : No borders : Dynamic network No hierarchy : this corporate model if fluid and flexible and occurs due to the existence of a specific opportunity. As soon as the opportunity is met, the venture disbands a characteristic emerging by the fact that each partner brings in its core competencies, thus creating a best-of-everything organization information and communication technology is a key enabling factor in the context of virtual organization the emergence of a borderless organization is the main advantage of virtual organization, characterized by a geographically dispersed structure organizations can enter and leave the network at any time refers to the equal role of different partners within a virtual organization Figure 2. The five key attributes of the virtual organization (Source : Goldman et al., 1995). Virtual organization can be thought as a collection of legally independent units - enterprises. In its fullest pluralistic impression it may have the so-called Information Broker or Network Coordinator, who is responsible for enhancing the performance of the whole structure (Dembski, 1998). This coordinator is perhaps the only one having a deep knowledge about the exact composition of the whole network.

9 TELEWORKING AND VIRTUAL ORGANIZATION 339 Naturally the virtual organization is not just a collection, gathering or constellation of partners (Dembski, 1998). It is a collaborative structure with a boundaryless character. Through cooperation along the lines of virtual organization, collaborators are practically merged together to one, though reconfigurable, organization. As each constitutive part brings his own core competence in the value chain, alone is nothing, but within the organization all parts together succeed clearly synergetic effects and considerable power. The later consists another very important aspect of virtual organization of enterprises, especially in the light of its boundaryless property. Thus, the organization is perceived, treated, reacted to by the outsiders as if it were larger and much more powerful than it really is. Many researchers are stressing this fact. Hardless (1997) points out that virtual corporations are 1+1 = 3 structures; they are simultaneously lean but impactful ; in brief, they have scale without mass. As Hardless states, this characteristic is really important especially for the SMEs, which due to their own lack of resources and expertise they are not otherwise able to gain competitiveness in the global marketplace. Virtual corporation is leveraged on technology. The fact that this technology is networked ensures the boundaryless property assigned to that type of corporation. This implies that certain types of spatial barriers are disappearing. Very often these organizations operate entirely in cyberspace, which implies that they are not tied actually to any particular location or time zone (Dembski, 1998). Sometimes employing merely a handful of people, a virtual enterprise can be truly global and local at the same time. A very important aspect in the framework of virtual organizations is the fact that following a strategy of global sourcing and cooperation they benefit from all kinds of diversity. Actually they thrive on contributions from different cultures, with different tradition, customs etc. (Dembski, 1998). The only selection criterion applied by a truly virtual organization is that of core competence, expertise and skills of a potential partner. In other words, the partner s origin, location, ethnic bonds, etc. are mostly irrelevant. This in turn implies that virtual organizations are network structures with endless potential boundaries or rather without any real separation lines (Dembski, 1998). The organization structure of a virtual organization has nothing in common with pyramid-like stand-alone organizational structures of the past (Beckhard, 1997). Pyramidic organizations are strongly based on command and control mechanisms, which lead to the formation of a distinct decisional center or headquarters. This fact implies that power is concentrated at a certain point, which gives the organization a clear shape and image (Dembski, 1998). On the contrary, virtual organizations are better thought as sets of relations represented aptly as networks or cobwebs (Ulrich, 1997), defying traditional structures, status and bureaucracy. Their strength is in integrating different parts/enterprises in schemes with high degree of horizontal structuring, i.e. flat hierarchies,

10 340 NETCOM, vol. 14, n 3-4, 2000 low formalism and strong team orientation. In this sense they are multicentred or even centerless (Figure 3). They do not rely on mechanisms of command and control, but the constituents of the organization are largely self-regulating and selfcontrol structures (Dembski, 1998). Thus the culture of control is replaced by the culture of information and knowledge sharing (Jagers et al., 1998). Aken (1998) induces the concept of a core-partner and makes a distinction between a virtual organization with and without a core-partner. A core-partner is a sort of leader of a virtual organization to which all other partners have to comply. On the other side, Williamson (1991) induces the concept of hybrid organizations, i.e. organizations, which in managerial terms lie somewhere in the middle of the two distinct economic forms of governance, namely hierarchy and market. In his view, hierarchy denotes a common ownership of successive stages of the supply chain, whereas market represents the transactions between atomistic organizational units. Virtual organizations can be thought as hybrid organizations, i.e. neither market nor hierarchy. Virtual organizations appear to the customers as being one entity, which satisfies increasingly the one-stop shopping demand of them by providing total solutions to their needs. They may take responsibility for total results and provide complete solutions based on the diversity of core competencies provided by the various partners within the organization (Miller, 1997 ; Dembski, 1998). In this context, complete solutions as a response to the customer s needs and market requirements is the main output from a virtual organization in contrast to SMEs which offer mostly components. Hence, SMEs in order to be able to offer system solutions and strengthen their competitiveness, they need to cooperate and to Figure 3. New organizational forms in the context of virtual organizations : A schematical presentation.

