Organizational innovation and virtual institutes

The world has entered the Knowledge Age. Numerous events provide evidence that traditional organizational systems are finding it difficult to maintain their competitiveness in this unpredictable world. The “organization” itself has become the most important factor of competition.Organizational revolution is the first item on the agenda. This paper examines traditional Chinese research organizations and concludes that organizational innovation is a precondition for creation and innovation. The author discusses a new type of reserach organization ‐ the virtual institute (VI), its background and significance. The author also looks at the organizational change in China and offers examples of VIs both in the USA and in China. The experiences of implementing VIs in China indicate that the VI is an inevitable trend for the future. Finally, the author discusses the outlook and challenges of VI.