cting out other processes to vendors. The relationship goes beyond outsourcing, however, because outsourcing generally involves contracting out ônoncore, nonmission-critical services such as cafeteria services or payrollö (Binstock, 2000). However, in a virtual enterprise, a company will contract out processes that can be critical to its performance of its core mission. For example, Cisco Systems now handles its own development of current products and sales, but it has formed a virtual enterprise for the manufacture and distribution of all products as well as product development of older product lines (Binstock, 2000).
The incentive behind virtual enterprises is ôpure economicsö (Binstock, 2000). In a virtual enterprise each company is often a self-interested agent that is seeking to maximize its own interests (Sandholm, 271). For example, Adaptec Inc. is a marquee name company that designs special application-specific integrated circuits (ASICs) for personal computers (PCs) and servers. Traditiona
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