Virtual Organizations and Innovation Outcomes

Seminar paper from the year 2011 in the subject Business economics - Business Management, Corporate Governance, grade: 1,3, University of Auckland (Management and International Business), course: Contemporary Issues in Organizations, language: English, abstract: The global business world experiences dramatic developments, shifts and challenges since the end of the last century. Factors such as international competition, knowledge-based production, technological changes, advances in IT, and deregulation play an increasingly important role. Hence, conventional organizational concepts and structures of the 'old economy' come under growing pressure due to insufficient capabilities to deal with these landslide changes. Traditional organizational structrues, most prominently the classical bureaucracy with its conventional formalized and hierarchical form, are displaced by new organizational forms. More horizontal relationships, with partners (internal or external) being only focused on core competencies, take the place of old vertically structured hierarchies. More interactive communication approaches, both vertically and horizontally, can be observed. More decentralized management concepts lead to incentive-based and increasingly autonomous project teams (Clegg, Kornberger, & Pitsis, 2005). According to one of the most renowned management theorists Henry Mintzberg (1981), for every specific configuration of an organization's environment and its tasks, particular organizational structures fit best. Therefore, one could expect that new organizational forms are best capable of dealing with prevailling challenges such as innovation. This essay aims to analyse the case of virtual organizations and the way they might shape, and/or derail the processes and outcomes of innovation.