Master Thesis

Master of Science Business Administration – Strategic Innovation Management

Master Thesis

Governed by blockchain: a novel mode of interorganizational

governance

Groningen, June 22

, 2020

Pim Roozen

S3858383

University of Groningen

Faculty of Economics and Business

p.i.j.roozen@student.rug.nl

Supervisor: dr. M. Hanisch

Co-assessor: dr. E. Smailhodzic

ABSTRACT

1. INTRODUCTION

The governance of interorganizational relationship has been a fundamental challenge of organizations and is therefore subject of a lively debate in the respective organization literature (Poppo & Zenger, 2002; Ring & van de Ven, 1994). Organizations face the challenge of coordinating the relationship, while opportunistic behavior could undermine the collaboration and potential threats arise from exchange hazards (Macneil 1980; Williamson, 1985). Previously, these challenges were addressed by setting up complex contracts (Mayer & Argyres, 2004; Schepker et al., 2014), or the collaboration relied on prolonged relations that developed over time (Poppo et al., 2008; Zaheer & Venkataraman, 1995). Today, the emerging blockchain technology could provide firms a novel governance mode to organize interorganizational relationships (Lumineau et al. 2020; Ziolkowski et al., 2018).

Blockchain securely facilitates transactions between parties that do not have to know each other, which establishes so-called trustless trust (Werbach, 2016). Early stage blockchain literature examines its potential to disrupt how relations, firms, and even countries are governed (Shermin, 2017; Yermack, 2017). Furthermore, scholars identify applications in a multitude of industries (Casino et al., 2019; Cennamo et al., 2020), promising “a world without middlemen” (Gupta, 2017, p. 2). In particular, Lumineau et al., (2020) explored blockchain’s governance capacity by including it in the scholarly discussion on interorganizational governance. This academic debate suggests that two types of governance are at play in interorganizational relationships. On the one hand, contractual governance comprises formal contracts that can be drawn up to define roles, rights, obligations, and procedures to manage contingencies (Schepker et al., 2014; Williamson, 1985). On the other hand, relational governance emphasizes the importance of informal structures, relational norms and trust (Dyer and Singh, 1998; Poppo et al., 2008). Literature has been fragmented whether these types of governance function as substitutes (Li et al., 2010; Lui & Ngo, 2004), or rather as complements (Adler, 2001; Poppo & Zenger, 2002). In this regard, Lumineau et al., (2020) examined how blockchain fundamentally differs from these conventional forms of governance and state that it holds great potential for the governance of interorganizational relationships.

for governance, but empirical evidence is lacking, and various aspects are rarely addressed. Therefore, the research question of this study is as follow:

“How does blockchain technology complement or substitute contractual and relational governance?” To address this question, this study uses a qualitative research method of grounded theory building (Gioia & Chittipeddi, 1991). This method allows to develop an understanding of a phenomenon that is not yet identified or poorly understood (Corbin & Strauss, 2004), and thus appropriate. Accordingly, I interviewed multiple delegates of 29 blockchain projects of IBM. To ensure triangulation, 31 additional interviews that are conducted by IBM are used, resulting in a dataset of 60 interviews and input of 124 informants. The results of this study show that blockchain complements relational governance with trust on the network level by combining immutability, transparency and decentralization, which results in an unprecedented single source of truth. Moreover, blockchain substitutes relational governance through a set of relational norms, consisting of information exchange and a shared goal. In particular, the findings reveal that blockchains are initiated to achieve efficiency, optimization, transparency and security. Additionally, it is found that blockchain technology can substitute contractual governance by technically reflecting the roles that participants in a collaboration embody, even as the rights that can be assigned to certain participants. In this way, a blockchain network can replace the need to specify these explicit roles and rights through additional forms of contractual governance.

The main contribution of this study is an inductive grounded model that captures how blockchain governs interorganizational relationships. By doing so, it advances governance literature with the understanding of blockchain governance. In addition, it extends research on trust with the novel type of network level trust, which enables collaborations that were not feasible before. Finally, by uncovering mechanisms through which blockchain relates to both contractual and relational governance, it also becomes apparent what governance mechanisms are just partially or barely effectuated by blockchain. These mechanisms are incorporated in a Blockchain Complementary Model, which extends the contribution of this research from governance by blockchain to governance of blockchain (Pelizza & Khulmann, 2017).

