Int. J.

Production Economics 75 (2002) 127–134

Information technology enabled meta-management for

virtual organizations
Omar Khalil*, Shouhong Wang
Charlton College of Business, University of Massachusetts Dartmouth, North Dartmouth, MA 02747, USA

Abstract

Virtual organizations (VO) have recently evolved as a new paradigm of organization design in pursuit of competitive
advantages, and in response to electronic commerce (EC) requirements. The management of VO, called meta-
management, provides a systematic approach to the exploitation of competitive economic advantages for a VO. It
consists of basic activities including analyzing and tracking requirements, allocating satisfiers to requirements, and
adjusting the optimality criteria. Information technology (IT) is the essential foundation for the formation and
management of VO. A framework that describes the enabling role of IT at the three responsibility levels of meta-
management is presented, and future research is suggested. r 2002 Published by Elsevier Science B.V.

Keywords: Information technology; Virtual organization; Meta-management; Organizational learning; Decision making

1. Introduction Whereas division of labor is designed to

In pursuit of competitive advantages, virtual
organizations (VO) have been crystallized in recent
years as a new paradigm of organization design
[1,2]. A VO is a group of independent firms that
link together and form a single temporary
company. It operates as a federated collection of
firms tied together through contractual and other
means [3]. In the electronic commerce (EC) age,
many VO have emerged in cyberspace. Enabled by
information technology (IT), VO replace tradi-
tional, unitary business forms with contractual
relationships, and provide management with max-
imum flexibility in response to market changes.
*Corresponding author. Tel.: +1-508999-8443;fax: +1-
5089998776.
E-mail addresses: okhalil@umassd.edu (O. Khalil),
swang@umassd.edu (S. Wang).
0925-5273/02/$ - see front matter r 2002 Published by Elsevier Science B.V.
PII: S 0 9 2 5 - 5 2 7 3 ( 0 1 ) 0 0 1 8 6 - 4
improve the efficiency and effectiveness of produc-
tivity by manipulating the internal structure of a
task, a VO works by manipulating relations
between collections of tasks. The management of
VO is called meta-management. Meta-manage-
ment provides a systematic approach to the
exploitation of competitive economic advantages
for a VO. It consists of basic activities including
analyzing and tracking requirements, allocating
satisfiers to requirements, and adjusting the
optimality criteria [4,5].
Compared to traditional management, meta-
management of a VO has two major distinct
characteristics. First, a VO must make goals
explicit. Intangible goals, such as subjective loyalty
to the community, are not allowed in the meta-
management of VO. Second, the central task in
meta-management is the maintenance of the
temporary partnerships within a VO. Dynamic
128 O. Khalil, S. Wang / Int. J. Production Economics 75 (2002) 127–134
switching from one virtual organization to another
is becoming a standard instrument in the meta-
management toolkit.
Advanced IT (computing and communication)
has made it possible to manage the complexities of
a VO efficiently and effectively. With IT, the
processes of making a product or providing service
can be differentiated, distributed in different
places, and executed at different times with
assurance that the whole process can be integrated
and controlled effectively [1]. This paper elaborates
on meta-management responsibilities, and dis-
cusses the role and challenges of IT in support of
VO.
2. A paradigm shift of organizations in the
electronic commerce age
Scientific management spelled out in 1911 by
Frederick W Taylor in his book ‘‘The Principles of
Scientific Management’’ has focused primarily on
rationalization of the shop floor. This approach
advocated removing responsibility from craft
works by separating it from their purely opera-
tional movements and placing organization of
work one level above its execution. The next move
in the same direction was with operational
management, when rationalization and design
were brought one level above the shop floor and
planning more global organizational design [6].
VO goes one step further in this direction. VO
push strategic thinking up the ladder of abstrac-
tion, and further detaches the core of the
enterprise from its concrete operations in the
global economy [6]. Organizations will be most
competitive if they simultaneously meet the
challenges of global efficiency, local responsive-
ness, and learning. The real challenge is to design
an organizational form that is capable of being
efficient and responsive, and that enables the
transfer of knowledge across locations. For many
firms, the answer is to adopt a VO organizational
design [3]. Being virtual is about finding allies who
can help firms to bolster their weaknesses [7].
VO have been with us for a long time; however,
the issue of VO had not become so important until
EC was introduced years ago. In fact, EC and VO
can never be separated in exploration of modern
business [8–10]. The unique aspects of EC, which
shift organizations to virtual, are discussed below.
1. Organic networked organizations. Successful
