Organizational Behavior Term Project Report

Building
Organizational
Culture in Virtual
Organizations during
Infancy
Submitted to: Mrs. Shagufta Rafif

Mohsin Ayub - 10566

Maria Iqbal - 10189
Muzammil Shahabuddin - 10969
Noman Ameen - 11122
 Building Organizational Culture in Virtual Organizations in Infancy

LETTER OF AUTHORIZATION

Dear Readers

As a student of MBA – Executive, our course instructor of Organizational Behaviour Mrs.

Shagufta Rafif authorized us to conduct a research on the topic, “Problems in setting an
organizational culture of Virtual Organization in Infancy”. We were required to conduct the
research on the selected topic, in accordance with the acquired learning throughout the semester.

This report is conducted to identify the problems of setting an organizational culture for a
business that has just begun its operation and to recommend solutions using OB techniques that
we studied throughout the semester.

The report is required to be submitted on 11th December 2010.

Sincerely

Mohsin Ayub
Maria Iqbal
Noman
Muzammil
MBA (Executive)

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 Building Organizational Culture in Virtual Organizations in Infancy

LETTER OF TRANSMITTAL

December 11, 2010

Ms. Shagufta Rafif

Institute of Business Management
Karachi

Subject: Problems in setting an organizational culture of Virtual Organization in Infancy

Dear Mrs. Shagufta Rafif

Here is the final research report on the topic, “Problems in setting an organizational culture of
Virtual Organization in Infancy” which you had authorized us to conduct at the beginning of
this semester. The report is now ready for your perusal.

This report is a brief portrayal of the problems being faced while setting an organizational of the
business working virtually. Furthermore this report also recommends solutions for encountering
these problems while using OB techniques. The only limitation that we faced during our research
was the deadline which we had to meet keeping in view the mass of data we gathered.

The making of this report has been a wonderful learning experience for us and we thank you for
giving us this opportunity to avail it. We have worked meticulously with our toiling endeavors to
provide you a real and complete picture of the current conditions of the problems that are being
faced while setting the culture of virtual organization. If you have any queries, please feel free to
ask. I would be glad to respond to your queries.

Sincerely,
Mohsin Ayub
Maria Iqbal
Noman
Muzammil
MBA Executive
Institute of Business Management, Karachi.

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 Building Organizational Culture in Virtual Organizations in Infancy

LETTER OF ACKNOWLEDGEMENT

December 11, 2010

Mrs. Shagufta Rafif

Institute of Business Management
Karachi

Dear Reader:

It has been a great honour for us to prepare a report on “Problems in setting an organizational
culture of Virtual Organization in Infancy”, which was assigned to us by our course facilitator
of Organizational Behaviour, Mrs. Shagufta Rafif, without her guidance and support the
compilation of the report would not have been possible.

Thanking you,

Sincerely,
Mohsin Ayub
Maria Iqbal
Noman
Muzammil
MBA Executive
Institute of Business Management, Karachi.

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 Building Organizational Culture in Virtual Organizations in Infancy

Table of Contents

1. LETTER OF AUTHORIZATION .............................................................................................. 2

2. LETTER OF TRANSMITTAL .................................................................................................. 3

3. LETTER OF ACKNOWLEDGEMENT .................................................................................... 4

4. Table of Contents……………………………………………………………………………… 5

5. Executive Summary .................................................................................................................... 6

6. Introduction ................................................................................................................................. 7

7. Rational for the Study (Why virtual organization) ..................................................................... 8

8. Problem Statement ...................................................................................................................... 8

9. Research Objectives .................................................................................................................... 8

10. Research Steps / Methodology.................................................................................................. 9

11. Research Design...................................................................................................................... 11

12. Sampling Approach ................................................................................................................ 12

13. Summary of Responses ........................................................................................................... 16

14. Analysis................................................................................................................................... 25

15. Conclusion & Recommendation……………………………………………………………. 26

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 Building Organizational Culture in Virtual Organizations in Infancy

EXECUTIVE SUMMARY

Virtual Organizations have gained great popularity globally in a very short time span. The
psychology of generation Y is very different from the psychology of generation X and baby
boomers. This is one major reason why technology has played such an important role in the
modern world. The globalize world has some positive and some negative aspects; however
one attribute that everyone has to encounter in the virtual organization is the working and
presence of mind 24/7 throughout the day. There was a time when people had to control their
work according to their stamina, but now things have changed so significantly, that a large
number of populations wake up all night and work with other colleagues who are present far
away. The virtualization involves high level of communication and people have to deal with
diversified clients regardless of considering the inner situation or state of their mind. This is a
tough task, but since it has become the requirement of the hour, therefore people are more
inculcating within the scenario and transforming their mind to work according to the new
culture that has developed.

