What is "virtual organization"

n. An organized entity, whether corporate or charitable, that does not exist in any one, central location, but instead exists solely through the Internet

A virtual organization is an organization involving detached and disseminated entities (from employees to entire enterprises) and requiring information technology to support their work and communication. Virtual organizations do not represent a firm’s attribute but can be considered as a different organizational form.

Unfortunately, it is quite hard to find a precise and fixed definition of fundamental notions such as virtual organization or virtual company. The term virtual organization ensued from the phrase “virtual reality”, whose purpose is to look like reality by using electronic sounds and images. The term virtual organization implies the novel and innovative relationships between organizations and individuals. Technology and globalization both support this particular type of organization.

Virtual can be defined as "not physically existing as such but made by software to appear to do so", in other words “unreal but looking real”. This definition precisely outlines the leading principle of this unconventional organization, which holds the form of a real (conventional) corporation from the outside but does not actually exist physically and implicates an entirely digital process relying on independents web associates. Thus, virtual organizations are centred on technology and position physical presence in the background. Virtual organizations possess limited physical resources as value is added through (mobile) knowledge rather than (immovable) equipment.

Virtual organizations necessitate associations, federations, relations, agreements and alliance relationships as they essentially are partnership webs of disseminated organizational entities or self-governing corporations.

In grid computing, a virtual organization (VO) refers to a dynamic set of individuals or institutions defined around a set of resource-sharing rules and conditions. All these virtual organizations share some commonality among them, including common concerns and requirements, but may vary in size, scope, duration, sociology, and structure.