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Blockchain technology has been promised as a solution to social and environmental issues in supply chains. The potential includes reduction of vulnerable party exploitation and avoiding environmentally harmful practices. Yet, it remains unclear how these potential improvements are created and whether blockchain can truly contribute. Therefore, this field study explores and identifies the mechanisms for blockchain technology to facilitate positive social and environmental impacts in supply chains. We applied an explorative qualitative research approach and interviewed blockchain technology implementers and practitioners that allowed a detailed analysis of this problem despite the scarcity of practice data. The results include the development of a middle-range theory that shows barriers and drivers of blockchain-based technologies in supply chains, introduces the concept of blockchain-enabled system, and outlines expected outcomes and impacts. We further identify four impact pathways that describe how blockchain-enabled system create positive impact: (voluntary) market mechanisms, plausibility checks, smart contracts and tokenisation, and peer-to-peer trust. The study contributes by providing insights into “how” blockchain-based technologies in supply chains can lead to social and environmental impacts. The study also furthers the discussion on blockchain technology’s role in supply chain implementation and addresses the yet unresolved problem of measuring the impact of such blockchain-enabled systems.
Globalisation has made modern supply chains increasingly complex as technology, culture, and value chain activities become entwined and supply chains reach deep into various regions of the world. Companies often do not know their tier three or four suppliers; with limited visibility beyond the first tier. Similarly, producers do not always know who consumes or manages the materials they supply. Information flow and visibility between these and other actors in supply chains is low. Thus, identifying product or material sourcing and process activities that include questionable and illegal practices including human rights abuses, environmental damage, or fraud is extremely difficult (
These blockchain-based technologies in supply chains can bring advantages in terms of transparency and efficiency (
One interesting statement in the latest review of blockchain applications in the supply chain by
A close examination of this literature indicates that while existing studies explore and identify what potential benefits blockchain technology in supply chains
Thus, while other fields of research such as big data and developmental studies have consolidated an understanding of the pathway from decisions and actions made to impact on specific endpoints (
Therefore, the purpose of our study is to discover the mechanisms by which blockchain-based technologies in supply chains create positive social and environmental impact. Given early and only emergent understanding in this field of study and with limited explanation—theoretically or practically—of how blockchain-based technologies in the supply chain create positive impact, an explorative qualitative research approach is taken. Blockchain-based technology experts, the majority of whom have first-hand experiences implementing the technology in the supply chain, are interviewed. This information provides first-hand insights from some of the few cases that have seen actual blockchain implementation. Since blockchain-based implementations in supply chains are still in early development stages, it would be unrealistic to provide a conclusive explanation of this phenomenon. Thus, we intend to propose a “middle-range theory” that is context specific and should be further tested and adjusted over time ( • How and by what mechanisms do blockchain-based technologies in the supply chain lead to positive social and environmental impact? • What is the role of the blockchain component in the supply chain that generates this impact and can this component’s contribution be separated from the impact generated by other components?
The study contributes to and advances the existing body of knowledge in several ways. Where previous studies mainly focussed on blockchain-based technology impact (
For this study an explorative qualitative research approach was used based on conducting and analysing in-depth interviews. Since the implementation of blockchain-enabled systems is still in the early stages, their impact cannot yet be fully known and measured. A conclusive explanation of the blockchain-impact nexus is thus currently beyond reach. Instead, we propose here a middle-range theory defined as a conceptualisation to a specific context (
Research procedure. The research procedure started with sampling and recruiting study participants before conducting interviews. The interviews were then individually coded before all quotes belonging to one theme were grouped. From some interviews new study participants were identified. The interview and analysis process proceeded iteratively until theoretical saturation was reached. Finally, a conceptual scheme was formulated from the themes that emerged from the interview data.
We used both theoretical sampling and snowball sampling in this study. In theoretical sampling, participants are selected based on leads in the data (
In total, 16 interviews were conducted. Of the study participants 63% were technology providers, 19% were actors in the direct supply chain, and 19% were other actors such as consultants. 44% of the participants worked on projects in the agricultural sector, 31% in the mining sector, and 25% in the fishing sector. 50% of the interviews were CEOs of which all but one were also the (co-)founders. 22% of the study participants were more technical including chief technology officers and one developer. The remaining participants were from marketing, procurement, product management, and consulting. The majority of the CEOs that participated belonged to small companies (<50 employees) and were considered to be sufficiently involved in the implementation process to be able to discuss it in detail in an interview. Their explanations of how their implementation works confirmed that they were intimately involved in any developments and implementations. The study participants come from more than 10 different countries with the majority of them (69%) being located in Europe.