implementation of EC requires a corporate-wide
strategy, with ‘‘cross-boundary’’ examination and
streamlining of processes [11]. The result often
forces greater cooperation between intracompany
departments as well as external partners. Increased
openness of corporate enterprise networks in the
EC age will fundamentally change the configura-
tions of organization networks [5]. In the past,
network organizations have been almost exclu-
sively formed within a firm. Now, corporations
will increasingly interconnect and form interorga-
nizational networks. One of the most significant
changes for the existing industry structures is that
critical new organizations such as transaction
guarantors have been created for EC. In the
information age, EC creates fertile soil for network
organizations. Organizations are able to search
globally for opportunities and resources, perform
only those functions for which the company has an
expert skill, and outsource those activities that can
be performed more economically by others. EC
facilitates VO and makes them more functional.
Supported by EC, VO becomes organic networks,
hybrid arrangements, and value-adding partner-
ships.
2. Automatic workflow. EC would significantly
change the operational processes in the VO due to
its new information technological environment.
Workflow management [12] is considered as a
technique for VO to manage the new technological
environment. Workflow management is a process
followed to reexamine business processes and the
relationships between business units in the VO.
Workflow management permits the VO to under-
stand the business processes as a whole, and to
redesign the business processes for increased
competitiveness.
3. Lower transaction costs and direct marketing.
In general, strategic opportunities of EC can be
counted on as a result of the implementation of
VO in two aspects. One is business process
reengineering through the use of point-of-sale
systems (POS), electronic data interchange (EDI),
electronic funds transfer (EFT), and Web-based
 O. Khalil, S. Wang / Int. J. Production Economics 75 (2002) 127–134
information systems [13]. The other is electronic
markets [14] in establishing market leadership
through a focus on superior customer service,
differentiation, innovation, and direct marketing,
3. Meta-management and managerial requirements
in virtual organizations
The management of virtually organized tasks is
called meta-management [1,4,5]. According to
Mowshowitz’s theory, two distinct characteristics
of meta-management of VOs make meta-manage-
ment unique to traditional management. First, a
VO must make goals explicit. Intangible goals,
such as subjective loyalty to the community are no
longer the important variables in meta-manage-
ment of VOs. High productivity and low cost are
those common goals shared by all the firms
operating in the virtual organizational environ-
ment. Second, the central part of meta-manage-
ment is the maintenance of the temporary
partnerships within a virtual organization. Switch-
ing from one VO to another is becoming a
standard instrument in the management toolkit.
In a study of VO management, which is close to
the concept of switching, Strader et al. [15]
proposed a VO life cycle model. According to
their model, a VO goes through four distinct
phases during its life cycle: identification, forma-
tion, operation, and termination. In each of the
four phases, decision processes, such as partner
evaluation and selection, operation redesign, and
partner termination, are involved and sequentially
related.
In developing a conceptual model of VO, Shao
et al. [16] considered four variables as the essential
dimensions of VO; they are: connectivity, purpose,
technology, and boundary. According to their
assertion, their model can be used to make
predictions for the stability of VO and creation
of new forms of VO. Although their model does
not provide quantitative measures of these vari-
ables in any detail, it supports the concept of meta-
management of VO in terms of explicit goals and
dynamic switching.
One aspect of meta-management is its tendency
to reject pure affect or caprice in decision making
129
[1,17,6,18]. This rejection is a consequence of the
logical structure of virtual tasks coupled with the
explicit switching criteria used by meta-managers
in global-oriented environments. A VO will not
succeed in expunging affect and caprice entirely,
but they will do a better job of it than conventional
organizations. The values informing the decision
making process are linked to the goals of the
organization. A VO recognizes this linkage ex-
plicitly. Organizations are goal-oriented and as
such could improve their efficiency and effective-
ness through the use of meta-management techni-
ques.
Accordingly, virtual organizing is essentially a
reflective tool for the critical self-examination of
one’s own actions. Using it properly, helps us to
become more aware of our implicit, tacit values
and goals as they manifest themselves in what we do.
The explicit awareness of these goals and values
enables managers to better assess the options
available to them for meeting organizational
needs. Further, it affords an opportunity to
reformulate or reconfirm goals and values in a
more deliberate manner [6]. A virtual organizing
