Virtual Breeding Environment: A First Approach to Understand Working and Sharing Principles

Nathalíe Galeano Sánchez1, David Apolinar Guerra Zubiaga1, Jaime Atahualpa Irigoyen González1, Arturo Molina1

1 Centre for Integrated Manufacturing Systems, Eugenio Garza Sada 2501, 64849 Monterrey, Mexico

{ngaleano, david.guerra, atairigoyen, armolina}@itesm.mx http://csim.mty.itesm.mx/english/home.htm

Abstract. Collaboration is one way to achieve competitiveness in a global market. Virtual Organization Breeding Environments (VBEs) motivate the creation of Virtual Organizations (VO) as organizations that respond with high flexibility to rapid changes in market needs. VBEs define (implicit or explicit) main working and sharing principles in order to impulse collaboration between members and assure long-term benefits. This paper presents the results of a first stage of an action-research effort focused on finding VBE working and sharing principles that will define main elements for a VBE Framework, such as actors, activities, knowledge sharing, organizational structure and culture.

1 Introduction

Globalization and market aggressiveness face the need to strongly use collaboration mechanisms sharing valuable knowledge. Competitiveness has leaded to increase productivity in a global environment, however the success and sustainability in a long term is not achieved in majority of cases. Collaborative Networks (CN) and their forms, such as a Virtual Organisation (VO, also known as a network) created out of a Virtual Breeding Environment (VBE, also known as a cluster), provide accepted benefits, such as capitalizing on knowledge and market power existent in the partners, which give them the edge in a competitive situation [1].

Clusters (VBE) that are dynamic have moved beyond simple hierarchical networks to become characterized by numerous repeated connections between individuals, firms and institutions that constantly shift and expand (VO creation) [2]. In order to reproduce these effective VBE, a model that can embrace the internal dynamics is needed as an initial effort to develop a framework. An approach to develop the model above is modelling the actors that have developed collaboration readiness inside a VBE throughout networks and relationships [3]. The aim of this paper is to present the first results a VBE action-research effort in which organizational forms, actors, activities, culture and policies have been identified in order to understand its working and sharing principles.

2 VBE Research Context

A large variety of Collaborative Networks (CN) has emerged during the last years as a result of the challenges faced by both the business and scientific worlds [4]. In this research, two manifestations of CN are relevant and their brief description is presented below:

� Virtual Organization (VO): A set of independent organizations that share resources

and skills to achieve its mission or goal [4]. � VO Breeding Environment (VBE): A VBE represents an association (also known

as a cluster) or pool of organizations and their related supporting institutions that have both the potential and the will to cooperate with each other through the establishment of a “base” long-term cooperation agreement and interoperable infrastructure. When a business opportunity is identified by one member (acting as a broker), a subset of these organization can be selected and thus forming a VO [4].

Cortada et. al. [5] notice that the success starts always on the environment comprehension. Following this guideline, the beginning of successful generation of VO is the understanding of the environment in which the VBE is breed. A VBE encourages collaboration between enterprises allowing them to complement their competencies. An effective VBE Model requires: well identified actors, roles explicitly described, and interrelations between them outlined.

3 Research Methodology

Action Research (AR) is the methodology used in this research [6]. The research is planed in three action research cycles as showing in Figure 1. First a review of actual VBE models and state of the art is carried out, the output of this stage is a draft Model that identifies main VBE working and sharing principles. After a first model is developed, two spirals of the action research methodology should be performed: The first cycle aims to apply the draft principles in a small pilot case analysis (a group of 3 or 4 enterprises that collaborate for a specific purpose in a VBE), and the second cycle aims to apply the redefined principles in a second industry case (automotive VBE in Mexico).

The research results presented in this paper are related to the first action research spiral, a firs approach of a VBE Model based on interactions and focused on VO creation is drawn from this exercise. The activities involved in this cycle explained above.

Plan Activities: 1) A plan for the review of the actual VBE research is done including resources

allocation and time spent. 2) A format is developed to extract specific information from VBE cases. The

VBE Structure is a data sheet template that consists of eight areas: General

(includes name, location, age, brokers’ name, mission and objectives), Impact, Actors, Intellectual Property, Financial, Products/Services, ICT and Annex (CNO Cases) in which there are several blanks to fill, i.e. broker’s name, VBE location on life cycle, stages in development of the industrial cluster, value creation sources and integrators’ names.

Fig. 1. Action Research Cycles.

Act Activities: 1) VBE Cases are identified all around the world, focusing in collaboration acts. 2) A sample is selected looking for industrial heterogeneity, economic variety,

and geographical diversity in order to achieve complete findings (see Figure 2). The cases were selected because of documented representative collaboration inside them.