The projects were built on different blockchains including Ethereum (36%) and Hyperledger Fabric (29%). One study participant stated that they have implemented solutions for clients using different kinds of blockchains, while another said that their solution is built so that they could move to another blockchain if required. Projects involving large companies also favoured Hyperledger solutions. Most of the projects with large companies were within mining supply chains, while projects within agricultural supply chains tended to include smaller companies.
We conducted semi-structured interviews (
We sent interview invitations via e-mail accompanied by a signed invitation letter. In some cases, one reminder was sent. If the contacted person agreed to be interviewed, a call was scheduled, and the interview guide was sent in advance. The interview typically started with an introduction of the interviewer and the project before asking for consent to audio record the conversation. The interview questions were not necessarily asked in the order presented in the interview guide and not necessarily all questions were asked depending on how relevant they were for the specific interview. Additional questions may have been included such as “You mentioned efficiencies. In what ways does blockchain help?” in order to get more detailed answers.
The study participants had the chance to ask questions about the project and the purpose of the study. The interviews were typically conducted via video call and lasted between 30 and 45 min. The interviews were audio recorded with the consent of the participants and then transcribed. Prior to analysis, all identifying information was removed from the transcripts. All interviews were carried out between April 2020 and September 2020. The interview guide (SI.1) can be found in the
The interview analysis was completed using a “quote by theme” matrix and using anonymised transcripts. A qualitative content analysis was completed in order to identify common themes. The analysis was an iterative process and was comprised of different coding rounds until a satisfactory combination of themes was found (
In the first round of coding, three interviews from participants of different industries—agriculture, fishing, and mining—were used to establish a first collection of 54 codes. These codes were then—based on similarities and common meaning—grouped into 17 themes. For example, the codes “network effects” and “automating payements” were both grouped into the theme “identification of efficiencies”. Subsequent interviews were then analysed using the themes only. Relevant quotes from each interview were selected and for each quote the theme was identified. One quote could address several themes. All quotes belonging to one theme were put in a table and analysed to extract a summary for each theme. With each interview analysis it was tested if the previously identified themes were fitting or how they could be adapted. The interview and analysis processes proceeded therefore together and iteratively until theoretical saturation was reached. Theoretical saturation was considered reached when the themes suitably described all interviews and no substantially new content emerged during the interviews that could not be described by the existing themes. The final set of themes could then be grouped into four different dimensions describing the entire topic under analysis, i.e., how blockchain leads to impact. The now organized dimensions and themes were then displayed in a scheme summarising the results. Examples of coding are provided as
The interview data shows that the supply chain implementation of blockchain-based technologies remains in its early stages. While three quarters of the study participants have implemented their blockchain-based technologies, all of the study participants are still improving their implementations.
Outputs, outcomes, impacts, and factors influencing blockchain-enabled systems. The grey columns resemble a pressures, practices, and performance framework (
We firstly introduce and define the concept of a
This dimension comprises factors that influence the adoption—or lack thereof—of blockchain in supply chains.
This dimension includes factors that influence and drive implementation of blockchain-enabled system.
We observed a strong
The third major driver theme we identified is
Blockchain technology provides a
Blockchain-enabled systems support
Blockchain technology allows
This dimension comprises the supply chain actor outcomes from implementing blockchain-enabled systems. Blockchain-enabled systems
Blockchain-enabled systems can
A decentralised trusted ledger
This dimension encompasses the outcomes on the supply chain from implementing blockchain-enabled systems.
Blockchain-enabled systems incentivise
Blockchain-enabled systems provide incentives for
We categorised the social and environmental impacts from implementing blockchain-enabled systems into three themes. These themes reflect participant expectations only, as the impacts have yet to be measured.