posture would provide the means for critical
reflection, awareness, searching, and learning from
experience – an ability presently too weak, scarce,
and fragile in most organizations and institutions.
As such, virtual organizing emphasizes five essen-
tial dimensions of human activity: reflective,
collaborative, abstractive, creative, and continu-
ous improvement [6].
The VO creates new management and coordina-
tion challenges [19,20]. A VO reacts to customers’
needs more quickly, brings new products to
market faster, and changes their contours more
rapidly than other organizations. However, to
achieve that potential, the VO must respond to its
most serious challenge, coordination. VO incurs
higher coordination costs because of numerous
external and internal relationships that must be
managed across time and space. Due to the
complexity of such relationships, traditional co-
ordination and control mechanisms are ineffective.
VO would not simply exist without the advanced
IT that links their parts together [3].
Innovation, competency, and collaboration are
critical for organizations to survive and excel in
130 O. Khalil, S. Wang / Int. J. Production Economics 75 (2002) 127–134
the rapidly changing global economy. The ability
to learn, collaborate, and innovate faster than
one’s competitors is possibly becoming the only
sustainable source of competitive advantage in the
knowledge-based economy. This requires organi-
zations to shift from hiring and retaining a work
force that produces products to one that primarily
manages information [21,22].
Meta-management is inevitable in the virtual
organizational environment. The meta-manage-
ment of a VO involves essential functions that are
unique, compared to the traditional management
practices. These functions are:
1. New information technology adoption. One of
the major functions of meta-management of
VO is to adopt new IT. Information filtering,
knowledge acquisition, and case matching are
examples of what management needs in order
to handle the information overload while
operating in EC environment. Software agents
and mnemonic instruments can be used to help
decrease the information overload. EC support
systems can assist the user to cope with the
information load on the Internet, make semi-
unstructured decisions involved in the net-
worked organizations, and maintain and im-
prove the networked business process.
2. Organizational learning. Corporations need to
be organized around information. Finding
and applying methodologies to generate and
use knowledge faster and more effectively is
becoming a promising new management
practice. Furthermore, organizational knowl-
edge in a VO may get lost since the work
force is highly mobile. Thus, managers will
have to become repositories for organizational
history. Organizations should respond to
this challenge by factoring in human know-
ledge as a key component of their asset
base, and by creating knowledge bases or
repositories that enable workers to shorten
learning curves by sharing each other’s
experiences.
3. Coordination. Managing virtual sub-units of the
VO and ‘‘virtual’’ people within the VO is
another major task of meta-management. A VO
has to be based on trust and minimal super-
vision since it is very difficult to supervise and
control its components.
4. Organizational redesign. If a VO is new, it
would be relatively easy to design. Workers who
are comfortable in a traditional workplace may
find such an arrangement difficult to under-
stand at first. For organizations creating virtual
sub-units which currently exist in reality, or for
traditional organizations trying to redesign
some of their components, the use of IT in
organization design will be much more difficult.
In summary, VO is a new organizational form in
the EC era, and requires a new management
paradigm of meta-management. Table 1 sum-
marizes these major unique characteristics of
meta-management of VO and their alignment with
managerial requirements.
4. Information technology enabled
meta-management of virtual organizations
IT offers additional variables that when com-
bined with considerations of structure, people, and
tasks, can help design more responsive organiza-
tions. In fact, IT is the essential foundation for
creating and managing VO. IT enables commu-
nication that spans distance, time, and culture,
thereby creating emergent structures and alternate
forms of organizational experience. It permits such
an organizational design to overcome the spatial
and temporal dispersion that accompanies
increased global reach. It facilitates the coordina-
tion among loosely federated components, over-
come the spatial and temporal barriers that
characterize conventional organizational struc-
tures, and promote flexibility. More specifically,
IT applications, such as Web-based information
systems, data mining and mass customization
technology, organizational memory systems, and
groupware supported negotiation and decision
making, shall match and support OV for new IT
adoption, organizational learning, coordination,
and organizational redesign. The alignment rela-
tionships between VO meta-management func-
tions and IT available to enterprises are fitted into
a framework as depicted in Fig. 1.
 O. Khalil, S. Wang / Int. J. Production Economics 75 (2002) 127–134 131

