Measuring the implications of virtual integration in the new economy

Abstract

Addresses the appropriate structuring of the firm's business model in the context of new economy holonic networks. States that this requires some framework for analysing the firm's business model relative to the opportunities offered by those networks and alliances. Proposes that some performance measurement criteria are required that provide a basis for comparing the various options open to the company. Approaches the problem by considering the assessment of the risk that accompanies a decision to outsource a process compared with the alternative option of developing the expertise “in‐house”. Concludes that concepts borrowed from financial management are helpful in this respect and the capital asset pricing model offers a means by which the risk can be assessed.