Blockchain-enabled systems can provide trusted and accessible information about product production including labour conditions, which can support the reduction of
Based on the analysis of the interview data we derived several possible impact pathways for a blockchain-enabled system to create positive impact. We then identified four mechanisms underlying the impact pathways: (voluntary) market mechanisms, plausibility checks, smart contracts and tokenisation, and peer-to-peer trust. Key examples of these impact pathways and mechanisms are illustrated in
Impact Pathways and Mechanisms. Four mechanisms creating positive environmental and social impact have been identified. They are depicted in boxes
These mechanisms are based on obtaining trusted information about products that can be verified by third parties. This mechanism is facilitated by blockchain-enabled systems and can allow consumers to access specific product information such as product source and processing characteristics. Accessible traceability creates transparency and can be a market differentiator for sustainable product markets, increase consumer engagement, and build loyalty. Study participants believed that consumers could make better and more sustainable decisions based on this accessible and trusted product information.
Similarly, companies may gain additional access to supply chain and product information that was previously opaque to them; in this way the blockchain-enabled system is able to reduce information asymmetry. In these systems companies can make buying decisions beyond standard price and quality business dimensions. Companies can more easily expand decision and management criteria to include human rights abuses records or carbon footprints of products and supplier processes. Companies can further take actions to increase sustainability by knowing the environmental and social hotspots in their supply chain. For example, an action would be to directly support supply chain actor improvement or by paying premiums for reducing sustainability impact.
In general, study participants argued for a positive transparency spiral leading to “
Another mechanism leading to positive environmental and social impact relates to employing validation algorithms for complex data. These validations can ensure that production volumes remain accurate or that certificates are not double counted or over the dedicated amount. Blockchain-enabled systems ensure that the data provided by supply chain actors such as farmers or processors cannot be manipulated or reverse engineered, especially proprietary information. After an asset is registered on the blockchain only the specific item registered can be used within the supply chain. The amount cannot be multiplied or unreasonably changed at a later stage. This makes both fraudulent behaviour and honest mistakes less likely to occur.
Machine learning algorithms were mentioned by one study participant as a tool to identify anomalies that humans would potentially not catch and that could lead to identifying other bad behaviour. These machine learning algorithms can be ingrained in blockchain smart contract-like systems.
Interviews supported the ability of blockchain-enabled systems to achieve positive impact through automation and the use of tokens. One respondent provided an example:
“The other aspect of blockchain that we looked into […] is the potential of smart contracts to play a role. Where transactional agreements can be executed without an exchange of paperwork and signatures. [Actors in the supply chain] were able to conduct in a matter of two and a half hours a transaction that normally would take 10 days to complete.”
Automating processes—such as payments upon execution of contracts—can speed the collection of data and create incentives for transparency by saving time and money. This kind of automation of payments further creates liquidity for supply chain actors as delays in payments are significantly reduced. This mechanism especially supports poorer actors such as farmers where a lack of funds can prevent them from participating in the market.
Tokenisation can be a valuable mechanism for connecting consumers with producers. Example schemes include
Building decentralised networks can support actors—especially in the Global South—that don’t have an official identity, access to bank accounts, or other official documentation (
Blockchain-enabled systems could capture transactions, for example those that are conducted after receiving money through micro-loans from consumers. Using a blockchain-enabled system allows individuals that are disadvantaged to circumvent some existing systems such as banks; this approach can reduce barriers for market entry for these vulnerable actors.
Blockchain-enabled systems in supply chains can potentially result in a variety of positive social and environmental impacts. These can happen through (voluntary) market mechanisms, plausibility checks, smart contracts and tokenisation, and peer-to-peer trust.
Market-based certification schemes such as FairTrade or Forest Stewardship Council (FSC) use (voluntary) market mechanisms in similar ways. These instruments work on the assumption that consumers are willing to choose more sustainably-produced products, which encourages competitors to follow this practice (
An increase in market shares of sustainably certified products over the past few years (
We asked if the impacts are due to the blockchain component in a system of technologies or due to other factors. The interviews provided only a partial answer to this question. We were able to determine that there are several reasons why study participants chose a blockchain-enabled system over a centralised one. Among these reasons we find negative past experiences, previous unsuccessful implementation of a centralised traceability solution for the company’s business, and previous centralised technology providers that exploited the company’s dependency on the providers’ services to put pressure on the company.
