Explaining Organizational Virtuality: Insights from the Knowledge Based View

Despite a sizable body of literature on virtual organization, little attention has been paid to defining organizational virtuality and identifying factors that influence degree of virtuality in organizations. Based on virtual organization literature and the knowledge-based view of the firm, we develop a working definition of organizational virtuality. We do this by conducting a review of existing definitions of a virtual organization, and identify organizational knowledge-related factors that influence virtuality. More specifically, we propose that 1) an organization’s need for knowledge exchange and ability to exchange knowledge jointly determine the level of organizational virtuality that develops in the firm; and 2) the higher the need for and ability to engage in knowledge exchange, the higher this level of resulting organizational virtuality. The contribution that this research makes to academia and managerial practice are also discussed.