INFORMATION TECHNOLOGY IN VIRTUAL ENTERPRISE

Stefan Trzcielinski and Aleksander Jurga

Institute of Management Engineering, Poznan University of Technology, Strzelecka 11, Poznan, Poland

Keywords: Information technology, communication technology, virtual enterprise.

Abstract: There is a common belief expressed in the subject literature that information technology (IT) is critical

contingency factor for virtual organization. Therefore our interest was to investigate the relation between the

intensity level of IT use and the level of the organization virtuality. In that purpose we elaborated a tree of

features describing virtuality and categorized IT tools into two groups taking into considerations the

functions which they play or can play in virtual organization and the range of their influence to cope with

cooperation of distributed partners. The research sample included 45 firms, mostly small and medium,

belonging to six branches. The firms had been chosen according to pre-selection criteria, confirming that

they construct a network to run their operations. Some indicators were elaborated to measure the level of

virtuality and intensity of use of IT. Next correlation was checked between these two levels. In this paper

we present what we have found about the relation.

1 INTRODUCTION

Virtual organization is being associated with the

information and telecommunication technologies (IT

technologies). The association appears in various

context. For instance, the following statements can

be found in the literature referring to the domain: IT

is a tool for coordination in the virtual organization

(Appel and Behr, 1998), IT technologies affected

directly the opportunity to develop the virtual teams

(Ishaya and Macaulay, 1999), IT connects the

partners into an virtual organization perceived as a

temporary partner’s network (Byrne, 1993, Jägers et

al., 1998), IT is the feature that constitutes the

virtual organization (Byrne, 1993, Gristock, 1997).

As the virtual organization is so widely perceived in

association with IT, and there is no systematic

research on such an association, the authors decided

to look at the problem more deeply.

2 THE RESEARCH PROBLEM

The problem that became the research subject can be

articulated in the following question:

Is there any correlation between the company’s

virtuality level (Trzcielinski, & Wojtkowski, 2007)

and the degree of the IT implementation by the

creator initiating the virtual organization?

To answer the question, we have

operationalized the notion of virtual organization

and we have prepared the IT’s typology.

2.1 Features of Virtual Organization

Referring to the studies on the domain’s literature,

fifteen features of the virtual organization have been

distinguished and then aggregated into four meta-

features defining the company’s virtuality

(Trzcielinski, 2007).

1. Openness. The feature associated mainly with a

special susceptibility of virtual organization to

construct the cooperative connections with other

entities. The proximate cause to arrange such

connections is a need for providing the adequate

competences necessary to make profit of the market

chance observed. This feature includes:

• Skill to choose and effectiveness to exploit the

key competences,

• Confidence and equal status of partners and

readiness to get the same/common goal,

• Tendency to give the firm’s resources to carry

out the tasks to be accomplished in the

network, to increase the resources and to widen

the access to the resources,

• Openness and honesty in sharing profits, costs

and risk by all partners,

• Skills to develop the one common customer

relationship management system, supervision

413

Trzcielinski S. and Jurga A. (2008).

INFORMATION TECHNOLOGY IN VIRTUAL ENTERPRISE.

In Proceedings of the Tenth International Conference on Enterprise Information Systems - HCI, pages 413-419

DOI: 10.5220/0001724904130419

 SciTePress

and fulfilling the customer needs, appropriate

customer segmentation.

2. Temporariness of Partnership. It is due to the

exploitation of the partners’ key competences for a

determined time period, i.e. the different time period

of participation in the virtual organization as well as

a different role in the organization (Christie, &

Levary, 1998). This feature includes:

• Temporariness of virtual organization related

to its short lifetime,

• Reconfigurability of the partners’ network

meant as a readiness to enter and to retire from

the virtual organization after having completed

the task,

• Institutional independence of the partners,

• Heterarchy expressed by the degree of

formalization, organizational structure’s

flattening, management decentralization and

variability of the decision center.

3. Orientation to Market Opportunities. The

success or failure of the venture depends, among

others, on the ability to identify and to immediately

reply to the market opportunities. The feature

includes:

• Organization’s flexibility to respond and adapt

its activities to the variable market conditions.

• Integrity of organization, i.e. the virtual

organization is perceived by outsiders as an

entity

4. Organizational Distance between Partners.

There are three basic component features of it:

territorial and time distance, social distance and

information distance among partners of virtual

organization. This feature includes:

• Territorial distance considered as a

geographical dispersion of partners; it could

refer to the dispersion within local, country,

European or worldwide market.

