Due to environmental changes and business trends such as globalisation, outsourcing and virtualisation, more and more companies get involved in business activities that are outside their direct control. This typically occurs by entering into collaborative relationships and joint ventures with specialised companies in order to fulfil the demands of customers quickly (DiMaggio, 2001). Organisational structures that results from such collaborative relationships and joint ventures are referred to in this paper as enterprises and the management of them known as enterprise management. The authors use the definition of the European Commission (2003) that defines an enterprise as “… an entity, regardless of its legal form … including partnerships or associations regularly engaged in economic activities.” Therefore in its most simple form an enterprise could be a single integrated company. However, findings from this research show that enterprises can also be made up of parts of different companies and the structure of the enterprise is contingent upon a variety of different factors. The success of the enterprise as a collaborative venture depends on the ability of companies to intermediate their internal core competencies into other participating companies’ value streams and simultaneously outsource their own peripheral activities to companies that can perform them quicker, cheaper, and more effectively (Lal et al., 1995). In other words, the peripheral activities of one member-company must be complemented by a core competence of another member-company within an overall enterprise.
Key Terms in this Chapter
Enterprise Module: An interdependent semi autonomous part of an individual company with a highly specific core competence asset (e.g., new proprietary technology or superior knowledge) complemented by other less specific assets (e.g., shared information or process technology) that enables the core competence to be deployed.
Asset Specificity: The degree to which an asset can be used for different purposes. High specificity means that there is little opportunity to use an asset for anything other than its initial intended purpose. Low specificity means that an asset has many possible different uses.
Enterprise Management: The management activities involved in designing and managing an enterprise.
Extended Enterprise: The entire set of companies (or their parts) that work together to bring value to the marketplace. Members view their destinies to be interdependent which distinguishes the extended enterprise from other loose confederations of buyers and suppliers.
Virtual Enterprise: A temporary confederation of independent companies linked by shared information, skills, costs, and access to one another’s markets. They have an evolving corporate model that will be flexible enough to exploit a specific opportunity.
Enterprise: An entity, regardless of its legal form, that includes partnerships or associations, which regularly engage in economic activities.
Vertically Integrated Enterprise: The enterprise structure formed when permanent consolidation occurs between the value members. This most closely approximates the single large autonomous organisation.