11 TELEWORKING AND VIRTUAL ORGANIZATION 341 bundle up their performances with other companies in the context of virtual organization (Amberg and Zimmermann, 1997). As many researchers point out, virtual organization provides a certain competitive advantage, which is mainly due to the following characteristics : it combines the core competencies of all its members so that the maximum competitive capacity is obtained. The diversity of core competencies ensures the provision of complete solutions as a reply to the customer s and market s demand, it is distinguished for its flexible organization which removes spatial, temporal and organizational barriers, and it can react swiftly to changing market conditions. As Skyrme (1998) points out, virtualization in general offers organizations of all types crucial benefits in the new information economy, namely : they can source intellectual resources globally ; they can gain flexibility through dynamic structures and contractual agreements; they can tackle projects or problems which might otherwise have been beyond their capabilities ; they can reach global markets without a local presence ; and they can significantly reduce costs over conventional ways of working. Both large and small/medium sized enterprises can take advantage from this new organizational schemes. In the context of large enterprises, focusing on specific mass-market segments, the costs to maintain all necessary value-adding competencies to follow the rapid short-term market changes is too high. These companies are very likely to concentrate on clusters of core competencies using external resources for missing parts. The concept of these core competencies clusters liaised with networked cooperation seems to be a successful strategy. On the other side, small and medium sized enterprises do not usually have the necessary resources to adapt to fast changing market demands, which eventually requires even the change of branch. In the context of virtual organization, these companies might benefit from networked cooperation by much easier open market positioning. TYPOLOGY OF VIRTUAL ORGANIZATION Cooperation between companies has up to now taken various forms. Each of these forms exhibits certain specific characteristics, but none of them is completely compliant with the previously referring definitions of virtual corporation concept. The attempt to classify all types of classical cooperation schemes leads to a classification, which comprises three main categories of cooperation, namely (Erben and Gersten, 1999) :

12 342 NETCOM, vol. 14, n 3-4, 2000 strategic alliances ; value-adding partnerships ; and networks. Strategic alliances is one type of cooperation form, in which two or more independent companies are combining their synergetic competencies in order to strengthen or establish strategic market positions on well defined market segments. This type of cooperation can be applied either horizontally between companies belonging to the same branch or vertically between companies along a chain towards the final product. The time horizon of such alliances is usually of long term, while experience shows that mostly small and medium size enterprises are using strategic alliances horizontally structured in order to reinforce their power on specific market segments (Erben and Gersten, 1999). Another classical form of cooperation is the value-adding partnership, which is established between a set of independent companies cooperating along a value chain (vertical structure) and managing the flow of work, goods and services. This type of cooperation applies in cases where a concrete product development or manufacturing process is holding. Experience shows that the main users of this type of cooperation are small and medium sized enterprises towards intermediate product development and manufacturing (Erben and Gersten, 1999). Networks can be thought as platforms of companies in a stabilized network with fixed cooperation interests and links (Erben and Gersten, 1999). Network organization is the most generic model of business organization, following the logic of networks as consisting of distant parts (nodes), which interact by certain links existing between nodes. It could be thought as an umbrella of many different kinds of cooperation, which differ according to the scope of cooperation, the permanent or temporary basis they adopt, the type of communication established between them (face to face versus modern communication technologies) etc. In this context, a network organization can be thought as a group of any number of individuals or organizations that is tapped to find specific information. Depending on specific customer needs, the members of the network are forming various value chains in order to assure a flexible reaction on market demands. Networks can be thought more as loose connections, sometimes clan or club with member fees, which are not disposing any corporate management in contrast to virtual organization. The issues of short response time to the market demand and more flexible adaptation to the customer needs has been nowadays greatly recognized. The necessity to develop new kinds of flexible organizational schemes, which would fulfill the above requirements, in particular for small and medium sized enterprises, is evident. The virtual corporation concept is evolving as a specific example of flexible networked organization. Actually it represents a new strategy aiming at the realization of short term flexible cooperation schemes both horizontally and vertically structured.