• Time distance related to the different time

zones the particular partners of virtual

organization are running their activities in. The

time distance can generate troubles due to

delayed flow of and access to information,

time-shifted response to the changing market

conditions, difficulties to create the virtual

organization and to coordinate its activities

• Social distance appearing mainly as a lack of

the face-to-face contact between partners and

informal horizontal communication.

• Information distance manifested by the

response time to the risks and disturbances

affecting the fulfilling of the company’s

functions.

The above four features has been decomposed into

detailed ones. The detailed features have been, in

turn, decomposed into the symptoms of the virtual

organization’s presence; referring to the last ones,

the questionnaire for interviewing the management

body of the companies under test has been

developed.

2.2 IT Tools

IT tools are meant here as a set of tele-computing

technologies, without splitting into software,

hardware or IT infrastructure. The IT tools are their

specific designation resulting from their special

properties. Therefore, different groups of the IT

tools can be defined referring to these features. In

this paper, the function-based and the range of

influence-based classifications have been assumed

(Trzcielinski, 2007). Referring to the functions, the

following types of IT tools are depicted.

1. Communication Supporting Tools. The notion

denotes the IT tools used to achieve the fast and

precise information exchange between partners,

customers and even competitors. The process of

planning and coordinating the tasks run by

distributed partners of virtual organization is more

difficult. The physical distance between partners

significantly increases the information distance

measured with the time of reaction to the noticed

market chances and to the risks and disturbances

arising when the virtual company is accomplishing

its tasks. The information flow is just necessary not

only to create the virtual organization but also to

complete successfully the tasks the virtual

organization has been brought into existence. The

classic communication - supporting tools are fixed

telephony and facsimile. A sharp technological

development caused the thorough integration of

solutions of information technology and

telecommunications. A new quality of the IT tools

has appeared enabling the efficient communication

between the business process players. At present, the

use of electronic mail, internet portals, mobile

telephony, internet communicators and VOIP as well

as transmission of information using mobile

telephony as well as opportunity to talk via internet

is often more convenient and efficient than

electronic mail. Thanks to variety of the IT-based

communication tools, the integration of partners

within a virtual organization becomes simple and

flexible.

2. Information-decision Process Supporting

Tools. This kind of tools supports the information-

decision making processes in virtual company.

Among others, the tools make use of the distributed

data bases located in both the data centers belonging

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to the virtual organization’s partners and the

common data bases accessible by internet.

Information in data bases can refer to material and

non-material resources, expertise of particular

partners, customer relation management, scenarios

of previous projects, competences of the virtual

company’s partners and the company environment

features. The IT tools of that kind are used to

perform among others the following:

• Financial, statistical, demographical analyses

etc.,

• Selection and sorting information,

• The physical and decision-making processes

coordination within the supply chain,

• Stock management,

• Scheduling the delivery,

• Cost calculation,

• Capacity planning and the use of resources,

• Process control,

• Demand forecasting,

• Document exchange (e.g. orders and invoices),

• Finance management.

3. Design Supporting Tools. In virtual organization,

the design functions (designing of product, for

example) can be accomplished by the physically

distributed designing team. Therefore, the

communication functions among partners and

function of the access to the shared resources in the

form of accessible files (data exchange), information

on the progress of the project have to be integrated

in these tools and to make possible the aligned

realization of anticipated tasks. The designing tools

used in the virtual organization depend on the

branch in which the perceived market opportunity is

located. For instance in case of production

companies, the IT tools and systems involve CAD,

CAM, CAPP, and others. However, the same group

encompass also the tools for WWW service design

(MS FrontPage), graphical project’s preparation

(Corel, Adobe), multimedia presentations (MS

PowerPoint), information flow modeling using the

UML standard (MS Visio).

The recent IT, regardless the classification

criterion, cannot be unambiguously assigned to their

function. Therefore, it should be assumed that the

types as mentioned above overlap each other.

Regarding the range of the influence, four

classes of the IT tools have been identified.

1. Desktop Tools. The group involves the tools

related directly to the workplace, and the usefulness

of these tools to develop the virtual organization is

very low. Such a limited usefulness results from the

fact the tools themselves do not form the IT network

connections to other players of the business

processes.

