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|The Virtual Corporation|
An updated version of this Insight is available at KMKnowledge.com
As information and communications technologies overcome the constraints of time and distance, it becomes possible to create virtual organisations. Virtual is usually taken to be something that does not exist in reality. So a typical definition of a virtual corporation (taking the dimension of time) is:
"a temporary network of independent companies linked by IT to share skills, costs, and access to one another's markets" (Business Week)
However, another definition relates to an organisation not having a clear physical locus. Here a typical definition is:
"an organization distributed geographically and whose work is coordinated through electronic communications."
Both definitions show how information and communications technologies can be used to exploit the dimensions of time and space. A virtual corporation is a specific example of a networked organisation. Many smaller companies are now realising the benefits of being part of a virtual corporation, which can give them the benefits of the resources of a large organisation while retaining the agility and independence of a small one.
The development of business networks as virtual corporations is well developed in Denmark, and is now evolving in other countries. David Skyrme Associates is itself a member of several virtual corporations, including ENTOVATION International. Members of the ENTOVATION Researching and Consulting Networking combine forces to create virtual knowledge teams and virtual corporations, according to project and client needs.
Virtually a Success
Working in virtual corporations comes naturally to small company entrepreneurs and managers who are effective networkers. They are difficult for those with the conventional corporate mind to fathom out. Some of the ingredients for developing a succeeding virtual corporation are:
In bringing together many virtual corporations, the role of a network broker can be important (it is, for example, something strongly advocated in the Denmark model). However, in our experience many virtual corporations will evolve naturally out of working relationships that have developed over years.
David Skyrme, Oct 1995. Minor revisions, August 1999.
Since this Insight was first published we have published Virtual Teaming and Virtual Organizations - 25 Principles of Proven Practice. See also the index section Virtualization.
'The Interprise Toolkit', Chapter 8 in Knowledge Networking: Creating the Collaborative Enterprise, David J. Skyrme, Butterworth-Heinemann (1999). More Details.
The Virtual Corporation, W.H.Davidow and M.S.Malone, HarperBusiness (1992). More Details.
Agile Competitors and Virtual Organizations, Steven L. Goldman, Roger N. Nagel and Kenneth Preiss, Van Nostrand Rheinhold (1995). More Details.
Virtual Organizations and Beyond, Bo Hedberg et. al., John Wiley & Sons (1997). More Details.
VONet - The Virtual Organization Network publishes a quarterly newsletter covering research in developments on the virtual organization and also the Journal of Organizational Virtualness (David Skyrme serves on the editorial board).
Management Insights are publications of David Skyrme Associates, who offers strategic consulting, presentations and workshops on many of these topics.
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