3) Collect and document the information of the VBE cases in the VBE template.

Mining, Antofagasta, CLShoes, Sinos Valley, BR

Business Services, Phoenix, US

ICT, Helsinki, FI

Software, Bangalore, IN

Knitwear, Carpi, IT

Knowledge Cluster, Basque Country, SP

Biotechnology, Massachusetts, US

Biotechnology, Ontario, CA Racing Cars, Motor sport Valley, UK

Manufacturing, IECOS (Monterrey), MX

ICT (Electronics -Software), Guadalajara, MX

In Birth In Growth In Maturity

Fig. 2. Sample of VBE Cases. Observe Activities: 1) VBE key factors identification. The triggered question for identify key

factors is: What make successful a given VBE? (Table 1). 2) Classification of VBE cases regarding to level of technology applied and age. 3) Basis of success factors are grouped according to its presence in high,

medium and low tech VBE and are quantitative qualified according to the strong, secondary and complementary presence.

4) Group each key factor according to which VBE is more connected: in High Tech Case, Medium Tech Case, Low Tech Cases, and All Cases.

Reflecting Activities: 1) Analyze results: VBE key factors identified and its relation with the type of

VBE (high, medium and low tech). 2) Analyze and model VBE actors: the key factors help to discover entities that

participate in VBE life cycle. The connections between these actors define the VBE dynamic.

3) Analyze the influence of diverse types of VBE structures and VBE culture issues.

Table 1. Success Bases on VBE Cases.

A A A A A L L M HM HM HM H H H H H

The success is based on ... ->

Brok

erag

e Ac

tiviti

es

Ope

ratio

nal S

uppo

rt

ICT

Use

Inno

vatio

n

Ric

hnes

s G

ener

atio

n (P

rofit

abili

ty)

Flex

ibili

ty

Hor

izon

tal C

oope

ratio

n

Plan

ning

(to

Gro

w)

Educ

atio

n

ICT

Ava

ilabi

lity

Inte

gral

Sol

utio

ns

Info

rmat

ion

Cul

ture

Know

ledg

e Sh

arin

g

Verti

cal C

oope

ratio

n

Res

earc

h In

dust

ry L

ink

Tech

nolo

gy P

ush

Stra

tegy

Biotechnology, Ontario, CA . O O O O o . O O O o O O O O OICT, Helsinki, FI O O O O O o . . O O O O o O O OBiotechnology, Massachusetts, US o o o o o o o O O . o o O . O .Racing Cars, Motor sport Valley, UK o O o O O . . O . o . . . o O oBusiness Services, Phoenix, US O o o o O o . O . o O o . o . .Software, Bangalore, IN o O O o O O o o O o O . . o . .Knowledge Cluster, Basque Country, SP o O o . o O O O . o . o O . . .ICT (Electronics to Software), Guadalajara, MX O o o o o O O o O o O o . . . .Manufacturing, Monterrey (IECOS), MX O o o o O O o o o . o o . o o .Knitwear, Carpi, IT O O . O o O O . . . . . o . . .Mining, Antofagasta, CL O O o . o O O o o . . . . . . .Shoes, Sinos Valley, BR O O . o o O o . . . . . o O . .

H: Common in High Tech Cases O Strong BasisM: Common in Medium Tech Cases o Secondary BasisL: Common in Low Tech Cases . Complementary BasisA: Common in All Cases

Appl

ied

Tech

nolo

gy

From the analysis of the VBE key factors, it was found that, they are present in

many environments, but their connection with each other is what makes synergy. Synergy is needed because network collaborative enterprises can create a new and unique value propositions by complementing, integrating and leveraging their capabilities and competencies [7]. The success bases in VBEs related to high tech cases imply intellectual activities (e.g. design in integral solutions and knowledge

sharing) and proximity between research and industry. Factors like VBE planning, education and integral solutions are strong presented in medium tech VBE cases. Moreover, flexibility, horizontal cooperation and brokerage activities are strong presented in low-tech VBE cases.

These key factors are results of activities developed by one or several entities, which are the actors playing roles in a VBE. Following section propose a VBE Model based on actors’ interactions and focused on VO creation.

4 VBE Model

In analogy with neurons and thoughts inside the brain, enterprises are interconnected in temporal events called Virtual Organizations. The brain must to be in healthy conditions to generate networks of neurons (thoughts), as the VBE to generate networks of enterprises (VOs). Actors identified inside the VBE should provide conditions for an effective collaboration. Figure 3 represents the seven actors identified in VBE Research and depicts VO generation upon a business opportunity. These actors are: Brokers, Integrators, Manager, Advisor, Members, Government, Universities, and, Research and Development Centres.