2. Local Network Tools. The class encounters all IT

tools ensuring efficient communication, fast access

to data as well as the information exchange within

the local IT infrastructure of the company. It refers

mainly to the internal aspect of the virtual firm. The

examples are LAN, intranet, local post office and the

local database servers.

3. Distributed Network Tools. In the class, the

integrated local network tools and wide IT

infrastructure going beyond the physical framework

of the company (MAN and WAN, Internet,

Extranet) are placed. The integration of the IT tools

seems to be significant to the virtualization of

company and business. With this class of tools,

suppliers and customers can communicate and

cooperate with no limits resulting from their

territorial dispersion.

4. Mobile Tools. The tools of this class

present all

features of classes mentioned above and an

additional ability of remote connection to LAN,

WAN and to individual desktop tools. To establish

the communication, not but the mobile Access

Points are required and the physical IT infrastructure

is not needed.

3 RESEARCH SAMPLE AND

MEASUREMENT METHOD

The surveys has been carried out in 2003-2006 in

companies which were creating and are still

developing the virtual organization. The creator is

meant as a firm which notice a market opportunity in

its environment, enters into contract with customer

and realizes the contract in the networking.

3.1 Research Sample

The network partners ware chosen regarding their

key competencies required to accomplish the actual

contract. Thus, the choice of the sample has been

targeted, and the criterions were:

1. The creator develops a network with the virtual

organization features. The features being at least as

follows: temporary inter-partner relations, territorial

dispersion of partners, low degree of formalization

of the structures being developed to carry out the

business project.

2. Operational activity of particular companies is

placed in various branches.

3. In the company, at least one type and one class

INFORMATION TECHNOLOGY IN VIRTUAL ENTERPRISE

415

of the IT tools is used.

The test sample involved 45 firms from the

production and service sectors, located in the

Wielkopolska voivodeship in Poland. The branch

structure of the companies under consideration is as

follows: IT services – 10 firms, real estate related

services - 11 firms, turnkey fair stands services – 10

firms, constructions and building maintaining

services – 5 firms, printing services – 4 firms,

manufacturing – 5 firms.

3.2 Measurement Method and Results

To measure the level of the company’s virtual

organization and its IT tools implementation level,

an interview questionnaire has been elaborated to

enumerate the following: symptoms of presence of

the virtual organization assigned to particular meta-

features of the company’s virtuality, and use of the

IT tools.

Intensity of presence of the particular symptoms

and IT tools have been assessed according to the

Likert order scale ranging from 1 to 5. Referring to

the answers given by the companies, the company’s

virtuality level has been measured regarding the

actual meta-feature. Then, a synthetic virtuality level

has been found (Table 1).

5 *

∗

⎟

⎠

⎞

⎜

⎝

⎛

iTw

pkt

(1)

where:

C – virtuality level coefficient regarding actual

meta-feature,

spktT – sum of points obtained for total meta-

feature,

iTw – amount of virtual organization symptoms

assigned to an actual meta-feature.

(2)

where:

V – virtuality level coefficient for the company

under test,

spktTV – sum of points obtained for entire company,

iTwV – total number of the total organization

symptoms shown in the questionnaire.

The intensity level of IT use has been measured

using two below coefficients.

(3)

where:

– IT application intensity coefficient,

SpktT

– a sum of points obtained by the firm which

creates the virtual organization, regarding the

intensity of use of IT,

ITw

– number of the questionnaire statements

referring to the IT technologies applications.

(4)

where:

ITK

– communication technologies application

intensity coefficient,

SpktT

itk

– a sum of points obtained by the firm

which creates the virtual organization, regarding the

intensity of use of communication technologies,

ITw

itk

– number of the questionnaire statements

referring to the communication technologies

applications.

The results of the measurements are presented in

Table 2.

Statistical analysis of the obtained data shown in

table 2 has been preceded by the test to answer the

question: if obtained results for variables: V

(synthetic virtuality level)), V

(IT technologies

implementation level), V

ITK

(communication

technologies implementation level) agree with the

normal distribution.

Table 1: Average level of the firms’ virtuality regarding

actual meta-feature and the whole branch.

