Trusting the trust machine: How does blockchain-enabled governance configuration enhance financing credibility?

Abstract

This study highlights the role of blockchain technology in addressing the trust crisis in supply chain operations and financial activities. While previous research has acknowledged blockchain as a response to trust issues, limited studies have explored its specific contributions and its impact on accelerating cash flow in supply chains. Drawing on governance theory, this study investigates the relationship between blockchain technology and supply chain finance (SCF) through multiple case studies. The central argument is that blockchain technology alone does not automatically generate trust. Instead, trust is established through the configuration of various governance mechanisms. We propose that trust in blockchain applications is derived from two main factors: the requirement of codifiability and verifiability. Through a cross-case analysis, we found that in situations where both the requirement of codifiability and verifiability are high, blockchain governance tends to dominate. When only one factor is high, a configuration of blockchain governance and relational governance emerges. When both factors are low, contractual governance proves to be efficient. This study underscores the need for a nuanced understanding of trust dynamics in blockchain applications and highlights the importance of considering contextual factors in trust research related to blockchain technology.