Blockchain in supply chains: an unfulfilled promise

Abstract

Purpose

This paper investigates the influence of blockchain technology on trust and transparency within supply chain management. While existing research suggests blockchain has revolutionary potential, real-world evidence remains limited. This study aims to bridge this gap.

Design/methodology/approach

The research relies on transaction cost analysis and principal-agent theory to develop a conceptual model. The model proposes how blockchain fosters trust and transparency, ultimately leading to a market-based governance model within supply chains. Five different blockchain applications were analyzed in a multi-case study through document reviews and expert interviews to test the model’s assumptions.

Findings

The study’s findings challenge initial assumptions. The complexity of blockchain networks and a reluctance to share information among participants hinder blockchain technology’s ability to increase trust and transparency. Consequently, the expected reduction in opportunism and uncertainties is not observed, and a market-based governance model fails to materialize. In practice, supply chain partners gravitate toward permissioned blockchains managed by established consortia. Acting as trusted third parties, these consortia assume control over network management, rendering blockchain essentially unnecessary.

Originality/value

This paper sheds light on the practical limitations of blockchain technology in revolutionizing supply chain management. While blockchain promises much, the findings suggest that established consortia currently play a more critical role in fostering trust and transparency within supply chains.