Virtuality degree with

regard to the meta-features

[V]

Branch

1 2 3 4 5 6

Constructions

and maintaining

3,89 4,29 4,22 3,40 3,95

IT services 3,74 4,37 3,77 3,46 3,84

Real estate

services

3,81 4,55 3,48 3,55 3,88

Printing 3,70 4,27 4,17 3,30 3,83

Turnkey fair

stands

3,96 4,39 4,19 3,62 4,04

Manufacturing 3,92 3,29 3,36 2,94 3,52

Average of all

groups

3,84 4,28 3,83 3,44 3,87

Columns: (2) Openness, (3) Relationship temporality

(4) Orientation for market opportunities

(5) Organizational distance

(6) Synthetic degree of virtuality [V]

∗

⎟

⎠

⎞

⎜

⎝

⎛

iTwV

spktTV

∗

⎟

⎠

⎞

⎜

⎝

⎛

iTw

spktT

∗

⎟

⎠

⎞

⎜

⎝

⎛

iTw

itk

spktT

itk

ITK

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416

Table 2: Average level of the firms’ virtuality regarding

actual meta-feature and the whole branch.

Intensity level of IT

use

Branch

Synthetic

degree of

virtuality

[V]

all IT

tools

]

only

communi-

cation tools

]

1 2 3 4

Constructions

and maintaining

3,95 2,16 3,96

IT services 3,84 2,29 3,80

Real estate

service

3,88 2,11 4,13

Printing 3,83 2,57 3,75

Turnkey fair

stands

4,04 2,52 4,28

Manufacturing 3,52 3,12 3,12

Average of all

groups

3,87 2,46 3,94

As the test sample size is lower than 2 thousand

cases, the Shapiro-Wilk test has been used to

estimate the normality of distribution of the

observations. For each of the variables mentioned

above, the test results permitted to state that the

distribution differs from the normal distribution.

Because the distribution of results obtained cannot

be considered as a normal distribution and the

correlation has been examined for two variables (V

and V

, V and V

ITK,

respectively) measured on the

Likert scale, therefore, the Spearman-Rang

correlation coefficient has been applied to compute

their correlation. The found correlation results are

presented in Table 3.

In face of the low correlation coefficient V and

a thesis can be advanced that the level of the

company’s virtual organization does not depend on

the IT tools implementation degree by the creator.

Moreover, the negative correlation coefficient

implies that an increase in the IT tools

implementation degree results in the decrease in the

company’s virtuality level. Such conclusions

undermine the opinion widely presented in the

literature which states that there exists a strong

relationship between the IT implementation and the

virtual organization.

The correlation between V and V

ITK

is different

than that mentioned above. The correlation

coefficient value allows to assess this correlation as

placed between the average and high one. Thus, the

conclusion can be drawn that the group of the IT

tools used especially for communication purposes

(communication tools) by the virtual organization’s

creator makes a crucial impact on the company’s

virtuality level.

Table 3: Matrix of correlation between the synthetic

virtuality level and the intensity level of IT tools use.

Spearman Rang-order correlation

Bold values of correlations are significant for p<0,05

Features (IT tools

application degree)

Features Synthetic

virtuality

level [V]

all IT

tools

]

only

communi-

cation tools

]

1 2 3 4

Synthetic

virtuality level

1,000

all IT

tools

]

-0,245 1,000

IT tools application

degree

only

commu

nicatio

n tools

]

0,474 -0,146 1,000

4 DISCUSSION OF THE RESULTS

In research work, a set of 45 firms showing

symptoms of creating the virtual organization have

been considered. The research has indicated that

different IT tools are used by the firms. Among

these tools are such once which are used to run the

firm’s operational regardless the firm’s participation

in the companies’ network organization. Analysis of

the correlation coefficients obtained has shown that

the commonly shared opinion presented in the

literature and indicating the strong relationship

between the IT [V

] and the company’s virtuality

[V] is, in fact, a one going too far. In our opinion,

such a common statement comes from the

assumption that IT promote the creation of virtual

organization but it is not included into consideration,

that some tools can be applied by the company

regardless it creates or not the virtual organization.

Therefore, it cannot be stated that the virtual

organization’s creation and running is strongly

supported by the IT.

INFORMATION TECHNOLOGY IN VIRTUAL ENTERPRISE

417

The research work as well as the statistical analysis

of results have shown the reality in which the

processes related to the creation and running the

virtual form of a company z are mostly promoted by

the communication technologies. Communication

technology tools have been considered within a set

of the IT. However, due to its low percentage within

the set, such tools did not significantly affect the

correlation between the IT [V

] and the company’s

virtuality level [V].

