To support massive connectivity and boost spectral efficiency for Internet of Things (IoT), a downlink scheme combining virtual multiple-input-multiple-output (MIMO) and nonorthogonal multiple access (NOMA) is proposed. All the single-antenna IoT devices in each cluster cooperate with each other to establish a virtual MIMO entity, and multiple independent data streams are requested by each cluster. NOMA is employed to superimpose all the requested data streams, and each cluster leverages zero-forcing detection to demultiplex the input data streams. Only statistical channel state information (CSI) is available at the base station to avoid the waste of the energy and bandwidth on frequent CSI estimations. The outage probability and goodput of the virtual MIMO-NOMA system are thoroughly investigated by considering the Kronecker model, which embraces both the transmit and receive correlations. Furthermore, the asymptotic results facilitate not only the exploration of physical insights but also the goodput maximization. In particular, the asymptotic outage expressions provide quantitative impacts of various system parameters and enable the investigation of diversity-multiplexing tradeoff (DMT). Moreover, power allocation coefficients and/or transmission rates can be properly chosen to achieve the maximal goodput. By favor of the Karush-Kuhn-Tucker conditions, the goodput maximization problems can be solved in closed form, with which the joint power and rate selection is realized by using alternately iterating optimization. Besides, the optimization algorithms tend to allocate more power to clusters under unfavorable channel conditions and support clusters with a higher transmission rate under benign channel conditions.