Virtual Business Organizations

Information technology has made it possible for new business models to be set up. Today, it is not necessary for entrepreneurs to acquire premises or buildings to open or run their businesses as they can take advantage of existing technology to operate a virtual business organization (Baack, 2017). Virtual business can be defined as an entity that performs its operations in the internet without or with little physical presence. The model can be traced to the outsourcing trend and the World Wide Web (WWW) in 1980s, and although it is susceptible to poor stakeholder relationships, virtual business minimizes operational costs.

The concept of virtual organization has been present since the early 1980s, and it grew rapidly with the emergence of WWW towards the end of the decade. Most organizations in the 1980s took advantages associated with outsourcing to transfer unproductive or non-critical processes and operations to external entities located domestically or internationally (Bryder, Malmborg-Hager, & Söderlind, 2016). The introduction of WWW facilitated the trend since organizations could communicate faster and link with customers and suppliers from anywhere (Camarinha-Matos, Afsarmanesh, & Rabelo, 2001). An organization located in New York, for example, can have a virtual connection with an organization in Cape Town South Africa. Electronic data interchange (EDI) and groupware technologies have also helped in the advancement of virtual based business organizations. These two technologies make it possible for businesses to exchange data and information securely. 

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By eliminating the requirement of a physical office to run a business, the virtual model minimizes costs needed to start and run an entrepreneurial venture but impairs stakeholder relations. An entrepreneur only needs to design a website to connect suppliers and customers, which eliminates overhead and inventory expenses. The organizations employ a few people to oversee management, website maintenance, and customer care. However, they are unable to maintain strong relations with customers, suppliers, and employees due to the lack or the limited face-to-face interactions. Hence, the model is best suited for retailers.

In overall, business virtual organizations are advantageous over brick-and-mortar models in the retail sector. These organizations emerged alongside outsourcing and WWW trends. They are less expensive to operate, but they are likely to have poor relations with stakeholders. 


Baack, D. (2017). Organizational behavior (2nd ed.). New York, NY: Elsevier. Retrieved from

Bryder, K., & Malmborg-Hager, A., & Söderlind, E. (2016). Virtual business models: Entrepreneurial risks and rewards. Woodhead Publishing.Camarinha-Matos, Afsarmanesh, H., & Rabelo, R.J. (Eds.). (2001). E-business and virtual enterprises: Managing business-to-business cooperation. New York, NY: Springer Science + Business Media.

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