In our research, a relatively wide range of the IT

tools has been considered, including the tools

referred to, in both the literature and the subjective

assessment by the authors, as those supporting the

creation and running of the networking. Due to

research, it could be found that some IT tools have

been totally dismissed in the firms creating the

virtual company. Thus, the assumed set of IT tools

has shown an ‘excess’. Evidently, it reduced the

correlation factor’s value. In addition, the reduction

in the correlation coefficient resulted from the fact,

that the firms are using the application-oriented

specialized IT tools. Therefore, the variety of

applied IT increases while the share of the

‘commonly used’ IT tools relatively decreases; the

‘commonly used’ IT tools being meant the tools

applied regardless the firm’s/branch’s specialization.

The computed correlation degree between [V

]

and [V] (Table 3, column 2) determines only the

force of the relationship. The correlation does not

explain the quantitative relationship between [V

]

and [V].Therefore, to explain the latter, the

regression anlysis has been performed. The

regression analysis has been carried out for both the

relationship between [V

] and [V] (Fig. 1) and

between [V

ITK

] and [V] (Fig.2).

After having tested different regression models

with the Statistica 6.0 package, the exponential

regression model has been chosen. The choice was

based on the variance analysis with which the degree

of matching the model to the empirical data can be

determined.

In Fig.1 one can notice that the company’s

virtuality level increases slightly when the IT

implementation level ( in the range 1,8; 2,3)

increases. The continued increase in the IT

implementation level results in an decrease in the

company’s virtual organization level [V]. The

explanation of the latter is that only some kinds of

the IT tools promote the virtual organization. The

company’s virtuality level does not increase because

some technologies do not serve the virtual

organization but are used just to run normal

operations of the firm.

Regression: y=a+b*x*exp(c*x)

1,8 2,0 2,2 2,4 2,6 2,8 3,0 3,2 3,4

3,0

3,2

3,4

3,6

3,8

4,0

4,2

Synthetic level of virtuality [V]

Intensity level of IT use

Figure 1: [V] and [V

] regression analysis.

Referring to the results presented in Table 3

(column 2), the high correlation between the

communication tools and the company’s virtual

organization level can be noticed (correlation

coefficient is near to 0.5). From this observation, the

thesis can be advanced: Among the IT tools used by

the creator to develop the company’s virtual

organization, the communication technologies are

the dominating ones.

High degree of relationship between the

communication technologies [V

ITK

] and the

company’s virtual organization [V] can be explained

in the following way: the fast flow of information is

the most important factor for virtual organizations

enabling to achieve the competitive advantage in its

business environment. As the virtual organization

encounters the partners in territorial dispersion, the

communication technologies are crucial when

developing and running the companies in

networking. These technologies are crucial in any

network as they ensure the contact between partners,

coordination of activities (by the creator),

supervision or just accomplishment of tasks by the

distributed partners. Therefore, the communication

technologies such as fixed and mobile telephony,

internet services including electronic mail,

communicators and fax are highly exploited by the

virtual organizations to realize the emerging market

opportunities.

Fig. 2 shows that the company’s virtuality level

increases sharply for a given range of the

communication tools implementation level. The

higher limit of the range can be assumed to be of

3.6. The continued increase in the implementation

level value does influence the company’s virtual

organization level very slightly. The explanation is

that such tools are substitutes to each other (mobile

telephony versus fixed telephony, e-mail versus

communicators).

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2,6 2,8 3,0 3,2 3,4 3,6 3,8 4,0 4,2 4,4 4,6 4,8 5,0

2,6

2,8

3,0

3,2

3,4

3,6

3,8

4,0

4,2

Synthetic level of virtuality [V]

Regression: y=a+b*x*exp(c*x)

Intensity level of use of communication technologies

Figure 2: Regression analysis between [V] and [V

ITK

5 CONCLUSIONS

In this paper we have focused on the research results

that significantly undermine the wide spread

opinion, referred in the literature, about the strong

relationship between the IT and virtual organization.

The studies carried out in this work have shown that

the virtual organization level of the company

depends on its specialization. Moreover, there is

higher level in the small business. The notice seems

to be logical as such companies has limited

capacities in their disposal. Therefore, especially

when facing the complex projects, to have access to

necessary capacities, the networking, including

virtual organization, is arranged. Thus, the

conclusion can be drawn that the a concept of agile

enterprise is an appropriate solution mainly for small

businesses. Meanwhile, the bigger companies

(represented by production entities in our survey)

arrange the more stable networks; therefore, a

concept of lean management is more suitable for

them.

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