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Strategies and implication of supply chain integration with blockchain

Papanikolaou Efstathios

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Summary

Distributed Ledger Technology (DLT), or else blockchain, enables new ways of inter-firm interaction in a networked environment. DLT is in its primitive stage of development and many organizations in various industries experiment with it to realize its boundaries and benefits that stem from it in practice. In today’s globalized economy, effectiveness and efficiency of supply chain operations depend upon the synchronization and coordination of organization’s processes, departments and external entities, that intersect supply chain operations. Those supply chain touchpoints seem to leave some space for DLT adoption at supply chain level, due to the trust issues, uncertainties and vulnerabilities that are raised in relationships among interacting entities. The same applies in the case that those touchpoints are referred to the internal or external intersections of organization’s supply chain processes for each individual supply chain entity.Although DLT has long way to go until widely adopted, companies proceed mainly with pilot supply chain implementations to explore its benefits. Supply chain digitalization is becoming the center stage in developing manufacturers' competitive advantage. However, research shows that supply chains are facing information exchange and trust issues and that makes DLT an ideal candidate to address those challenges. Technology itself has no singe objective value. When it is commercialized in some way by a business model then its economic value becomes apparent. Business model innovation is associated with the capability of an organization to commercialize new ideas and technologies or to depict the variations on a generic value chain. DLT brings fundamental changes in the way that value is exchanged, transactions are executed among ecosystem actors and ecosystems interact. Business model represents the value logic of an organization and articulates how a company goes to the market to implement a strategy. It is the link between the strategy and the operative implementation.Existing literature has discussed the potential of DLT to transform the supply chain, but limited work has been taken into exploring the impact of DLT to the respective business model. Although business model innovation literature is referred to the aspect of technological advances as one of its main drivers, the impact of DLT implementation at supply chain level on manufacturers’ business model has not been addressed. We acknowledge and set at the center of our research the fact that in a highly dynamic environment, where different types of relationships coexist, supply chain collaboration is inextricably linked with information sharing capabilities and trust dynamics developed among interacting parties. To close that gap in literature, we select an inductive, qualitative multiple case study approach to answer the first main research question (mRQ1) of “What are the implicit effects in business model that stem from DLT adoption”, under a manufacturing supply chain context.The main source of evidence of the multi-case study research consists of semi-structured interviews with elite informants of 25 large manufacturing companies established in 8 European countries. Between December 2020 and April 2021 two rounds of remote and on-premises interviews, lasting approximately 90 minutes each, have been conducted with each elite informant from each one of the 25 manufacturing companies. Based on findings we identified how DLT adoption under a manufacturing supply context leads to activities, intents and decisions that affect organization’s business model elements. We map how and which business model dimensions are affected and provide managers a method to analyze and assess which DLT related supply chain decisions will affect which business model dimensions; we present the respective process model.In our study we confirm the common view that trust among interacting parties is the main DLT adoption driver. This is expected given the stated role and benefits of DLT adoption in both literature and practice. We focused our research on the intersection of the organization with its interacting entities external to the company in a business ecosystem context to explore how DLT adoption impacts business models. We concluded that it is too simplistic to argue that trust and data openness are implicit business model effects. Our study results revealed that supply chain partner selection and substitution, process and transaction redesign, generation of new knowledge, rules and incentive of collaboration constitute the secondary business model effects stemmed by DLT adoption. Our results show that DLT adoption initiates the transformation of trust and supply chain collaboration between the organization and its supply chain interconnected parties at ecosystem level. The process model developed presents a dynamic picture of a sequence of processes comprised of activities and intents that indicate the secondary effects on business model dimensions.Peer-to-peer transactions among network members, the large number of network participants that ensure both DLT security and the need for positive network effects, highlight the need to argue for an ecosystem approach, where actors create value for actors, when investigating DLT adoption. DLT can be adopted and drive value creation in different ecosystem types, Therefore, before we explore DLT adoption, under a manufacturing supply chain context, we need to clarify what ecosystem type should we consider when we discuss DLT and direct our research regarding the first main research question based on the selected ecosystem type analogies to DLT ecosystem conceptualization. We argue that the economic community consisted of organizations, that although independent, are connected and interact through DLT form the DLT ecosystem. DLT can be applicable in many ecosystem types. However, little research has been done on how DLT works in all ecosystem types. We acknowledge specific ecosystem characteristics in a DLT network of actors and argue that there are similarities between various ecosystem types. Our study extends DLT and ecosystem literature by answering the research sub-question (subRQ1.1) “How do ecosystem types make fit to DLT?”. Seeing DLT as an innovative digital technology that designates the transactions between ecosystem members, we selected to examine the software, digital, technological, innovation, product and service ecosystem types as concepts closer to DLT ecosystem. We revealed their similarities to DLT business ecosystem and spotted their key attributes that make them to deviate from the DLT business ecosystem approach. From that comparison we deduced that each one of those ecosystems can be developed within the DLT business ecosystem. They can also be a subset of it but do not match DLT ecosystem key attributes and do not meet its objectives. We concluded that this can be achieved only by the business ecosystem approach. Therefore, answering the second part of our research sub-question on what ecosystem type is closer to DLT concept we reviewed the business ecosystem approach. To make it apparent we mapped the business ecosystem analogies to DLT ecosystem and identified the similarities between these two concepts.We argue that when we investigate DLT adoption under an ecosystem conceptualization we need to consider the roles that ecosystem actors hold in it under the context of ecosystem sustainability. DLT value lies in the sustainability of the DLT network, since value created in DLT network is collectively produced by its members. In that way we can investigate more accurately the DLT adoption causations, since different DLT ecosystem roles in a highly dynamic environment lead to different DLT adoption incentives. We build upon ecosystem conceptualization, due to DLT network effects and extend DLT literature by answering the research sub-question (subRQ1.2) of “How DLT ecosystem actors based on their role, contribute to ecosystem sustainability?”. Little research has been done on how DLT actor roles affect DLT ecosystem sustainability in a highly dynamic environment, where e

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