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1Akamai University ,USA, 2College of Business Economics and Entrepreneurship

Key words: Communication, virtual organizations,virtual culture, information systems ,technological change

Professor Ph.D Professor Ph.D Lecturer

Abstract. This paper explores the impact of virtual culture on effective communication in virtual organizations.The authors
conluded that despite the technology as an important aspect of a virtual firm, there is still a human component that serves as the
decision-making aspect and deals with judgment activities .They also pointed out that with the development of new technologies, can
be expected that communication will continue to experience radical changes within modalities of communication in virtual
enterprises. In their opinion it is not easy to predict in advance the direction in which these changes will be oriented. However, what
is certain is that they will depend not only on technological change but also on the change in the employee awareness in virtual


Information systems play a vital role in the e-business
and e-commerce operations, enterprise collaboration and
management, and in the strategic success of businesses that
must operate in an Internetworked global environment. The
Internet services, in conjunction with the existing and more
widely used communication media, provide the broadest
enhancement of information and communication resources

1.1.Definision of Virtual Organizations

“Virtual organization is a temporary network of
independent business units – suppliers, customers, and even
rivals – linked by information and communication technology
to share skills, costs and access to different markets. This
organizational model is flexible – groups of collaborators
quickly unite to exploit a specific opportunity. In its most
elementary form, the concept depicts any organization that
interacts with other organizations to create a virtual
corporation and that contributes only within the scope of its
core competence. Central in the development of virtual
organization is technology. Teams of people in different
companies work together, via a computer network in real

This definition provides a clear structural perspective
and a detailed picture of what makes a virtual organization.

1.2.Characteristics of virtual organizations

Virtual organizations are characterized by (a) highly
dynamic processes, (b) contractual relationships among
entities, (c) edgeless, permeable boundaries, and (d)

reconfigurable structures [4].
As the virtual organization consists of a network of

independent companies, each of these companies contributes
with its core competence. The organization that initiates the
cooperation defines the most appropriate business processes
which in turn are complementary with the business skills of
different firms. The synergy effect that is the result of
combining all the core competences allows for creating an
organization that meets the customer requirements in a
flexible manner. According to [1], a virtual organization has
to have its own identity. If the identity of a partner remains
visible alongside the identity of the organization, it is defined
as a “loosely coupled virtual organization“ whereas a “tightly
coupled virtual organization“ appears to customers as a joint
organization. The development of information and
communication technologies allowed for the differencies in
distances between virtual organizations to be solved so they
can work together.

The partners in the virtual organization are equal, hence
it is the organization without hierarchy. A favourable effect of
such an architecture results in an improved organizational
efficiency and responsibility [2]

The organizations consist of a network of autonomous
companies, hence such an architesture is also known as a
network architecture. It differs from a hierarchy architecture
by a large number of lateral communications that make this
organizational structure highly coordination-intensive (Figure


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Figure 1. Matrix structure [9]

There are different virtual organization networking

modalities depending on the needs and possibilities for
creating a degree of collaboration and management, and
hence different types of information to be shared.

The types of necessary information to be shared in a
manageable virtual organization on an e-level are the

 Planning (P): information used in defining a
common purpose, in determining the scope and
orientation of work of the entire virtual

 Operational (O): information on the activities to
be performed on a daily basis for each member.

 Coordinating (C): information flows to ensure that
operational activities achieve their goal effectively.



An organization that has a large proportion of
employees working in the virtual workplace faces distinct
challenges related to building an organizational culture.When
building a culture within a virtual firm, managers have
numerous tools at their disposal to compensate for the lack of
social context, geographical location, and the normal
behaviours of a non-virtual firm. Managers of a virtual firm
need to focus on results since they may not be able to see all
of the work that is being done. They also need to be able to
delegate and keep track of projects and work. Managers of a
virtual firm should not be micro-managers as this style will
most likely not be effective. Another requirement for a
manger in a virtual organization is that he or she needs to be
able to motivate his or her employees to go online. Since the
majority of the firm’s work will be online it is important for
the employees to be able to access the information they will
need to do their jobs. This can be done by putting important
news and updated online matter at a place where the
employees will also find other job-related information. If the
majority of the firm’s work will be online it is important to
have an easy-to-use system. Employees will not want to go
online or use systems that are hard to use and take too much
time. When building a system it is important to get opinions
from the people who will be using it. In addition, with all of
the tools and systems that will be in place for a virtual firm, it
is important that the employees know when and how to use
the tools and systems they have access to. Sometimes it

makes a better business sense to meet a person face-to-face
that try to communicate via e-mail. This needs to be
understood by everyone, especially when dealing with