Fig. 3. VBE Model based on Actors’ Interaction.

Broker: The broker functions are specialized in the business opportunities search that is the starter element for VOs creation, and in the communication act to the integrators.

Integrator: This role is mainly the project manager for the VO Operation to develop the ideas (business opportunities) selected by the broker. Broker and integrator roles, could be performed by the same entity but are separated in this model because of the nature of their activities in which the broker activities imply creativity

and extensive use of right hemisphere of the brain. In the case of integrator, activities are related to the left hemisphere of the brain because are associated with verbal, logical and analytical thinking through fixed guidelines.

VBE Manager: Its main responsibility is to provide the best medium to encourage collaboration between VBE members (i.e. availability of ICT tools, infrastructure and legal framework).

Advisor: As majority of systems, monitoring and control activities are required to enhance productivity. In the case of a VBE system, the Advisor performs these activities.

VBE Members: Collaboration and Productivity are their main responsibilities (mainly achieved by Horizontal and Vertical Cooperation [8]). The more trust in VBE members, the more the collaboration cases, without trust, environment trends to be stunted. An example of active VBE Members is the companies associated in Aportia, a software integrator in Guadalajara, Mexico [9]. They offer Information Technologies Products and Services; also work in programs for Capability Maturity Model (CMM) Certifications or equivalents for Aportia members [10].

Government, who should facilitate the access to public infrastructure, stimulates growth, and avoids gradual deterioration of the industrial infrastructure [11].

Universities and Research and Development (R&D) Centres: The goal for these actors is to raise intellectual capital, its creation encompasses the whole spectrum of knowledge-based activities from replication to innovation [12].

4.1 Organizational Structure in VBE

Work, Individuals, Organizational Formal Agreements and Informal Organization are the four components needed to define an organization [13]. Regarding to a VBE, Individuals are the seven actors identified; Work is related with the VBE operational activities; Organizational Formal Agreements are the roles and responsibilities of the actors; and, the Informal Organization is presented on the interactions between VBE members.

Three main types of structures in VBE Cases have been identified during the research: Cellular, Boxes and Chain (names given by the authors). See Figure 4.

Cellular: This is a common type of organization to create temporal VOs with high speed. It is present in environments with members that have high entrepreneurship; lightness to incubate SMEs for satisfying VBE’s customer needs is one advantage.

Boxes: This is a structure that enhances the creation of more structured VOs oriented to large projects. It’s used in environments with well-identified members, who have a structured profile that certifies their capabilities and that are grouped in specialized areas.

Chain: It presents less interaction between members; their interaction is limited to the relationships in a plain value chain during VO Operation. VO partners work according to a plan already developed and under well-defined roles. This is common for product development projects. A disadvantage of this structure is the little knowledge sharing potential because of limited interaction between partners in the design and planning activities.

Cellular Boxes

Chain Fig. 4. Types of Structures used in VBE Cases for creating VOs

Table 2. Map of Structures Identified in VBE Cases

VBE Cellular Boxes Chain

Biotechnology, Ontario, CA √

ICT, Helsinki, FI √

Biotechnology, Massachusetts, US √

Racing Cars, Motor sport Valley, UK √

Business Services, Phoenix, US √

Software, Bangalore, IN √

Knowledge Cluster, Basque Country, SP √

ICT (Electronics to Software), Guadalajara, MX √

IECOS, Monterrey, MX √

Knitwear, Carpi, IT √

Mining, Antofagasta, CL √

Shoes, Sinos Valley, BR √

From the three major categories of organizational structure presented in the table

above, two constants can be identified about their elements: the members should be closely communicated, so a horizontal and plain architecture fits very well; and someone needs to coordinate different efforts in order to gain synergy between the VOs. This means that in successful VBE, there are well-developed support industries

in such a way that VOs can be easily developed. These support industries can achieve a cluster denomination because of their integration with the main industry. This is integration in value chain and the organizational structure should make easy this process as happens in Singapore VBE which has focused the entire country's organizational structure to support its growth [14].

After this analysis, an expeditious conclusion is that an appropriate VBE must to have few levels in its hierarchical organization in order to enhance VOs creation through a rapid process. Proof of functionality of this size of structure are the cases of Aportia in Guadalajara, Mexico [15], ICT Cluster in Helsinki, Finland [16], the Industrial Districts all around Italy [17] and the Software Manufacturing Industry in Bangalore [18]; in which, small and medium enterprises (SMEs) are organized by simple teams with no more than two levels of hierarchy. A deep structure could slow the process because of many authorizations to achieve and the source of competitiveness of a VBE Model could be gone.

