A Formal Analysis of Virtual Enterprise Creation and Operation

A Formal Analysis of Virtual Enterprise Creation and Operation

Andreas Jacobsson (Blekinge Institute of Technology, Sweden) and Paul Davidsson (Blekinge Institute of Technology, Sweden)
Copyright: © 2009 |Pages: 15
DOI: 10.4018/978-1-59904-576-4.ch003
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This chapter introduces a formal model of virtual enterprises, as well as an analysis of their creation and operation. It is argued that virtual enterprises offer a promising approach to promote both innovations and collaboration between companies. A framework of integrated ICT-tools, called Plug and Play Business, which support innovators in turning their ideas into businesses by dynamically forming virtual enterprises, is also formally specified. Furthermore, issues regarding the implementation of this framework are discussed and some useful technologies are identified.
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Innovations are important to create both private and social values, including economic growth and employment opportunities. From an innovator’s perspective, there are some common obstacles for realizing the potential of innovations such as shortage of time to spend on commercialization activities, lack of business knowledge, underdeveloped business network and limited financial resources (Tidd, Bessant, & Pavitt, 2005). Thus, the innovator requires support to develop the innovation into business, something often seen as the specific role of the entrepreneur, which is to search, discover, evaluate opportunities and marshal the financial resources necessary, among other things (Leibenstein, 1968). Playing the role of an innovator or entrepreneur in the networked economy requires a global outlook. New trade and production patterns, as well as the emergence of new markets point toward a more efficient use of global resources. Information and communications technology (ICT) already plays an important role as a facilitator in this development. We believe that better economic growth can be achieved when the innovator and the entrepreneur can compete and collaborate in order to solve problems on a global market place.

In realizing innovations, small and medium sized enterprises (SME) are particularly important. In response to fast changing market conditions, most enterprises and especially the SMEs need ICT-infrastructures that consider their size as well as high specialization and flexibility. While allowing them to maintain their business independence, ICT-based innovation support should help SMEs reach new markets and expand their businesses (Cardoso & Oliveira, 2005). On this topic, one promising approach for SMEs is to participate in computer-supported collaborative networks that will act as breeding environments for the formation of dynamic virtual enterprises (cf. Ecolead).

The vision of Virtual Enterprises, or more generally Collaborative Networks, is constituted by a variety of entities (e.g., organizations and people) that are largely autonomous, geographically distributed and heterogeneous in terms of their operating environment, culture, social capital and goals (Camarinha-Matos & Afsarmanesh, 2006). The idea of participating in highly dynamic coalitions of enterprises that are formed according to the needs and opportunities of the market, as well as remaining operational as long as these opportunities persist, put forward a number of potential benefits, some of which are related to agility, innovation management, resource optimization and the adoption of complementary roles based on core competencies (Camarinha-Matos & Afsarmanesh, 2003).

The lack of appropriate theoretic definitions and formal models has been argued to be one of the main weaknesses in the area of collaborative networks and virtual enterprises (Camarinha-Matos & Afsarmanesh, 2003, 2005, 2006). In fact, D’Atri and Motro (2007, p. 21) point out that “while the essential principles of virtual enterprises are mostly agreed upon, a formal model of virtual enterprises has been curiously missing.” In this article, we provide a formal model of virtual enterprises and their most crucial tasks. We also propose a formal framework of integrated ICT-support intended to enable secure and agile virtual enterprise creation and operation. We call this framework Plug and Play Business (Davidsson et al., 2006).

In the next section, we provide a formal description of the concept of virtual enterprise followed by a formal analysis of Plug and Play Business. Next, we discuss the usefulness of emerging technology trends relevant for the implementation of Plug and Play Business software. In the end, we present some conclusions and ideas for future work.

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