Trust and technology in the virtual organization.

Introduction

Technology has had a drastic impact on our society -- and the impact has been both positive and negative. As a social phenomenon, the Information Age has changed the emphasis from physical labor and production to information management, beginning with the PC revolution in the 1980s and 1990s. Now a new workplace is forming, thanks to desktop video conferencing, collaborative software, and most important, the Internet (Townsend, Hendrickson, and DeMarie, 1998; Asman and Essex, 2001). As a result of new technology, which allows transmission of any information across vast distances in little time and at little expense, a business structure called the virtual organization has emerged. This new structure, wherein co-workers often do not see each other on a regular basis, calls for reexamination of traditional controls over employee ethics.

A traditional business organization is full of checkpoints and control systems that are evidence of a lack of trust. By design, managers in the traditional business can physically observe their employees to ensure that no one does the wrong things by accident or design (Handy, 1995). New technologies give employees every opportunity to use their work time for personal matters, and, in a virtual business environment where trust does not exist, managers may fear a loss in efficiency (Handy, 1995). In moving the traditional office to a virtual format, many managers are keeping their old way of thinking about trust by installing software to monitor employees' computer activities (Stanton and Weiss, 2000). Handy (1995) and others (Baillie, 1995; Fukuyama, 1995) have argued that in developing a model for a virtual organization, human judgment, communication, and trust are more effective than traditional monitoring or micromanagement (Holton, 2001). This paper discusses the negative effect of checkpoints and control systems on employees in the virtual organization and argues in favor of nurturing ethical behavior through a new breed of trust.

Definition of the Virtual Organization

A virtual organization is one in which business partners and teams work together across geographical or organizational boundaries by means of information technology (Chutchian-Ferranti, 1999). Joyce Chutchian-Ferranti (1999) offers three of the most common examples of types of virtual organizations. First it may be a group of skilled individuals who form a company by communicating via computer, phone, fax, and videoconference. Second, a virtual organization is often a group of partnering companies, each of which specializes in a certain function such as manufacturing or marketing. They communicate across geographic distances to accomplish a specific task. Third, a virtual organization can be one large company that outsources many of its operations, using modem technology to transmit information to its partner companies so that it can focus on its specialty. A virtual organization is not a distinct structure; rather it is a strategy for revolutionizing customer interaction, asset configuration, and knowledge d issemination (Venkatraman and Henderson, 1998). The quality of "virtual" could be applied to every organization, from a century-old cement manufacturer to a brand new dot-com.