4.2 Culture in VBE

The environment in which a VO is created has a typical collaboration culture. The Collaboration culture that a VBE requires, remarks trust in partners. The more trust, more the collaboration cases. And without trust, environment trends to be stunted. Trust between organizations is a competitiveness requirement, but this phrase is really a misnomer because trust is something that only people can do. The build-up of trust between organizations is founded upon the inter-personal bonding via trust developed between the individuals in the different organizations (or indeed between different units within a single organization) [19]. This means that a successful VO only can be generated with partners working in a collaborative culture inside their own organizations.

The culture of collaboration involves the ability of team working because it is the optimal organizational solution when a complex problem has a strategic element complicating the optimum solution, and a significant amount of planning is inevitable due to the complexity of the issues [20]. Regarding to clusters, implementing a modular solution (VO as a team) to respond the market needs decreases complexity in the challenge of be competitive in a changing market.

4.3 Knowledge Sharing in VBE

The seven actors defined in the VBEs are focused on generation of a long term competitive environment complementing competencies between them. Complementary competencies are an integral part of knowledge-based collaboration [21]. A VBE search this type of collaboration because the sustainability resides there: a VO can be temporal but it should provide the knowledge acquired in its life cycle to the VBE in order to improve other VOs (in present and in future). In a more general view, the entire VBE can evolve into a better one by learning about itself (knowledge sharing).

To describe knowledge sharing in a VBE is necessary to define common knowledge concepts. First it is important to differentiate data, information and knowledge: Data is only text that does not answer questions to a particular problem [22], Information can be defined as data with meaning [23] and, Knowledge is information with added detail relating to how it may be used or applied [24].

An important requisite for knowledge usage is adequate knowledge structure definitions, describing the role of each knowledge type in overall context [25]. Explicit knowledge as the first word implies, is knowledge that has been articulated and very often captured in the form of text, tables, diagrams, product specifications and so on [26]. Tacit knowledge is highly personal and hard to formalize, thus making it difficult to communicate or share with others [27]. Implicit Knowledge is the type of knowledge that can be articulated but has not [28].

The types of knowledge described (explicit, implicit and tacit) are mapped on the actors of the VBE Model. Table 2 indicates these relations and depicts in what type of knowledge are largely based the activities of given actor. The description of the knowledge type found in Broker, Integrator and VBE Members activities is detailed below.

Table 3. Type of Knowledge largely based for activities of Actors in a VBE.

Explicit Implicit TacitBroker . O OIntegrator O . oVBE Manager O o oAdvisor . o OVBE Members o O OGovernment O o oUniversities and R&D Centres O O o

O Strong Basiso Secondary Basis. Complementary Basis

Act

or

Knowledge Type

The broker is certainly an important source of tacit knowledge because there is a “feeling” in the ability to find the best business opportunities. This is the result of the acquired experience in a broker (see Figure 3). A broker compiles many data about market and trends and processes it to produce information that use in the business opportunities search. The vision of VO as a solution to market needs is developed via applied knowledge and is not formerly registered.

Fig. 5. Tacit Knowledge in Broker Activities within VBE model

The knowledge in the integrator is focused to the project management, because the life of a VO is a project that needs to be managed. The main thrust of Process Management is the concept of knowledge management [29].

In the VBE members, the knowledge that is important to develop for enhance the collaboration between them is the know-how needed to create effective partnerships. An important issue in this ability is trust, a complex factor that is related to tacit knowledge. This knowledge has potential value in a VBE if it were spread over many other members.

When collaboration is the objective, a holistic vision of the actors highlights the value of knowledge sharing in the environment as a source of competitiveness. A combination of knowledge from different perspectives impels abilities to create new opportunities and to respond to challenges in innovative ways [21].

5 Conclusions and Further Research

The results of a first cycle of an action-research effort focused on finding VBE working and sharing principle have been presented. The research methodology has been described and the main elements for a VBE Framework have been depicted: 1) actors have been identified and their interactions portrayed in a Model, 2) the knowledge sharing that occurs inside a VBE has been indicated, 3) three types of organizational structure in VBE cases analyzed have been showed bespeaking their characteristics and, 4) culture main findings have been exhibited in this document.

Next stages in this research will focus on next two cycles in the Action Research Methodology planned, considering knowledge management as the medium for achieving a sustainable development in VBE, a team based as the optimum organizational structure for an efficient operation, and a culture of collaboration as the social environment required for accomplish the main goal in a VBE: competitiveness and VO creation.

6 Acknowledgements

The research presented in this document is a contribution for the European Collaborative Networked Organizations Leadership Initiative (ECOLEAD) project, funded by the European Community under the “Information Society Technology” Programme. A special thankfulness to the Centre for Integrated Manufacturing Systems (CSIM) of ITESM University for support this research.

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