The evolution of information technology has allowed even individuals to give a tough fight
to large organizations. The globalization aspect has brought people from all around the world
in one place and dealing with such a situation where a person need to be considerate about
the ethics and norms of the opposite worker has become a tough task indeed. Today where
companies are coming up with innovative ideas to withhold their unique proposition by
hiring more global employees through virtual channels the task is becoming even difficult
day by day as more freelancers, individuals and small groups are making their way into the
arena with high competency.

Today there are numerous virtual organizations that are operating worldwide and have
various employees on variable pay basis. This results in one worker to be employed in more
than one organization, although this seems fruitful for the worker as he is employed more
than one place and takes the salary from different organizations, but instead it rather becomes
difficult for that worker to quickly transform his ideas, perceptions, norms, and cultural
values according to the one that are required by their client.

From organization prospect, the concept is highly profitable due to their cost effectiveness,
convenience, support, quality and low turnaround time. However, implementing the idea of
virtual organization although might seem easy but there are several hurdles that an individual
or group needs to tackle in order to achieve the desired destination. In this project we will
cover the different aspects and hurdles that an origination faces while building or maintaining
their organizational culture. Research suggests that South Asian labour force demand is

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 Building Organizational Culture in Virtual Organizations in Infancy

worldwide popular and bridging the gap through this virtual organization is an interesting
journey. Today over 30 million people in South Asia work online either through virtual
channels or through different channels in order to earn money. Therefore it would rather be a
substantial research to find out what factors are critical for the culture development within
virtual organizations, especially when it is in the starting phase.

INTRODUCTION
The concept of virtual organization is new to Pakistani market, so conducting a research
based on this new concept was a fun and learning experience as we learned a lot from this
research. Primarily running our own virtual organization also made the topic more interesting
for conducting the research. It then became easier for us to link the problems that we
researched to the problems that we faced practically and to draw out solutions from the
learning of organizational behavior.

The concept of virtual organization that we bear in mind explains as an organization in

cyberspace. Cyberspace specifically denotes the real and imaged space in which individuals
meet in electronically mediated and simulated space. The emphasis lies on the establishment
of an 'information space', which is created through the connection of computers and
computer networks. The creation of this space facilitates the sharing of information and
knowledge, as well as electronic communication. Virtual teams and virtual organizations
being a new concept obviously face many opportunities and challenges. However, still a
virtual organization is at greater risk of failure. The higher degree of risk in virtual
organization is a result level of independence that is given to the team of virtual organization
and the manner the management performs it duties virtually. Managing a team virtually itself
is a challenging task when you are not facing the person to whom you are assigning the jobs
practically. It then becomes difficult to analyze the person whether he would be able to the
work appropriately or if he is well committed to his work. Furthermore applying the same
techniques for managing human resource for the people working in virtual organization
would be a blunder in itself. Hence coming up with innovative and applicable ideas for
managing team in virtual organization and identifying the problems in the implementation of
those ideas is the core objective of the report. Thus the report is designed in a manner that it
is not only a learning experience for us but it will be a learning experience for all the readers
who will be reading the report.

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 Building Organizational Culture in Virtual Organizations in Infancy

RATIONAL FOR THE STUDY (WHY VIRTUAL ORGANIZATION)

We have been involved in the virtual organization business for the past 5 years, and dealing
with employees who are not present in front is entirely different from what we observe in the
practical world. People have a misconception regarding the building up of culture and
maintaining the norms within a virtual organization, however the practical scenario is very
different from what people perceive about virtual organization. Although the business
processes are pretty much similar from hiring to operations, however performing of operation
is done on a different basis and employees need to be managed differently as well.

We have observed the increasing trend of virtual employees during the recent times and
being a part of the same, we feel that our research will contribute to our organization as well.