13 TELEWORKING AND VIRTUAL ORGANIZATION 343 A virtual organization is perceived as any group brought together for the purpose of completing a project. This includes temporary or provisional workers, outsourcing or involving individuals or groups at multiple locations through any type of communication channel, including the Internet. In that sense, all virtual organizations are network organizations, while not all network organizations are virtual organizations. Moreover the scope of virtual organization is to complete a project, while a network organization aims at locating information. Virtual organizations are characterized by flat organizational structures. Due to that, structure s decisions can be made quickly and competently by any given member of the network. Nevertheless many researchers are stressing the fact, like any other business organization structure, they must also have some kind of hierarchy. According to them, some decisions must be made at some kind of a top hierarchy, even if this hierarchy is informal. Otherwise they may find their selves in a no decision process. The existence of some sort of hierarchy, even informal, has been supported also by Sandhoff (1999). He claims that although in virtual organizations all partners are supposed to have equal participation rights, this does not hold in real applications but, as in classical networks, there are more or less strategic positions. These positions are certainly characterized by a high degree of centrality. Virtual enterprises can be further classified as static and dynamic (Franke, 1998). Within these two broad categories the following types of virtual organization can be further classified (Figure 4) (Campell, 1997): Internal virtual corporation is a sort of virtual corporation applying within one organization, which aims at creating flexible organization structures. In this context, the virtual enterprise consists of several business units, built by autonomous groups and teams. The management tasks are decentralized, carried out by the autonomous teams. Virtual organization structures Dynamic Static Internal virtual organization Dynamic virtual organization Stable virtual organization WEB company Figure 4. Dynamic and static virtual organization structures.

14 344 NETCOM, vol. 14, n 3-4, 2000 Stable virtual organization in another type of virtual organization, which is structured on the basis of an inter-organizational cooperation between different companies. It is based on the concept of contracting non-core competencies out of a main organization - the core partner. Several firms are providing inputs to or distributing the outputs of the core organization. In this context, a cooperation scheme is emerging, in which several committed suppliers are closely related to the main (core) organizations leading the whole scheme. The stable virtual organization is based on partial outsourcing as a way to inject flexibility in the overall value chain. This type of cooperation has a more permanent character dependent on the choice of the core partner than the market, which means that stable virtual organizations are not dependent on opportunism. Experience shows that this type of cooperation applies between large organizations. Other virtual organizations have been characterized by their dynamic nature, leading thus to dynamic virtual organization schemes. The dynamic nature implies that the entire set up of a virtual organization may change in response to the market place. In this sense, virtual organizations of this type are temporary as to their ability to react quickly as regards the membership, the structure, the objectives etc. Its vague/fluid boundaries and opportunism, as well as equity of partners and shared leadership mainly characterize a dynamic virtual organization. Experience shows that this type of organization can only be established in case of small companies. The temporary character of virtual organization has been claimed by various researchers, stressing the fact that sometimes virtual organizations can be actually not completely temporary. Experience has proved that some virtual organizations are emerging by permanent networked groups of business entities - a sort of pool of business entities - which are forming temporary teams on a project-by-project basis. In this context a sort of temporal stability as well as a corporate culture of the partners is succeeded. As Dembski (1998) points out, although virtual organization is a project or task driven organization, a particular project can be huge enough to last many years, as for example astronautics. Experience shows that there are many virtual organizations, which have been existing over the years although they have considerably changed in between, as for example virtual banks on the Internet. In Dembski s view virtual organizations do not need to be any more temporary that other conventional organizations. It should be mentioned that most definitions of virtual organization encountered in the literature are referring to dynamic and WEB-company virtual organization. The drastic technological developments and more specifically the potential offered by the Internet has provided the ground for the development of the WEBcompany. This company consists of a temporary network of dynamic nature formed between specialized organizations based on the use of Internet. The aim of such a company is to offer on a global scale all sorts of products and services by using the Internet. WEB-company has the same characteristics with the dynamic

