Predicting the Relationship Between Virtual Enterprises in an Agile Supply Chain through Structural Equation Modelling

Virtual enterprises are formed in response to turbulent market conditions and are influenced by factors such as the changing relationship between customers and suppliers, the spread of agile supply chains and shorter product life cycles. Research suggests that successful virtual co-operation and supply chain agility are best achieved when the core capabilities of the partners are complementary. This paper therefore investigates the relationship between virtual enterprises in supply chains and provides further insights into the factors affecting agility. A hypothetical model is developed to examine the factors and a structural equation model is used to test the hypotheses, based on survey data from virtual enterprises in Mongolia. The structural equation model uses exploratory factor analysis, confirmatory factor analysis and path analysis. The results provide empirical evidence of the ability of the model to predict benefits arising from the formation of the virtual enterprise.