Managers also need to be able to communicate through
multiple channels on both formal and informal levels. There
is a number of features of a virtual firm that should be
considered as part of the culture to successfully run and
manage the firm. The first feature of the culture of a virtual
firm is trust [15]. Since a manager cannot always see his or
her employees they have to be able to trust that they are
doing the work that they are supposed to be doing. It should
also be noted that since the majority of work will be done
online, most of this work can be easily monitored and
employees may worry about being spied on. The second
feature of a virtual firm is leadership. It is important that a
company’s leaders show the behavior that they want their
employees to exhibit. These are the role models of the firm
that will set the tone for the entire company. The third feature
is that a virtual company needs to be OK with being different
and doing things differently. Virtual companies will always
be different from the traditional company and the culture
needs to account for that. In addition, the employees need to
be able to work in an environment that they may not be used

The fourth feature of a virtual company is that there
will be some positions within the company that do very
boring work, for example, an employee who works in a call
center or at a help desk [15]. These employees will most
likely be low paid so rewards and incentives need to be
considered to reduce the turnover and increase efficiency. The
fifth feature of a virtual company is communication. All the
employees of a virtual company need to have good
communication skills, including the upper level management.
In a virtual company, employees do not have the ability to
stop by a coworker’s office to quickly discuss a project.
Instead, they will need to pick up the phone or send an e-
mail, neither having the same effect as a face-to-face
meeting. It is also difficult to show emotions over an e-mail
and sometimes over the phone. Because of this, employees
need to learn to express themselves effectively and to really
listen. This includes discussions during group meetings or
when working on team projects.

The sixth feature of a virtual company is the need for
connectedness within the company .Since employees do not
see each other regularly as in a traditional company, it is
important to establish a connectedness of employees. This
will make the company have more of a family feel and
improve motivation. The seventh feature is shared values. In
order to have a successful virtual company, everyone
involved needs to share the same values. This is even more
important in a virtual company because the company’s values
cannot be instilled on a daily basis as in the traditional
company due to the lack of physical connection. The eighth
feature is that virtual companies will have slightly different
jobs in comparison with the traditional companies. For
example, a traditional secretary may be replaced by a virtual
assistant. In addition, a larger number and more varied IT
responsibilities may be required and employees may be
needed to command knowledge in more than one areas.



Communication plays a key role in the work of virtual


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organizations. Without communication, the boundaries of
operations of a virtual entity would be impossible to
determine at any level [4]

Electronic communication allows for the distance
connectedness of employees, regardless of time differences,
of the culture and the language and of the jobs they perform,
contrary to traditional organizations where all the jobs are
performed at the same place and at the same time (Figure 2).

It also allows for a fast and easy flow of information
between distant organizational entities, however, also among
all the participants in the business chain – distributors,
customers, etc. Besides, electronic communication can
contribute significantly through forming its varied modalities,
by innovation processes in the virtual firms operations. This
is where its importance is crucial [5]; [6],[7]; [11];[14].

3.1.Implications of electronic communication upon virtual

The research into six areas of electronic communication
have ensured a better insight into the four major aspects of
the virtual organization: (a) a highly dynamic process, (b)
contractual relations between entities, (c) permeable
boundaries, (d) reconfigurable structures [4]

Figure 2. Communication at any place and at any time [10]

In surveying these four areas, it is important to bear in

mind that a majority of findings were obtained on the basis of
the study of electronic mail and e-conferencing, other forms
of electronic communication, such as group voting,
documentation management systems, or electronic data
exchange not included. Furthermore, a large amount of
research compares the modalities of electronic
communication with oral speech, especially with a direct,
face-to-face communication, despite the fact that electronic
communications display a large number of properties similar
to the written form of communication. Similarly to the face-
to-face communication, electronic communication is
interactive. The result is that the behaviour in electronic
communication takes on the characteristics of both the
documents – the written and the informal speech [13]