According to the study participants another concern with a centralised solution is the difficulty with getting competing actors to participate in such a system. As one of the participants stated, they would not join a centralised system where they are not the host and not in control. Maintaining ownership of their data is another reason why blockchain-enabled systems are preferred by some actors.
It was further stated that using blockchain-enabled systems may mean that some companies are willing to allocate a larger budget for traceability solutions. This budgetary increase may occur since in some cases the funding for a blockchain-enabled traceability system comes from the innovation budget and not from the sustainability or a back-office budget. Thus, using a blockchain-enabled system can be a driver for implementing traceability systems and digitising supply chains through innovation channels.
However, based on the overall information retrieved from the interviews it was not possible to clarify to what extent the outcomes and impacts identified in this study are due specifically to the blockchain component in the systems analysed. It is also conceivable that determining if and to what extent outcomes and impacts are due to the blockchain component is in fact infeasible. Many technologies are interlinked in a system and the outcomes and impacts are generated from the emergent behaviour of such a system making it difficult to parse contribution by a specific technology. This observation means the overall system design and integration, not just the blockchain component, is of tremendous importance for achieving positive outcomes and impacts.
Most study participants were not able to provide an answer to how they measure impacts of implementing a blockchain-enabled system, their justification being that it is too early to measure impacts.
What became clear is that different participants have different key interests—key performance indicators—in what needs to be measured. While some are interested in looking at increasing incomes of farmers, others are concerned with reducing human rights abuses and environmental impacts. Others were interested in consumer engagement and cost reductions. Thus, choosing relevant indicators for measuring impact is important as is the choice of an appropriate method to assess the relevant indicators. It may be advisable to consider indicator development early in blockchain-enabled system design so that pertinent information could be collected automatically.
We find it concerning that only a few study participants had thought concretely about measuring impacts as it makes it difficult to evaluate the success of their own projects and its potential continuation, further development, or dissolution. The lack of performance measurement might hinder the transfer of knowledge to other projects within a company or outside of it. This information is likely needed if positive impacts should be replicated and scaled.
In this study, we focus on how blockchain-enabled systems can bring positive social and environmental impacts, whereas other studies emphasise what kind of benefits blockchain technology in supply chains can have (
This study confirms previous findings that blockchain technology can increase trust and transparency (
While the study focuses on how blockchain-enabled systems can create positive social and environmental impacts, we also want to highlight some risks, barriers, and uncertainties related to their implementations in supply chains.
Blockchain-enabled systems in supply chains are typically built on either Ethereum or on non-proof-of-work blockchains such as Hyperledger Fabric. The proof-of-work consensus mechanisms is energy intensive by design (
The different kinds of blockchain also have diverging advantages and drawbacks. For example, performance issues such as limited throughput (i.e., the number of transactions processed per second) are considered a barrier to blockchain adoption (
While blockchains are often considered immutable, risks of attack do exist (
Lack of interoperability has been identified as both a risk and an opportunity of blockchain technology (
Another source of uncertainty in the implementation of blockchain-enabled systems in supply chains is regarding potential government regulations (
This study also shows that different blockchain-enabled systems face varying challenges and uncertainties depending on their design. A blockchain-enabled system using Ethereum may benefit from experiences from other applications using Ethereum, while a blockchain-enabled system built on a lesser known blockchain platform may be the first of its kind and require more extensive testing. Additionally, the combination of different components in the system design may be unique and with limited previous experiences. This means that unexpected challenges can occur and would need to be overcome. Another challenge arises from making early design choices—such as choosing a private blockchain platform - that may need to be revised later based on experiences or technology developments. For example, one study participant explained how the initial implementation commenced on one blockchain platform, but due to price and functionality constraints the company decided to move to a different blockchain platform. Designing and implementing such blockchain-enabled system therefore may require continuous iterations, which can be time-consuming, particularly for early movers.
Summing up, this section highlights that while blockchain technologies may have advantages over existing solutions (e.g., virtual immutability), blockchains are different in terms of decentralisation and performance and security risk still exist for this technology. It is uncertain which security challenges will result in increased uptake of the technology. The section further highlights that system design matters and different trade-offs are relevant depending on system architecture choices.
We discuss here potential sources of bias due to the choice of respondents and more broadly the use of an explorative qualitative research approach.
