1. Life cycle of virtual organizations in the Czech Republic
TD020190
Life cycle of virtual organizations in the Czech Republic
Luboš SMRČKA
University of Economics in Prague, Faculty of Business Administration, Department of Strategy
Dagmar Čámská
Czech Technical University in Prague, MIAS School of Business & Interdisciplinary Studies
WorldCIST’17 - 5th World Conference on Information Systems and Technologies
April 11 – 13, Porto Santo Island

2. 2751 cases = about 7% of all cases
According to Becht, Mayer and Wagner the address used by virtual enterprises is the address where more than 100 enterprises are seated for the purpose of state or regional business register.
Becht, M., Mayer, C., Wagner. H.F.: Where do firms incorporate? Deregulation and the cost of entry.
Journal of Corporate Finance, 14, (2008)
The first file contains a list of enterprises registered at the virtual address extracted from business register.
Insolvency register
Reference period – from the 1th January 2008 to 30th June 2014
Type of the insolvency proceedings - the insolvency proceedings to entrepreneurs physical and legal entities initiated after the insolcency proposal and finalized by the approval of the final report.
2751 cases = about 7% of all cases
As a result 125 enterprises have been detected in both samples.

3. Number of virtual enterprises in regions of the Czech Republic
Number of virtual enterprises in regions of the Czech Republic. Source: authors
Region
Number of enterprise
Prague Region
South Moravian Region
Pilsen Region
Moravian-Silesian Region
Central Bohemia Region
Hradec Králové Region
Ústí Region
Pardubice Region
49363
4436
2005
1535
515
193
148
131
Olomouc Region
109
In total enterprises with virtuál headquarters, 84% are in Prague

4. Number of cases with and without bankruptcy declaration
Number of cases with and without bankruptcy declaration. Source: authors
Virtual enterprises
Total sample
Region
Number of cases
Relative frequency
With declaration
Without declaration 54 71
43%
57%
1536
1215
56%
44%
Total
125
100%
2751

5. Reasons for not declaring bankruptcy. Source: authors
Number of cases
Relative frequency
Flaws in the proposal or unmet requirement of insolvency
Lack of debtor's assets
Unpaid deposit for costs of insolvency proceedings
Proposal taken back
Bankruptcy cancelled 35 14 9 12 1
49.3%
19.7%
12.7%
16.9%
1.4%
Total 71
100%

6. State of insolvency proceeding (cases with bankruptcy declaration)
Source: authors
Insolvency proceeding
Number of cases
Relative frequency
Unfinished
Finished 14 40
26%
74%
Total 54
100%

7. Age of enterprises in insolvency proceeding Source: authors
Bankruptcy declaration
+ lack of assets (+14 cases)
Time period
Number of cases
Bellow 1 year
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years 5 3 11 2 1 4 12
Above 5 years 33 41

8. Age of enterprises and length of finished insolvency proceeding Source: authors.
Age of enterprise
Length of proceeding
Time period
Number of cases
Bellow 1 year
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years 4 2 9 1 6 13 8
Above 5 years 24 3

9. Conclusion
The paper's aim was the analysis of the enterprises registered at the virtual address (also called virtual enterprises) in the Czech Republic. There are worries that this kind of enterprises is connected with lower transparency, higher risk of default and serious consequences for related partners. The research verified the assumption that the life cycle of the virtual enterprises is short and they finish their business activities very quickly in the insolvency proceeding. The sample contained 125 enterprises. The size is not representative and it can be taken as pilot. The results show that many enterprises have been set up already many years ago and therefore the virtual enterprises are not a case only of start-ups but they are used also in other stages of the corporate life cycle. Possible explanations are mentioned. On the other hand the length of these insolvency proceedings is shorter than average in the Czech Republic.