Mitigating Risk through Building Trust in Virtual Enterprise Networks

Abstract

The emergence of virtual enterprise networks represents a dynamic response to the challenge of the hierarchical coordination of networked businesses. Therefore, the chapter’s first aim is to provide justified answers to the question of why the virtual enterprise business model is getting so much attention and correlate these answers with the main business drivers that today’s enterprises are facing. In virtual enterprises, the distributed tasks of the partners must be integrated over and above the barriers of missing face-to-face interactions and cultural differences. The social integration of the virtual network involves the creation of identities for the participating nodes, the building of trust and the sharing of tacit and explicit knowledge between them. The traditional organization already doing well in these areas seems to have an edge when going virtual. As a consequence, trust becomes more and more important in these types of virtual collaboration networks. Therefore, this chapter finally aims to discuss extensively the way of managing trust in virtual enterprise networks as a solution to mitigate collaboration and performance risk in varying business situations and also aims to present conditions for building trust in the virtual collaboration context.