Table 1
Characteristics of meta-management and managerial requirements

Characteristics of virtual organizations Characteristics of meta-management Managerial requirements

Autonomic participants Equality among participants Coordination

Virtual group management
Group decision making

Cooperation is not Maintenance of temporary Policies

permanent in the nature Partnerships Organizational redesign

Common interests Explicit goals Low costs

Performance management

Sharing knowledge Knowledge management Negotiation

beyond information/data Mass customization
management Organizational learning

Electronic communication Global-orientation Automatic workflows

Ubiquitous information
Capture
New IT adoption

Fig. 1. IT enabled meta-management of virtual organizations.

In this framework, the meta-management func-
tions fit into all three managerial levels in VO:
operational, tactical, and strategic level, although
there are no cut-lines between these managerial
levels. At the operational level, meta-management
focuses on performance management of the entire
VO, including low transaction costs, workflows
automation, and ubiquitous information captur-
ing. At the middle managerial level, meta-manage-
ment emphasizes tactics in two aspects: customer
132 O. Khalil, S. Wang / Int. J. Production Economics 75 (2002) 127–134
orientation and organizational learning. Mass
customization becomes a prevailing marketing
practice. Virtual group management, negotiation
among the groups, and knowledge sharing and
organizational learning keep the VO active and
agile. At the top managerial level, meta-manage-
ment facilitates policy formalization, strategic
decision making, coordination of the participants,
and VO redesign. The following section illustrates
how IT can enable these functions of meta-
management.
1. Web-based information systems. Web-based
information systems permit the uniform coupling
of transactions within the VO (B2B and B2C),
making them more responsive and efficient. Web-
based information systems provide the capability
of buying and selling products and services via
computer networks and other electronic means.
Intranets promote communication and informa-
tion sharing within sub-divisions of the VO.
Extranets extend intranets through providing
accessibility for VO partners and customers across
global boundaries.
Web-based information systems make ubiqui-
tous information capture, automatic workflows,
and information sharing possible. This brings
transaction costs down to zero. More importantly,
Web-based information systems create a perfect
environment for mass customization and organi-
zational learning at the tactical level of meta-
management.
2. Data mining and mass customization technol-
ogy. Customer orientation is a major task at the
tactical level of meta-management. Data mining
increase information utilization by notifying in-
dividual customers when new products become
available and by creating customized products and
services. By accumulating knowledge about custo-
mer habits, organizations will be able to identify
trends and turn consumer statistics into long-term
customer relationships. Mass customization tech-
nology, direct marketing, and software agents
allow businesses to modify products and services
to suit local needs, while retaining the advantages
of large-scale production of those products and
services. IT can help control the introduction of
customized features into the production process.
Currently, successful examples of mass customiza-
tion can be found in a variety of industries
including manufacturing, telecommunications,
mass media, and software development. For
example, in automobile industry, made-to-order
cars can be delivered to individuals within a
relatively short time. With mass customization in
media software, news broadcasters have the ability
to deliver local news to its particular market as
well as to a national audience.
3. Organizational memory systems (OMS).
Supporting organizational learning is another
major task of meta-management at the tactical
level. OMS consists of electronic systems for
storing both structured and unstructured docu-
ments. An OMS integrates, supports, and auto-
mates the acquisition, retention, maintenance,
search, and retrieval of information in the multi-
media environment. Such systems provide a means
by which knowledge from prior experience can be
shared widely and applied to current problems.
These systems are widely used for managing
virtual group activities and negotiation. An
