Date: 18 Jun 2003

The Virtual Enterprise: Redefining the Concept

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In this paper, we critique the definitions of the virtual enterprise that have appeared in the previous literature, and propose a new definition. We define a ‘pure’ virtual enterprise as an enterprise that does not own traditional production factors, based on the observation that these are the source of rigidity in the management of the real enterprise. The virtual enterprise newly defined in this paper is an ideal enterprise, which may not exist even in the future. The pure virtual enterprise can be used as a benchmark model in future research. In addition, the difference in virtualness between the pure virtual enterprise and today’s real enterprise can be used as a measure to gauge the level of virtualization of the real enterprise. In this paper, we also derive the characteristics of a virtual enterprise from the new definition, rather than assert them without explaining their origin.