Research on the mechanism of virtual enterprise growth

At present, a considerable number of theorists explained the formation of virtual enterprises on the perspective of company efficiency boundary. They pointed out that the globalization of business combined with ubiquitous access to information technology, have reduced the market coordination costs; tightened enterprises' reliance on the market, finally led to the formation of virtual enterprises. But these researches mainly studied the formation of virtual enterprises from the outer phenomena, and they had not given proper explanation and further theory reasoning to the essence of virtual enterprises. Nevertheless, such explanation is not so sufficient to the formation of virtual enterprises. However, some latest researching results show that the formation of virtual enterprise is not simply driven by coordination costs, but the non-contractible characteristics are enjoyed by the networks with fewer but closer partners, such as innovation, adoption of the new technology, quality, information communication, trust, flexibility and sensitivity to environment changes. Based on this viewpoint, the paper starts with the enterprise residual right, product residual right, and the number of best partners, proposing that the possibility of virtual enterprises' formation is offered by the separation of enterprise residual right and product residual right, the scattering of product residual right. Furthermore, this paper considers that the amount of virtual enterprises' best partners and the non-contractible characteristics possessed by the partners' network finally determines the formation of virtual enterprises.