GAME THEORETIC INVESTIGATION OF THE EMERGING PARADIGM OF VIRTUAL BUSINESSES: A CASE OF STRATEGIC CHANGE IN PAKISTANI ORGANIZATIONS

Abstract

Over the past few decades organization has experienced a change from modern and structural interpretivism to the postmodern era. A postmodern perspective of organization emphasizes the ever-changing relationship between concepts and is a defensive reaction to forces intrinsic to the social bodies. This thesis signifies the influence of postmodernism whereby organization has undergone strategic change towards the emergence of new paradigms. Such paradigm shifts have the potential to keep pace with environmental changes with flexibility, efficiency and contextually appropriate response. Virtual organization is one such paradigm. It emerged as an outcome of strategic change due to globalization and changing consumer preferences. This thesis initiates an inquiry into the paradigm of virtual organization of the SME clusters in Pakistan. The thesis introduces virtual organization as a temporary combination of geographically distributed and independently working parties, linked by ICTs for exploiting the emerging market opportunities. It specifically highlights how a virtual relationship could be established among the geographically proximate SMEs using low-technology means of ICTs. This thesis puts to test a unique methodology for the study of relationship between parties, that is, the game theoretic investigation into the virtual organization, wherein, the study further attempts to explore the game theoretic modeling of relationship among enterprises forming an exclusively virtual relationship. These are several key findings and the conclusions drawn from this research. Firstly, the geographically proximate enterprises in the SME clusters can establish a virtual relationship with lesser advanced means of ICTs. Secondly, the relationship among parties in a virtual organization could be modeled in the form of a non-cooperative game in which parties join together at an optimal Nash equilibrium. Thirdly, the mutual trust and social forces work to ensure coordination at the optimum performance level. Fourthly, this research claims an initiative not only in terms of the methods but also the scope as it introduces the paradigm of virtual organization in Pakistan using game theory to model the relationship among parties.