Virtual Organization

Computers mediate between individuals by providing channels of communication in the form of messaging systems; they act as brokers in matching buyers and sellers, employees and employers, resources and work processes, and so on. The social significance of computers as mediators and brokers has tremendous political and economic consequences. For managers, these consequences manifest themselves most clearly in the virtual organization, which is founded on the separation of requirements, for example, inputs such as components, from the ways in which requirements are met, or satisfiers, for example, suppliers and distribution networks. Separating these elements allows managers to switch easily from one way of meeting a requirement to another. Used systematically, switching brings huge increases in productivity but it also weakens traditional loyalties. Absent a sense of loyalty to persons or places, virual organizations distance themselves from the regions and countries in which they operate. This process is undermining the nation-state, which cannot continue indefinitely to control virtual organizations. A new feudal system is in the making, in which power and authority are vested in private hands but which is based on globally distributed resources rather than on the possession of land. The evolution of this new political economy will determine how we do business in the future.