example of an OMS is that a system can be
developed and used for complex software devel-
opment projects in a software company. By
tracking group processes and decisions, the system
becomes an important part of the organizational
memory for the software development group.
OMS has become a necessary component of
information systems for meta-management
because of the increasing weight of knowledge
work and the capabilities of advanced IT used by
the VO.
4. Groupware supported coordination and deci-
sion making. The major challenge to effective
global teamwork is to dissolve distance and time
so that people from diverse cultures can work
together profitably. Meta-management at the
strategic level defines the common goal, issues
policies, and redesigns the VO. Intensive high-level
negotiations and decision making activities are
involved in coordinating the VO. Groupware
systems (e.g., Lotus Notes) can integrate electronic
messaging with screen sharing, group scheduling,
meeting support, group writing and other applica-
tions. These features support team leadership,
facilitate group processes, and extend the team’s
technical and managerial competence. Groupware
 O. Khalil, S. Wang / Int. J. Production Economics 75 (2002) 127–134
systems facilitate efficient and accurate sharing of
ideas, streamlines processes, negotiation, and con-
current tasks performance. Awareness of the other
cultures through learning of appropriate languages
is a primary skill for managers in VO. Language
translation software allows the translation from
one language to another, and reduces cultural gaps
between countries. Collaborative networks based
negotiation and decision making allow businesses
to form and dissolve relationships at an instant
notice and thus create new corporate ecology.
5. Discussion
VO can be used in a variety of settings to
enhance the efficiency and effectiveness of systems
and motivate managers and participants to reflect
on organizational goals. The essence of VO is the
systemic ability to switch satisfiers in a decision
environment of bounded rationality. The systemic
way of doing things is the advantage that VO has
over the ad hoc approaches to organizational
structuring and restructuring. Inappropriate use of
switching in a computer-based virtual organiza-
tion can generate a continuous stream of require-
ment-satisfier pairs that fail to account for
changing organizational goals.
IT applications are mostly acquired and im-
plemented without much thought to their role in
supporting corporate strategy. The explicit con-
nection between IT and the needs of a VO should
help managers in their effort to meta-manage
the VO. By supporting the virtual organizational
form, IT enables greater efficiency, responsiveness,
and learning in the VO. However, IT is not a
simple determinant of the VO. IT cannot trans-
form an organization on its own. Rather, IT
enables the realization of managerial intentions.
Depending on the firm’s current capabilities
to support the strategic goals of efficiency,
responsiveness, and learning, managers must focus
on those technologies that address areas of
deficiency. Firms that leverage VO forms can
potentially unleash electronic engines of unprece-
dented power by changing their industries in
a fashion comparable to the changes of the
industrial revolution.
133
IT enabled meta-management of VO discussed
here poses substantial challenges for both research
and practice in the EC field. Addressing these
challenges opens two new avenues for further
research. First, effective IT enabled meta-manage-
ment requires comprehensive networked VO en-
terprise modeling. In traditional systems modeling
approaches, there is a lack of integration for
modeling all the aspects of VO, including net-
worked organizations, information infrastruc-
tures, business process, and meta-management.
Hence, we need methods for modeling VO
enterprises in a uniform paradigm. Second, IT
enabled meta-management will require a new
paradigm of knowledge management. Knowledge
management support systems can provide the
management of VO with means of effective meta-
management. Knowledge management support
systems are high-level information systems that
coordinate these IT enablers for solving ill-struc-
tured tasks in the loosely structured OV. Con-
ceptualizing and developing knowledge manage-
ment support systems will significantly challenge
traditional information systems methods and tools.
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