Network Structure in Virtual Organizations

Abstract

Virtual organizations that use e-mail to communicate and coordinate their work toward a common goal are becoming ubiquitous. However, little is known about how these organizations work. Much prior research suggests that virtual organizations, for the most part because they use information technology to communicate, will be decentralized and nonhierarchical. This paper examines the behavior of one such organization. The analysis is based on a case study of the communication structure and content of communications among members of a virtual organization during a four-month period. We empirically measure the structure of a virtual organization and find evidence of hierarchy. The findings imply that the communication structure of a virtual organization may exhibit different properties on different dimensions of structure. We also examine the relationship among task routineness, organizational structure, and performance. Results indicate that the fit between structure and task routineness affects the perception of performance, but may not affect the actual performance of the organization. Thus, this virtual organization is similar to traditional organizations in some ways and dissimilar in other ways. It was similar to traditional organizations in so far as task-structure fit predicted perceived performance. However, it was dissimilar to traditional organizations in so far as fit did not predict objective performance. To the extent that the virtual organizations may be similar to traditional organizations, existing theories can be expanded to study the structure and perceived performance of virtual organizations. New theories may need to be developed to explain objective performance in virtual organizations.