The findings of this study are based on the information provided by 16 interviews with experts on blockchain-enabled systems in supply chains including technology developers, actors in the supply chain, and consultants in the agricultural, fishing, and mining sectors covering a broad range of actors and sectors. While the study participants were predominantly technology providers, other perspectives from within the supply chain were also represented. However, the study would have likely benefitted from a more balanced representation of different perspectives. Nevertheless, considering the still nascent and thus small industry of blockchain-enabled systems in supply chain 16 interviews with experts holding key positions within their organisations was considered satisfactory.
Additionally, interviews were conducted until theoretical saturation was reached, meaning that new interviews were carried out until no substantially new information was generated. Thus, the validity of the results based on the interviews can be considered high. Different questions in the interviews, different methods used for coding and analysis of the interview data, and having different researchers conducting the analysis may have lead to slightly but not substantially different results—because both the selection of respondents, the interview procedure, and the coding procedure were performed iteratively thus leaving the opportunity to cross-check the validity and completeness of the identified themes across the interviews.
The interview protocol was designed to answer the research questions and discussed by all authors. The interviewer was also given the freedom to ask questions outside the interview guide when the study participant seemed to be especially knowledgeable about a topic or to elaborate on previous answers. An analysis of the first interviews was used to assess if the questions asked during the interviews were able to address the research questions. The results were deemed satisfactory.
Given the significant championing and hype of new innovations we had to be careful that the results of this study might be biased towards unrealistic benefits of blockchain technology. The study participants are in fact implementing the technology and may have a more optimistic perspective of the capabilities and outcomes. However, not all study participants provided and used only blockchain technologies. For example, two technology providers stated that they are primarily supporting their clients with the process of digitisation, which is generally a requirement for introducing blockchain technology (
The research was further limited by the early stages of development. While information saturation was reached (
The specific contribution to the scientific body of this research is manyfold. While previous research mainly focussed on
Additional research should further address the role of blockchain technology in a blockchain-enabled system and evaluate to what degree generated impacts are due to the blockchain component. In this study, we were not able with the data available to clarify to what extent the blockchain component contributes to positive social and environmental impact generated by the blockchain-enabled system as a whole. However, we believe it is important to determine the role of specific components in a system of technologies in creating impact (
An important insight that we gained from this study is that there is currently a gap in measuring the impact of blockchain-enabled systems in supply chains. This gap is concerning because not measuring impact makes it difficult to evaluate the success of the implementation of blockchain. Measuring impact is not only a tool to assess the accomplishments of an implementation, but also a tool that can be used to make strategic decisions about project continuation or adaptation and can allow knowledge transfer to other projects ultimately achieving impact at larger scale. Future research could address this gap by, for example, developing a methodology to measure the impact of implementing blockchain-enabled systems and to test such methodology on real-world cases. These new measurement approaches need to be adaptable to specific use cases and allow to determine the extent to which perceived and projected impacts match actual measurable results. Since previous research on blockchain-enabled systems has mostly been conceptual, taking an experimental approach where the proposed methodology is tested in an actual project will allow to base findings on practical experiences and take into account real-world constraints that are not foreseen in conceptual studies.
Finally, future research should test and adjust the middle-range theory proposed as needed. Limitations regarding the early stages of technology development and implementation as well as the use of an explorative qualitative research approach were identified. In order to address these limitations, future research could conduct long-term—longitudinal—studies of specific cases. A long-term approach is needed in order to see impacts of implementations of blockchain-enabled systems and analyse if they are aligned with the ones forecasted by the current study participants. More in-depth case studies can be used to test the middle-range theory, adjust it, and provide additional detail, given that multiple functions and organisations will be impacted. Focusing on specific case studies can further help to provide a more balanced view of different perspectives within the supply chain addressing potential biases towards technology providers in this study.
The original contributions presented in the study are included in the article/
SK: Conceptualization, conduction of interviews, interview coding, data analysis, writing – original draft preparation; MP: Conceptualization, feedback on analysis, writing – review and editing; JS: Conceptualization, feedback on analysis, writing – review and editing.
SK’s and MP’s contribution has been funded by the grant 7015-00006 of the Independent Research Fund Denmark – Social Sciences.
The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.
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