For the communication to be successful, it is necessary
that communicators should have equal levels of knowledge
which is difficult to achieve without physical and linguistic

presence. This means that the lack of the face-to-face contact
in electronic communication may have a negative impact
upon understanding the message, however, the literature is
rather ambiguous as regards this issue. The research on
understanding electronic communication has concluded that
there are a number of difficulties to understand the meaning
of the information as well as to manage the feedback
information during a discussion. Regardless of the advantage
in terms of the speed of exchange of information
electronically and to larger distances, electronic
communication revealed some additional misconceptions,
e.g., the tasks will not be solved faster if set electronically. It
has also been proven, however, that the lack of visualization
has not significantly disturbed the control of conversation and
its comprehensibility in case of synchronous communication
via discussion groups [8]. Visualization is necessary,
however, in resolving certain conflicting situations and
complex activities, as well as in overcoming certain social
and cultural differences.

The inter-organizational communication among virtual
organizations assumes that the major portion of
communication is conducted through transaction exchange
within the network, which allows for a faster and larger
information flow, especially in task setting, whereas a smaller
amount of information is related to hierarchal flows. The
communication among the departments of equal rank within
the organization is conducted via synchronous technologies.

In case more consensus among the participants on
different levels is required, and in case non-synchronous
communication is pursued, the result may be a highly
intensive exchange of messages in order that a more detailed
harmonization and understanding should be achieved.


Communication is fundamental to any form of

organizing, however, it is especially important for virtual
organizations. Relative to more traditional settings,
communication processes that occur in virtual contexts are
expected to be rapid, customized, temporary, larger in
volume, more formal, and more relationship-based [4]. While
technology is an important aspect of a virtual firm, there is
still a human component that serves as the decision-making
aspect and deals with judgment activities. With these
components there is definitely a shift in the structure of a
virtual firm. For instance, there seems to be less middle
management within a virtual firm in comparison with a
traditional firm. Some firms have developed employee
orientation tools to guide them through the virtual work .This
can include written guidelines, training, and networks for
colleagues. Virtual firms should consider a computer-based
chat room, where employees can work on projects with other
team members and get information on the work they are
doing. They should also have a social protocol for employees
and teams that have information on common cultural values.
In addition to email, a virtual firm needs to have access to
video and audio conferencing. This will allow employees and
managers to work with one another from a distance and have
the effect of working from the same location. A virtual firm
needs to be able to balance the virtual with the face-to-face. It
should also make sure it can manage schedules online and
require employees to be on time even though they do not
have to physically show up. In addition to attendance, it is
important to make sure that employees participate in
meetings and in work in a virtual setting. Many virtual firms


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are sharing the corporate information and even financial
information with all their workers. This ensures a better
relationship between the upper level management and
employees. In addition, there seems to be a more even
division of power. This is linked directly to the virtual culture
of empowerment and self-control. We would like to point out
that a virtual company needs a technology infrastructure to
survive, but there is also a need to have a solid cultural
infrastructure in place that not only deals with the human
aspect but with the technology aspect as well.

With the further development of new technologies, we
expect that communication will continue to experience
radical changes within modalities of communication in
virtual enterprises. It is not easy to predict in advance the
direction in which these changes will be oriented, however,
what is certain is that they will depend not only on
technological change but also on the change in the employee
awareness in virtual firms. In other words, they will depend
on their ability to oversome the present differences (gender,
language, emotional, cultural, perceptional and other) and
create an efficient communication in virtual firms. There fore,
the human factor will play a role in improving
communication in virtual firms as important as that of the
development and improvement of the present technologies.


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Correspondence to:

Mirjana Radovic-Markovic

[email protected]

, Akamai University
Radmila Grozdanic

[email protected]

, College of Business Economics
and Entrepreneurship, Belgrade
Dusan Markovic

[email protected]

, Akamai University

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

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