PROBLEM STATEMENT
Hypothesis
H1: A strong culture can be built in the initial phases of virtual organization
H2: A strong culture cannot be built in the initial phases of a virtual organization

Problem statement:
To find out the factors that impact in the culture building of virtual organization in the starting
phases.

RESEARCH OBJECTIVES
The goal of our study was to gain an improved understanding of the problems being faced by the
virtual organizations in setting of their organizational culture. The purpose of this study was to
investigate the problems thoroughly that are faced by the virtual organizations and then on the
basis of the identified problems recommend appropriate organizational behaviour techniques to
encounter these problems. The prime objective of this research was to put light on the different
aspects that might occur while setting the culture for the newly starting organization primarily a
virtual organization which a new concept for conducting business these days and gaining
popularity day by day.

The fundamentally important research question for our study is:

“To identify the key drivers of setting organizational culture of virtual organization in
infancy”

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 Building Organizational Culture in Virtual Organizations in Infancy

In addition to the above two primary research objectives, another auxiliary goal of this analysis
was to gain firsthand experience of business research. The application of concepts in the courses
of “Organizational Behaviour” and “Methods of Business Research,” which form a critical part
of the MBA program at IOBM, is critical to understanding how organizations gain marketing
information. These market insights are essential for making right business decisions.

The project gave the team members an opportunity to get involved in a study that included the
phases of problem definition, research design and analysis.

RESEARCH STEPS / METHODOLOGY

The research method adopted was a structured process which went through the following steps,
as detailed below:

Step 1: Brainstorm ideas

The research project kicked off with a brainstorming session of the topics via emails that
defined the domain of the research. Once the domain of research was defined as
“Problems in defining the organizational culture of virtual organization”, the team
progressed to identify the parameters of the research within this topic.

Step 2: Group Meeting

The first review meeting was then held to discuss and finalize the project proposal as the
first deliverable for this organizational behaviour project. The project proposal parts and
deliverables were then assigned amongst the team members.

Step 3: Research design and medium selection

Appropriate research medium was the necessary element of the report for reaching the
consumer and recording their responses while considering constraints of time and money.
Hence for the purpose only quantitative research was conducted and questionnaire was
design to evaluate problems in setting an organizational culture for a virtual organization
in infancy.

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 Building Organizational Culture in Virtual Organizations in Infancy

Step 4: Online Survey

The survey techniques used for gathering the responses was through online survey. The
reason for using online survey as the medium of gathering the responses from the target
audience was due to the fact that it provided convenience to the respondent and through it
diversified data could be gathered. Since our topic was also such that focused mainly on
the audience that worked online, thus online survey helped us a great deal in achieving
our purpose.
The basic advantage of using online survey was to avoid cumbersome, error-prone task of
compiling results using a coding scheme, which had to be specifically designed for
manual questionnaires. Moreover there was no requirement of Survey ID to be
maintained manually.

Step 5: Online survey on Google Docs

In order to facilitate and ease the process of survey with least probability of error we
opted for designing the survey using the survey tool of Google Docs. The format of the
questionnaire was MCQ based and there was no requirement of coding scheme as the
data was analysed automatically by the Google survey tool.

Using this tool for conducting the survey not only provided ease but it also provided
applications which helped us in the data analysis. It also gathered the data on the single
spreadsheet that was quite time saving for us during the analysis phase

Step 6: Pre-test
A pre-test was then conducted to ensure that a typical subset of our sample size interprets
the questionnaire correctly and has the same understanding of questions as the research
team. The feedback from this step further improved our questionnaire phraseology and
hypotheses.

Step 7: Model Testing

The pretesting done further ensured that the questionnaire designed in this manner was
accurately obtaining responses and was saving them in appropriate manner. Moreover the

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 Building Organizational Culture in Virtual Organizations in Infancy

analytics tool of Google was also tested to ensure that analysis will be error prone. After
an end-to-end execution of the process, we launched the survey. All that was left after
this stage was to get the questionnaires filled in the available template and the results
would be computed automatically.

Step 9: Launch and Data Collection

The survey was then launched and was ready for data collection. The survey was
judgemental and convenience based. Since the topic we chose for the research was such
that we knew the target audience that was appropriate for getting the responses. Thus we
used academic and social networks for circulation of the survey. We circulated the survey
link in our social network of which we thought it will be appropriate to get the response,
moreover we also circulated the survey link within our CBM network. The total sample
size, hence, was 200 responses.

