Virtual Enterprises
Ted Goranson

Virtual Enterprises and Microlending

Microlending has already proven its success in the developing world. Small loans that are made for discrete purposes improve wellbeing and enjoy a sustainable lending model. But the productivity of the borrowers is limited to their aspirative labor alone. There is only so much that can be done for an economy, when the reach of any business is the work of one or a few men and women.

The next step is to enable virtual enterprises in the developing world: small hardworking groups that collaborate to create value. If the overhead can be kept lean, the team will always create greater value than the sum of the individuals working alone. Microlending offers an immediately leverageable model for building a virtual enterprise. Three elements are of particular interest:

• The goals of the microlending establishment are to enhance the public good while tapping into existing economic forces. This notion of using established market forces, entrepreneurial drive, capital lending and intrinsic self-esteem are at root. These combine with the larger purpose of lifting damaged nations is entirely congruent with the notions of the advanced virtual enterprise: independent achievement and direct societal benefits.

• Most common microlending processes involve a field agent who knows the locale and intuits the proper balance of trust. A similar agent will also be needed in some versions of the advanced virtual enterprise to serve as trust agents. They can also be communicators of capabilities and opportunities and to some extent translators to and from local approaches to problem-solving. Existing and future web-based infrastructure will start to take over some of these roles, but the humans on the ground can service this need immediately.

• Virtual enterprises can adopt any existing business practice that works, low or high tech, but they do have to add some new ones. From experience, the one new practice that is hardest for traditional Western enterprises is evaluating value apart from cost. We have basic methods of reasoning about this but again, it boils down to trusted intuition and domain knowledge. Currently, the granting of microloans is based on this notion of “soft” accounting, eschewing quantitative business plans and working on a more common sense level. In this respect, virtual enterprises will draw many benefits from the microloan community.

The aim in the developing world is to achieve sustainable economic prosperity. Virtual enterprises are a safe, implementable model for achieving this. When current microlending practices are examined, a collaboration among these small, distributed businesses is the next step. The microloan community has expertise, infrastructure, working capital and common values. It is poised for the next level of success.

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Download this white paper as a PDF [Here].