15 TELEWORKING AND VIRTUAL ORGANIZATION 345 virtual organization, namely it can be applied between small companies and it is characterized by vague/fluid boundaries. The difference from the dynamic type is that the WEB-company is fully based on information technology. Ching et al. (1993) points out that the establishment of network organizations is following two major streams : the downward and the lateral approach. Large vertically integrated companies mainly adopt the first while the later is illustrated by the practice of small and medium sized companies. Static virtual organization can be thought as falling into the downward approach while dynamic virtual organization within the lateral approach. Appel et al. (1998) claim that virtual organizations can be classified into two levels of virtualization, the first and the second depending on the level of organizational analysis (Figure 5). Actually these two levels are related to two different views namely the intra-organizational and the inter-organizational view. The first level of virtual organization - the intra-organizational view - can be still thought as a traditional form of organization. Hierarchical management structures are transformed into organizational structures managed by partly autonomous teams - team structure - within a dynamic team system, which can be easily restructured. New forms of IT support the coordination by teams. This team structure is completed by a stable long-term corporation center, the service center for all teams (Byrne, 1993a). This center takes control of the departments (teams) and combines the various teams of work on specific tasks with support of modern IT (Olbrich, 1994). Virtual Organizational Structures Intra-organizational Inter-organizational Type of virtual Management Type of Time organization scheme companies horizon Approach involved Internal V.O. hierarchy large long permanent downward (decentralized to corporation (static nature) autonomous teams Stable V.O. hierarchy large long permanent downward (core partner) corporation (static nature) Dynamic V.O. market SMEs short/temporary lateral (shared leadership) (globaly dispersed) (dynamic nature) WEB company market SMEs short/temporary lateral (shared leadership) (globaly dispersed) (dynamic nature) Figure 5. Types of virtual organization structures and their characteristics.

16 346 NETCOM, vol. 14, n 3-4, 2000 The second level of virtual organization - inter-organizational perspective - is a special form of cooperation in which the corporations involved are keeping their legal and economic autonomy (Klein, 1994). This level has been characterized by removal of institutional borders, cooperation along specific market demand in which each partner contributes its core competencies, lack of entry barriers, support by new forms of IT etc. As Appel et al. (1998) notice, both forms of virtual organization do not actually build a dichotomy, but they belong together in an independent way. Olbrich (1994) states that in order to become a virtual organization of the second level, it is a prerequisite to be already a virtual organization of the first level. Griese Corporation 1 Corporation 2 first level first level corporation center second level project teams Virtual Organization corporation center resources competencies Figure 6. First and second level Virtual Organizations. Source : Appel et al. (1998). (1994) adopts also the differentiation between the first and the second level of virtual organization. He points out that in the first level business processes undertaken are characterized by low complexity, while in the second one the whole business process is concentrated in a few places of the background. The concept of virtual organization has very recently become the epicenter of the scientific research. A concrete theoretical framework concerning virtual organization does not exist yet. The various authors provide their own definitions, describe various forms of organizations as virtual, or more or less virtual. Gristock (1998) claims that there exist various types of virtual corporations, which differ in the degree of virtuality according to the way their activities are organized over the three dimensions, namely time, geographic space and organizational boundaries (Figure 7). In this context, an organization can be highly fluid over time, which assigns the organization a virtual permanence. Over space it may be largely dispersed, thus resulting in a virtual presence. Finally, across organizational

17 TELEWORKING AND VIRTUAL ORGANIZATION 347 Virtual Presence D A Virtual Permanence Virtual Capabilities C B non-virtual Source : Gristock, 1998 Figure 7. Degree of virtuality. boundaries it may have access to external sources of technology, disposing thus virtual capabilities. In any case, virtual organizations, although they provide a great potential along the strengthening of the position of a company in a globally changing competitive environment and a prominent structure for the future, it is not a panacea for everything. As Drucker (1997) points out researchers are moving away from the belief that it has to be one theory of organization and one ideal structure. Different organization structures exist for different purposes, different types of work, different people, different culture etc., leading thus to a plurality of organizational forms. Demski (1998) claims that not all organizational schemes are relevant to all kinds of enterprise cooperation. Therefore, he attempts to classify the classical and new organizational schemes according to whether they are intra or inter-organizational schemes ; concentrate on economies of scale or scope ; result in the stability or flexibility of the system etc. (Figure 8). He points out that the virtual organization is a perfect solution in a business environment that requires both broad strategic and organizational focus. Also virtual organization is thriving in the environment of scope economies, which requires vivid inter-organizational cooperation and high level of flexibility.