Step 10: Analysis

Graphical analysis and hypothesis results were then calculated based on the responses
received. The details of analysis and tabulation of results follow in subsequent sections.

Step 11: Results and Conclusions

Conclusions were drawn from the results of the hypotheses and documented.

9. RESEARCH DESIGN

The research design utilized both quantitative and qualitative methods. Since Virtual
organizations are getting popularity in Pakistan as well so a kind of research like this was
necessary to analyse the major cultural factors that can have an effect on organizations like this.
The research was carried out using a two phased approach. In the first phase we identified the
key drivers based on the research through secondary mediums in which internet was our main
source for data collection. From the journals available online and E-books we studied different
aspects of culture of a virtual organization. The results from those were utilized in designing the
quantitative research.

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 Building Organizational Culture in Virtual Organizations in Infancy

10. SAMPLING APPROACH

The sampling of the research was tailored to primary target the segment of Karachi’s population.
The concept of virtual organization and to run a business virtually seems to be popular among
youth and people in the age group early 40s as these are the people who are technologically
aware and don’t have any issues while operating their day to day task on computer. Hence the
sampling method used in the survey was judgemental plus convenience due to resource
constraints. Resources, both in terms of time and costs, were considered when doing the pre-
study. The project team used their personal, academic and professional networks for the survey.
The e-mail request to fill up the online questionnaire included well-thought through sentences to
create the “snow-balling effect” to get maximum respondents to fill up the questionnaires.

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Building Organizational Culture in Virtual Organizations in Infancy

Online questionnaire snapshot

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Building Organizational Culture in Virtual Organizations in Infancy

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Building Organizational Culture in Virtual Organizations in Infancy

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 Building Organizational Culture in Virtual Organizations in Infancy

11. SUMMARY OF RESPONSES

100 responses

Background

Engineer 50 50%

IT/ Communication 25 25%

Business 14 14%

Medical 6 6%

Law 1 1%

Other 4 4%

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 Building Organizational Culture in Virtual Organizations in Infancy

Building Cultures - Things get accomplished around here because employees fear for their jobs.
1 Almost never 14 14%
2 Seldom 28 28%
3 Occasionally 24 24%
4 Frequently 24 24%
5 Almost always 8 8%

Building Cultures - The managers display real leadership traits and are respected by the employees.
1 Almost never 8 8%
2 Seldom 36 36%
3 Occasionally 32 32%
4 Frequently 10 10%
5 Almost always 10 10%

Building Cultures - There is a real feeling of teamwork

1 Almost never 0 0%
2 Seldom 15 15%
3 Occasionally 43 43%
4 Frequently 22 22%
5 Almost always 16 16%

Building Cultures - Only Management is allowed to make decisions

1 Almost never 2 2%
2 Seldom 10 10%
3 Occasionally 11 11%
4 Frequently 25 25%
5 Almost always 48 48%

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 Building Organizational Culture in Virtual Organizations in Infancy

Building Cultures - Although the employees are happy and contented, they give only passive cooperation.
1 Almost never 8 8%
2 Seldom 22 22%
3 Occasionally 20 20%
4 Frequently 37 37%
5 Almost always 9 9%

Building Cultures - Both managers and employees want to create better job performance.
1 Almost never 5 5%
2 Seldom 4 4%
3 Occasionally 24 24%
4 Frequently 36 36%
5 Almost always 27 27%

Building Cultures - There is a partnership between managers and employees

1 Almost never 16 16%
2 Seldom 21 21%
3 Occasionally 24 24%
4 Frequently 23 23%
5 Almost always 12 12%

Building Cultures - Although people obey their leader, they do not respect the leader
1 Almost never 10 10%
2 Seldom 14 14%
3 Occasionally 28 28%
4 Frequently 32 32%
5 Almost always 12 12%

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 Building Organizational Culture in Virtual Organizations in Infancy

Building Cultures - Management's main concern is too make money

1 Almost never 2 2%
2 Seldom 9 9%
3 Occasionally 20 20%
4 Frequently 29 29%
5 Almost always 36 36%

Building Cultures - The employees feel they are part of the organization
1 Almost never 13 13%
2 Seldom 16 16%
3 Occasionally 36 36%
4 Frequently 20 20%
5 Almost always 11 11%

