A study of the virtual organization of Taiwan’s business groups

Authors:Shung-Ming Tang, Muh-Chyun Shyu, Che-Hong Chen, Hsiu-Sen Chiang
Journal: Chiao Da Management Review. Dec. 2008, 28(2): 253-290.
Keywords: Virtual organization; Partner selection; Coordination mechanism; Organizational cost
Abstract:
During this new age of globalization, virtualization and intense competition, business groups must exploit the strategy of “Integrating Vertically and Connecting Horizontally” to network the resources from sub-conglomerates to form a complete value chain which conducts the combined procurement, manufacturing, marketing and even door-to-door delivery. These require the enterprise to develop an effective virtual enterprise operation structure. The purpose of this article is to develop and validate a virtual organization model for Taiwan’s business groups. Our research assesses the co-operation of 3531 individual suppliers for nearly 250 business groups. Based on the questionnaire survey selected from 206 company CEOs or Presidents, our data analysis based on the LISREL model agrees well with the data. The results of this research find that both partner selection and coordination mechanisms are key to the effectiveness of the virtual organization of Taiwan’s conglomerates. Information technology and organizational cost, on the other hand, have no significant impact on virtual enterprises’ operations. We believe that the proposed model can help to resolve the virtual organization’s communication and coordination problems, as well as provide a guide for how Taiwan’s conglomerates should establish their virtual organizations.