a legal framework for atomized enterprises
Atomized Enterprises have been a realistic possibility for less than a decade now, as reliable, high-quality connectivity spreads globally and connects pools of capital, labor and ideas. It is hardly a surprise then that governance and law, conservative by nature, are still geared towards serving traditional enterprises best. To be sure, these are heady times, when barriers are being broken and power structures are being subtly rebalanced; prophets who proclaim that everything is new in this brave new edge economy are not hard to find. The unbendable laws of physics for enterprises however mandate that any entity that creates and sustains value (atomized or traditional) must have a legal framework to support it.
This is why I was happy to see a news item about Vermont passing tax laws that pave the road for the existence of virtual corporations. Limited liability companies incorporated in most US states are required to have a registered agent, a physical headquarters and in-person board meetings. In an age when it’s possible for corporations to have widely dispersed stakeholders, some of these laws are a little anachronistic. Vermont LLCs dispense with in-person requirements for board meetings, and permit ‘any means of communication, including an electronic telecommunications and video- or audio- conferencing conference telephone call’ for directors to communicate.
The idea of seeking the most efficient labor pools is not new to US enterprises. In practice, however, work would be outsourced to body shops in emerging markets while shareholders, still largely in the US, got rich off the resulting savings. These gains were attributable to little more than smart labor arbitraging, and were not sustainable over the long term because they were often divorced from ground realities and incentives around the world. These new provisions in Vermont’s corporate structure effectively enable directors to be located around the world, along with the full context of where the enterprise conducts its operations.
Let’s not get carried away though. I am not sure I agree with say board meetings over Twitter, or the applicability of these provisions to corporations that exist only in Second Life. No system is immune to scamsters, however, and despite the possibility that these provisions could be gamed, it is a big step forward to quicken the creation of more Atomized Enterprises powered by collaboration among a loosely linked clique of actors.
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