Building Cultures - When things go wrong, the main concern is to fix it, not to lay blame.
1 Almost never 13 13%
2 Seldom 27 27%
3 Occasionally 20 20%
4 Frequently 20 20%
5 Almost always 16 16%

Building Cultures - There is enthusiasm among the employees to better job performance
1 Almost never 2 2%
2 Seldom 11 11%
3 Occasionally 43 43%
4 Frequently 30 30%
5 Almost always 10 10%

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 Building Organizational Culture in Virtual Organizations in Infancy

Building Cultures - Although the employees have good benefits, they tend to give only minimal
performance
1 Almost never 14 14%
2 Seldom 34 34%
3 Occasionally 25 25%
4 Frequently 17 17%
5 Almost always 6 6%

Building Cultures - The employees feel their jobs hold high esteem and are of great value to the
organization
1 Almost never 12 12%
2 Seldom 20 20%
3 Occasionally 26 26%
4 Frequently 27 27%
5 Almost always 11 11%

Building Cultures - Most of the employees seem content to stay in their position
1 Almost never 14 14%
2 Seldom 24 24%
3 Occasionally 28 28%
4 Frequently 17 17%
5 Almost always 11 11%

Building Cultures - Employees are part of the decision making process

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 Building Organizational Culture in Virtual Organizations in Infancy

1 Almost never 25 25%

2 Seldom 26 26%
3 Occasionally 27 27%
4 Frequently 8 8%
5 Almost always 6 6%

Our organization is good at fulfilling their mission

1 = Strongly Disagree 27 27%

2 = Somewhat Disagree 9 9%
3 = Neither Agree nor Disagree 18 18%
4 = Somewhat Agree 28 28%
5 = Strongly Agree 14 14%

- My organization's culture follows the company's mission

1 = Strongly Disagree 16 16%

2 = Somewhat Disagree 17 17%
3 = Neither Agree nor Disagree 21 21%
4 = Somewhat Agree 36 36%
5 = Strongly Agree 6 6%

My organization's culture is shaped by internal factors

1 = Strongly Disagree 4 4%
2 = Somewhat Disagree 6 6%
3 = Neither Agree nor Disagree 25 25%
4 = Somewhat Agree 47 47%
5 = Strongly Agree 14 14%

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 Building Organizational Culture in Virtual Organizations in Infancy

My organization's culture is shaped by external factors

1 = Strongly Disagree 4 4%
2 = Somewhat Disagree 16 16%
3 = Neither Agree nor Disagree 28 28%
4 = Somewhat Agree 39 39%
5 = Strongly Agree 9 9%

My organization's culture is developed by top management

1 = Strongly Disagree 3 3%
2 = Somewhat Disagree 6 6%
3 = Neither Agree nor Disagree 18 18%
4 = Somewhat Agree 24 24%
5 = Strongly Agree 45 45%

My organization shares information with others who should know

1 = Strongly Disagree 16 16%
2 = Somewhat Disagree 11 11%
3 = Neither Agree nor Disagree 28 28%
4 = Somewhat Agree 29 29%
5 = Strongly Agree 12 12%

My organization's structure is hierarchal in nature

1 = Strongly Disagree 10 10%
2 = Somewhat Disagree 12 12%
3 = Neither Agree nor Disagree 22 22%
4 = Somewhat Agree 36 36%
5 = Strongly Agree 16 16%

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 Building Organizational Culture in Virtual Organizations in Infancy

Gift taking and Gift giving is acceptable norm in my organization

1 = Strongly Disagree 14 14%
2 = Somewhat Disagree 19 19%
3 = Neither Agree nor Disagree 32 32%
4 = Somewhat Agree 17 17%
5 = Strongly Agree 14 14%

There are In-Groups and Out-Groups in the management

1 = Strongly Disagree 3 3%
2 = Somewhat Disagree 10 10%
3 = Neither Agree nor Disagree 24 24%
4 = Somewhat Agree 34 34%
5 = Strongly Agree 25 25%

The organization is justified to everyone's performance

1 = Strongly Disagree 23 23%
2 = Somewhat Disagree 15 15%
3 = Neither Agree nor Disagree 30 30%
4 = Somewhat Agree 20 20%
5 = Strongly Agree 8 8%

