3.1 Introduction

Virtual organizations obviously have a need for business models, which are different from the traditional, but there is no one single business model that is appropriate to all forms of virtual enterprise. Different organizations will require different business models and these will reflect the extent and strength of their interorganizational links within their networked alliances. In the most basic sense, a business model is the method of doing business by which an organization can best sustain itself which in most cases means generating revenue. The selected business model will therefore be that which spells out how the organization positions itself within the value chain in order to make financial return.

e-business has given rise to many new kinds of business model but has also allowed organizations to reinvent some. One of the most obvious cases is that of the auction model. eBay did not invent this model but merely reapplied one of the oldest business models in existence. Popularization of this model has broadened its application on the Web to a wide array of goods and services. A number of other forms of model exist and these typically reflect the e-business strategy, i.e. how the organization intends to create an online community. However, there are also models which reflect the strategic structure of the virtual organization. These models relate to the virtual culture adopted by the organization and the communication linkages...