Legal scholars in Europe are studying the Vermont virtual corporation law, trying to understand what it means, what the possibilities are. In a previous post I mentioned Pierre-François Docquir, a legal scholar of the Perelman Centre of the Université Libre de Bruxelles, who in a first reaction showed great interest in this legal development. In the meantime the analyzed the issue on his blog, OpinionDissidente (French language), using the work of the promotor of the law, Professor David Johnson of the NYU Law School.
A corporation, Docquir explains, is always always a fictional entity (or a virtual one), as opposed to human beings, which are natural legal entities. The special characteristic of the virtual corporation is that there is no link with the physical world: no physical headquarters, no physical meeting of the partners…
Docquir develops his analysis in four points, which I summarize here briefly:
- The virtual corporation: the whole life of this corporation is enabled electronically. Social software and a graphical interface makes it possible to collaborate even though the partner are dispersed in time and space. This corporation depends not that much on the shareholder-investor, but on the intellectual capital and the expertise of the partners. A project can be realized at less cost by using complex collaborations. The model could also be used for the non-profit sector.
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The work organization: this would be inspired heavily by the open source communities. The decisions would be taken by the partners, not automatically by a god-like management. The participants can contribute freely without being constrained by hierarchical instructions. Decisions would be taken by collective mechanisms, the repect earned by the work done would be a very important motivation.
In the European mindset this seems close to the cooperative movement (dating from the 18th century). There is also the thinking of Professor Edward Castronova, who tries to develop a critique of society based on gaming experience. To put it simple: companies should try to make work and collarboration more fun.
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Hosting company: in the thinking of Professor Johnson the infrastructure of the virtual corporation (the software, the graphical interface) could be provided by a hosting company. Such company would make possible the interaction between partners, the authentification of decisions and the archiving of decisions, and could also provide social and tax services.
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Open questions: lots of them! What will the responsability of the hosting company be if the virtual corporations commits illegal acts? What about tax, identities of the partners, what about the financial regulations (banking, laws against money laundering etc), what are the limits of open source collaboration styles? What about the external partners of the virtual corporation – can they trust a structure where the assets can very well be primarily of an intellectual nature? What if one of the partners dies?
Lots of questions, at least if one sees the virtual corporation in the perspective of Professor Johnson and his students. It seems obvious a lot is at stake here. It is an example of how virtual worlds thinking and open source thinking could have an impact on our thinking on how corporations – enterprises – could be organized.
Roland Legrand (kudos to Pierre-François Docquir for his analysis, which I summarized here in a rather sketchy way)