18 348 NETCOM, vol. 14, n 3-4, Development focus + Stability Flexibility Organizational Structures Interorganizational Intraorganizational Alliance - organization Hierarchical organization Virtual enterprises / networks Problem-oriented organization Economies of scale Economies of scope - Strategic focus + Figure 8. Organizational structures. Source : Dembski, As Zimmermann (1997) points out, the virtual enterprise is a crowning of organization development in a turbulent, high speed, competitive environment, imposing extremely high requirements on adaptability, flexibility and reconfigurability. However not all companies are thriving in such an environment. On the contrary, there are industries, which are working, in a stable environment and scale economies are present. In this context the old-familiar hierarchical organization remains unchallenged. Sieber (1977a) advocates such a classification by arguing that virtual organizations are not the appropriate organization form in a stable market environment where there are no technological upheavals; he classifies the various organizational forms according to the variability as well as the specificity of the tasks it handles (Figure 9). VIRTUAL ORGANIZATION WITHIN THE SPATIAL CONTEXT. The evolution of interactive digital networks has greatly affected the transformation of business and society. The revolutionary network technology has influenced the network business characteristics. New working structures are offering the

19 TELEWORKING AND VIRTUAL ORGANIZATION Variability of the task + Strategic Networks/ Cooperations Hierarchies Virtual Organizations Modular Organizations Figure 9. Forms of coordination and task structure. Source : Piecot et al., 1996 ; Sieber, Specificity of the task + potential for decentralization of work through various teleworking schemes. On the other side firm s organizational patterns and markets are rapidly evolving due to the lowering of transaction costs, the removal of boundaries, the shifts of power relationships, the increasing globalisation of competition and the changing business models enabled by network technologies. All the above imply a rapid restructuring of spatial patterns. Skyrme (1998) in his work on the realities of virtuality claims that the drastic technological developments and more specific the Internet have been the driving forces towards virtualization. Several megatrends driving towards increasing virtualization are (Skyrme, 1998): the increasing information and knowledge-based products and services, which allow them to be marketed and even delivered virtually, the decentralization trends and location-independence provided by the Internet revolution, which allows work and services to be carried out over a distance, the new organizational and working schemes enabled by technological advances, which are based on networking and give enterprises the freedom of location decision while they assure flexibility and responsiveness, and the globalization of markets and resources, which results in a new environment within which firms are able to more easily sell their product world-wide and draw on world-class expertise irrespective of their base of operations. Along these lines new types of interaction characterized by their virtual nature can be encountered in many aspects of the every day life forming directly or indirectly spatial structures. In this context, Skyrme (1998) identified the following types of virtuality : virtual products and services : the electronic transactions gain more and more ground against the traditional one, with a rapid increase of electronic markets that match buyers and sellers.

20 350 NETCOM, vol. 14, n 3-4, 2000 teleworking : an increasing number of workers joints the group of teleworkers. People may work from home, from telecottages, from client premises etc. In this context new patterns of work are emerging, which offer the means for new organizational schemes. The degree of pervasiveness of these new patterns of work and business organization may differ from place to place depending on various factors such as behavioural aspects, available infrastructure etc. virtual offices : this is another type of virtuality and is associated with the replacement of the physical office by a virtual one, where all office services are provided. In this context many large companies such as Digital, IBM etc. have adopted the idea of a hot-desking at specific locations, saving thus a great amount of office overheads. virtual teams : many companies create virtual teams. The essence of this notion is twofold : first they are virtual in the sense that members of the team are working at separate locations, where each one chooses the most convenient location ; second they are virtual in the sense that they are groups of people working in conventional office settings at different locations, who are cooperating virtually. The first type is related to teleworking, while the second relates to intra-organizational schemes adopted by large companies e.g. specific teams of a big organization dispersed all over the world, where the company has branches. On the other hand, virtual teams are the building blocks of virtual organizations, consisting of a self-managed knowledge work team with distributed expertise, which forms and disbands in order to accomplish a specific goal (Kristof et al., 1995) : virtual organizations : the term is referring to many forms of business organization structures ranging from a stable supply network appearing as a single organization, to a loose federation of independent firms, which are merging together to accomplish specific contracts or to exchange information. virtual communities : a virtual community is defined as a community of shared interests, in which time and location barriers are collapsed. They can be found on newsgroups, lists, scientific networks etc. The experience shows that local communities can take advantage of such developments. Thus many remote communities have gained a lot by developing both regional and world markets for their services through the Internet (Skyrme, 1998). Apart from the above types of virtuality, many other specific examples can be registered in real life. Skyrme (1998) refers to : virtual research laboratories, which allow the access of scarce, expensive and remote resources to users dispersed over space ; virtual factories where manufacturing processes are prototyped through simulation before the machinery is installed ; sales ; marketing ; advisory services and other routine operations are also going virtually. All these types of virtual operations have the following common features (Skyrme, 1998) :