89. "A Pure Virtual Organization"

ABSTRACT

Market-based methods of organizational control are replacing older, more bureaucratically controlled organizations. These include but are not limited to strategic alliances and virtual organizations. Virtual organizations are essentially a set of market-based arrangements in which a small number of individuals agree to act as if they are a larger organization to perform various services. The limiting case of a virtual organization is one in which there are no employees and no fixed assets. This limiting case is called a pure virtual organization.

The purpose of this paper is to document the existence of a pure virtual corporation operating in South Dakota. This organization has annual revenues of approximately $10,000,000. It has artifacts such as a corporate flag, coffee mugs, and wall magnets. It has 27 owners. All of its functions are handled through the means of contracting arrangements among its members. It is an organization in the telecommunications industry to handle the switching, transmission, and distribution of revenues from long distance telephone traffic. The owners are Local Exchange Carriers who are small telephone companies throughout South Dakota. It contracts with another company, called the South Dakota Network, LLC, to provide switching, transmission, and revenue distribution from long distance telephone carriers. The members contract to perform repairs as needed. The South Dakota Network provides the telecommunications technologies, fiber network, and performs various services for a fee.

A brief history of the pure virtual organization is provided along with descriptions of how it operates. The same organizational solution has been extended to two related pure virtual corporations among the same owners. The actual existence of a pure virtual organization provides an anchor to emerging concepts of market-based corporations.