An Exploratory Study of Virtual Organization From The Viewpoint of Information Science And Technology Kang-Lin Peng Dept. of Business Administration, Nation Taipei University PO Box 27-90, Taipei 104, Taiwan ROC, (886)2-22589920, p.kLl_2_l8~.m_s9:hj.n_e_t.n_e.t Chi-Ya Chang Dept. of Business Administration, Nation Taipei University PO Box 27-90, Taipei 104, Taiwan ROC, (886)2-26666866, [email protected] ABSTRACT Depending on the assistance of the highly developed information science and technology in daily operations, contemporary organizations then have the opportunities to make a tremendous breakthrough to accomplish the organizational missions without being constrained by the original physical boundaries. Therefore, the basic concept of this paper is trying to elaborate the impact of virtualization of contemporary organizations under the development of science and technology especially with an emphasis on how the variables of organizational design affect characteristics and development of internal and external organizations. Foreword Contemporary organizations have been extremely affected by rapid development of information science and technology. In early 1958, Leavitt & Whistler (1958) made their predictions on the changes of organizational boundaries under the development of information science and technology. Drucker (1988) also believed that, inevitably businesses would become the organizations based on informational technology. Recent developments in information technology capabilities, such as the World Wide Web and artificial intelligence, allow the development of new implementations of virtual organizations that exploit the capabilities of those new technologies(Daniel, 1997). In fact, the modern organizations have found the opportunities to make a tremendous breakthrough to accomplish the organizational missions without being constrained by the original physical b, ,ndaries. For example, the techniques of teleconference have made the possibility of conducting meetings without a real conference room. Hence, the applications of distance learning by internet have facihtated studying without coming to a real classroom. Especially for the globalization requires employees and business partners to be geographically and temporally distant from one another, deploying information technologies with a virtual organization is an obvious choice for overcoming spatial and temporal boundaries (Marie-Claude Boudreau, etc, 1998). These facts imply that the organizational virtualization has gradually made the structure and pattern of modern organizations changed. Consequently, this paper attempts to elaborate the impact of virtualization of contemporary organizations under the development of information science and technology especially with an emphasis on how the variables of organizational design affect characteristics and development of internal and external organizations. Definition of the virtual organization According to dictionary of Wecharlse, the definition of 'virtual organization' is 'being so in effect, although not in actual fact or name'. However, Davidow & Malone(1992)assert the meaning of 1009 'virtual' is 'The power of something comes from the others'. On the other hand, Mindrum (1995) indicates that from the meaning 'capability' of Latin root of the word, virtual means the powerfial effect of something, not the powerfial form of something. In conclusion, the concept of 'virtual' includes are at least two: one, concerning about the effect, the other, without any constraint of forms or physical boundaries. This completes the operational definition of 'virtual' in this paper. Lucas & Baroudi(1994) are the first researchers to put the consideration of science and information into the variables of organizational design. They suggest that the traditional physical boundaries can be replaced with electronic devices. In hence, electronic connections and electronic communication will be the main portion of organization. The organization will then take the information techniques to monitor people and groups in distance. Furthermore, strategically, the organizations will intensively use work flow software and EDI ; In addition, Bleeker (1994) indicated that virtual organizations, through the assistance of integrated computer system and telecommunication technology in linking with people, enable to be formed by co-operation net. In a word, in order to cope with the rapid change of the external environment, through a set of specific processes of information technology and arrangement, the virtual organization perform its organizational fianctions with resources which are obtained from the market with reasonable price to satisfy the internal as well as external requirement of the organization. Though it looks like dynamic net organizations introduced by Jarvenpaa and Ives (1994), the virtual organizations emphasize more on the capability of abstraction of need and then using resource allocation processes to allocate resources. Through the mechanism of internal and external market to lower the prices, the virtual organization will enhance its competitiveness. Therefore, the operational definition of virtual organization in this paper is 'equipped with information technology as tools, taking the major consideration of effects and capabilities, breaking the physical boundaries and constraint of traditional organizational forms, the virtual organizations continuously create new organizational types and make good performances.' The application of information science and technology in virtual organization Bleecker (1994) believes that depending on the application of integrated computer system and telecommunication technology, it can assemble thousands of people between businesses to form a cooperative net. And the purpose of this is to solve the complex problems of internal and external dynamic cooperation of organization. In another words, these are the problems of complexity of works and organizations.Smith and Wolfe (1995) believe that under the impact of globalization and computer technology, the purpose of emergence of virtual organizations is to reflect the complexity of environment and change in advance, which applies the client-server architecture to establish a new type of organization. New infrastructures mean economic transformation and growth, qoday, computers, linked by telecommunications, are creating a new infrastructure that will transform the economy and business organizations(Davis, 1996). To effectively control the dynamic market, to grasp the key information of potential objects to be cooperated with, to master every movement of the objects cooperated with now, to freely share the internal operation information and effectively make decision on the information mentioned above are the critical points of requirements to the virtual organization on the application of information science and technology. 1010 °,°°,°.**°'"**°'"'*',.o%% f Vlrt..d ~" 0 I Organization .: ............. \ :: •tne urg s oouncmry ~s ma~stmct 0~7~i~1 n .......... " ° Controlwifil Information Tecnnology m0 ~ • The*%***°°°**i Org s t~undary is distinct • Controlwith bureaucratic system r.- The dynamic of environment Fig. 1 Traditional organization vs. Virtual organization Effect of Information Technology (IT) on Virtual Organization I . Effect of IT on the Internal Organization To gain a better understanding of the effect, it is useful to view it from seven distinct perspectives: vertical control, horizontal coordination, organization and size of its composing units, new coupling forms, core products, communication culture, and ownership and management control. The seven perspectives are defined as follows: Vertical control. Vertical control provides technology-based methods for coordination and control in which to reduce the amount of coordination by human beings. Heydebrand (1989) described this phenomenon as implementation of technology rationalization instead of group rationalization. Horizontal coordination. (1)Processes in information systems: Integration of information and telecommunication technology dramatically shortens the explicit distance which is required. This even makes it a lot easier to communicate horizontally (Monge & Fulk, 1995). The installation of local storage units, located at the remote distance away from the headquarter warehousing facilities, is the internal distribution system that applies the information and telecommunication technology for horizontal coordination. On the other hand, the similar situation falls on both the sharing of coupling documents in the office and the communication systems via e-mails. It's more and more prevailing that the coordination of work processes relies on electronics not the manpower. (2)Concurrent engineering: Traditionally the product design in a company is based on a sequential "Throw-over-the-Wall" concept, which processes the design works within the functional areas of business step by step. This concept is now replaced by the one called concurrent engineering, which emphasizes the parallel processing, resulting from the integration of information and telecommunication technology. With application of the technology, when designing products, CE combines the participants including designers, engineers, and even suppliers of the company concurrently to ensure shorter time-to-market. Organization and size of its composing units. The streamlining of organization along with the business reengineering makes it possible that the multifunctional, sequential processing be replaced