Like most new ideas, virtual organization is not entirely new—some of its components are recognizable from earlier concepts of organization. However, the integration of all the components does signal something new and revolutionary. Its revolutionary character stems from the principle of switching (i.e., shifting between different means for satisfying a need), which calls upon management to maintain a logical separation between abstract requirements and the concrete means for their satisfaction. Advanced information technology makes it possible to realize virtual organization in practice, and the paradigm is clearly manifest in the operations of some innovative firms. The economic and social significance of virtual organization in the future is likely to be comparable to that of the factory in an earlier period. Properly implemented, virtual organization may deliver increases in efficiency and effectiveness on an unprecedented scale. At the same time, it may stimulate social changes at least as far‐reaching as those associated with the industrial revolution. Abbe Mowshowitz, is Professor of computer science at the City College of New York and a member of the Doctoral Faculty in Computer Science at The City University of New York.