My Organization culture is strong

1 = Strongly Disagree 16 16%
2 = Somewhat Disagree 7 7%
3 = Neither Agree nor Disagree 35 35%
4 = Somewhat Agree 22 22%
5 = Strongly Agree 14 14%

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 Building Organizational Culture in Virtual Organizations in Infancy

There are high rules and regulations for every work (SOP)
1 = Strongly Disagree 10 10%
2 = Somewhat Disagree 14 14%
3 = Neither Agree nor Disagree 35 35%
4 = Somewhat Agree 25 25%
5 = Strongly Agree 12 12%

My Boss is always in front of me when i work

1 = Strongly Disagree 26 26%
2 = Somewhat Disagree 26 26%
3 = Neither Agree nor Disagree 22 22%
4 = Somewhat Agree 17 17%
5 = Strongly Agree 5 5%

I am intensely monitored during my working hours

1 = Strongly Disagree 28 28%
2 = Somewhat Disagree 20 20%
3 = Neither Agree nor Disagree 17 17%
4 = Somewhat Agree 24 24%
5 = Strongly Agree 7 7%

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 Building Organizational Culture in Virtual Organizations in Infancy

12. ANALYSIS

Through the analysis of data we managed to figure out that strong culture although has great
influence in organizations operating practically, but when it comes to virtual organization, a
strong culture can be developed only through effective culture building strategies and
exceptional leadership skills. Even in the virtual organizations the leaders play the most
important role in building up organization culture and norms. The virtual organizations norms
are a little different from physical organization but the impact of culture is as important in this
regard as it can be in any other organizations. The most prominent thing that comes along in the
virtual organizations culture is the ability to work under diversified workforce. The modern
trends of organizations are changing and with the huge impact of globalisation every
organization has to learn the ability to deal with virtual organizations as well.

Our research has proven that workers expect their leaders to motivate them, help them and built a
personality regardless of the fact that the sub ordinate is present in front or not. The charisma of
leaders, the rule of organizations and the values of employees can be equally managed virtually
as well. The core thing is upon the organization and its management how it builds up the culture
from infancy and how it helps its employees to nurture even if the employee is not present in
front physically.

As far as the change of culture within organizations is concerned, for any organization
attaining the future state through its vision is done through the process of change management.
The process of change management starts with the creation of the vision and with the
empowerment of the individuals who act as change agent for the accomplishment of the vision.
In order to have effective change management it is required to have a plan that is realistic and
applicable for the change agent. Change management is thus the process of applying effective
strategies and plans for enabling the change agents in the achievement of the vision.
Change management is thoughtful and creative process which involves planning,
implementation, consultations and the involvement of the individuals who are affected by the
change process. For the change to take place it is essential that it should not be enforced and the
necessity of change should be developed so that everyone understands the need of change and
are ready to adapt that change. Forceful implementation of change might result in creation of
problems. Furthermore change must be such that it should be realistic, achievable and
measurable. Prior for going to the organizational change it is essential that one should ask
himself what are the objectives that they need to achieve from the applied change, why the
change is important, how many people will be affected by the change and how the people will
react to the change? The answers to these questions are significant in the sense that whether the

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change that is being made is necessary or not. If it is going to be profitable or not and what are
the elements that will be affected
Organizational Cultural Change management is a complete process that needs to be
understood and managed in a way that people affected by it can effectively cope with it. No
matter whether the change is of level one or of level two that is if there is one process change or
multiple processes change it’s a common practice that during the process of change one might
feels uneasy and frightened from the scale of challenge that may occur.

13. CONCLUSION & RECOMMENDATION

Organizations in Pakistan had been not very proactive in the past years, and due to this
reason their employees were not enjoying great benefits. The technology change that came into
the Pakistani IT industry has changed the whole scenario of organizations today. Virtual
organizations have emerged and have given a tough competition to the competitors in the
industry. Today, no organization can survive if its attitude and culture enforces them to remain
reactive rather than proactive. If the culture persist employees to have a proactive attitude, this
let them to grow further in other countries as well. Due to globalisations, virtual organizations
provide all possible facilities within their limits to their employees and if the employees are able
to understand and change their behaviour according to the organizational culture they are sure to
excel on every ground.

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