Interpretive structural modelling of risk sources in a virtual organisation

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Authors: M. Alawamleh, K. Popplewell

Publication Year: 2011


Journal: International Journal of Production Research

Volume: 49

Issue: 20

Categories: Innovation, Risk


The authors state that the environment that SME have to function in, nowadays, is becoming increasingly competitive and dynamic. In the search for methods to cope with this situation, SME group together in VO. According to the authors the formation of and participating in a VO is not easy and not devoid of risks. The article aims at creating understanding of the sources of risk and their interdependencies and thus helping in the development of strategies to mitigate these risks. They begin with identifying, from literature, 13 risk sources which can be possible causes of failure in the areas of delivery time, cost and quality and, in some instances, even complete collapse of the collaboration. The sources of risk affect VO directly and indirectly. Each of these sources are discussed and form the basis of a subsequent survey and analysis. For the survey a questionnaire was presented to experts on interoperability and collaborations issues, the aim was to identify direct and indirect relationships between the risk sources. As the identified relationships formed a complex set, with sources of risk influencing each other to greater or lesser extent, interpretive structural modeling (ISM) was used to identify and summarize these relationships. According to Waller (1975) ISM focusses ‘on the interrelations between two elements in an issue at a time, without losing sight of the properties of the whole’. The article explains the model and presents a ISM model of the risk sources that clearly shows the interrelation of the risks. A further classification of the risks sources is then performed using MICMAC. Objective of this method is to classify the risk sources into four clusters (autonomous, dependent, linkage and independent) based on the driving power and dependence of the elements. The independent sources of risk play a key role in risks in a VO. These risks are geographic location, cultural differences, ontology differences, heterogeneity of partners, inadequate collaboration agreement and structure and design. According to the authors these sources of risk merit focus in the development of strategies to mitigate all risks mentioned.