The next chapter describes the relevant literature in more detail. Chapter three delineates the methodology, involving the research setting, data collection and data analysis. Subsequently, the results of the study and the concluding grounded model are presented in the fourth chapter. Lastly, chapter five contains the discussion and conclusions and sets out directions for future research.

2. THEORY

other to transfer value and exchange information securely and effectively (Crosby et al., 2016). This is achieved by its decentralized nature, the ability to automatically enforce agreements between parties, and ensuring that there cannot be tampered with the value that is transferred or the information that is exchanged. In this way, blockchain unlocks a myriad of applications across a variety of industries (Casino et al., 2019), like money without banks, transparency of supply chains and more efficient governments (Shermin, 2017). Underlying these promises is blockchain’s capability to change how relationships between organizations and institutions are governed. Formerly, organizations relied on formal contracts to specify all sorts of agreements or they built reliable relationships over time (Poppo & Zenger, 2002). With the emergence of blockchain, organizations get access to a novel mode of governance that can drastically change this lengthy and costly process (Lumineau et al., 2020). Before defining how blockchain can impact interorganizational governance, it is important to understand how the technology works, which is explained in the following paragraph. Subsequently, a theoretical background of interorganizational governance is given in order to discern where blockchain’s contribution pertains, which in turn uncovers the research gap that this study addresses.

2.1 Blockchain technology

In 2008 the anonymous Satoshi Nakamoto introduced Bitcoin as “a peer to peer electronic cash system” (Nakamoto, 2008). Bitcoin originates from the believe that the financial system relies too much on intermediaries, like banks, and initiated the technology of blockchain such that it maintains the order of transactions and solves the double spending problem, without having to rely on intermediaries (Nakamoto, 2008). Since the invention of Bitcoin, blockchain technology has been subject to many additions and improvements in order to make it a suitable solution to solve many types of problems relating to the exchange of value and information (Felin & Lakhani, 2018). For instance, blockchain can transform supply chains to, among others, give consumers the insight if the food that they are eating is authentic and fairly sourced (Kshetri, 2018).

code that automatically enforces its terms, although the involved parties do not need to trust each other (Christidis & Ddvetsikitotis, 2016). Together, these characteristics make blockchain a shared, but secured database which can be used to transfer value, exchange information, and enforce agreements between parties that do not have to know or trust each other (Crosby et al., 2016). Such a database can be of great value in many industries. For example, within governments blockchain can ensure fraudless voting and legitimacy of land registries (Olnes et al., 2017), while in healthcare it is used to manage patient’s healthcare records (Liu, 20016). Particularly in the financial sector it invokes many applications, varying from clearing and settlement to fully decentralized cryptocurrencies, like the aforementioned Bitcoin (Peters & Panyani, 2016).

Whereas the blockchain of cryptocurrencies like Bitcoin is permissionless, meaning that the participants in the network do not have to be known, other types of blockchains are permissioned, in which all participants are known (Zheng et al., 2017). Because it is, by definition, regulated who gets access to these permissioned blockchains, the participants know with whom they make transactions and exchange information. This makes that permissioned blockchains can offer advantages in security, privacy, set-up costs and regulation compliance, which enables applications that are not possible or not desirable with permissionless blockchains (Yermack, 2017). These advantages can be particularly important for applications within enterprises, which is why these types of blockchains are also called “enterprise blockchains” (Lacity, 2018, p. 201). For instance, enterprises might want to keep control over who gets insights in their transaction history and can make decisions on what happens within the chain (Morabito, 2017). This evolvement of blockchain technology has aroused interest of companies to explore blockchain’s potential (Castillo, 2018). In particular, it is promising how blockchain offers organizations a novel way to organize relationships and collaborations (Lumineau et al., 2020; Shermin, 2017). In order to understand blockchain’s potential as a mode of governance, it is essential to examine how interorganizational relationship are governed traditionally, which is defined in the following paragraph.

2.2 Interorganizational governance

relation, governance mechanisms can be implemented (Hoetker & Mellewigt, 2009; Williamson, 1996). Previous governance literature discussed a multitude of mechanisms, varying from contracts (Williamson, 1991) to trust (Uzzi, 1997) and from formal control (Li et al., 2010) to relational norms (Mesquita & Brush, 2008). Despite this wide array of mechanisms, scholars agree that essentially two types of governance are at play, namely contractual and relational governance (Cao & Lumineau, 2015; Hoekter & Mellewigt, 2009; Poppo & Zenger, 2002).

2.2.1 Contractual governance

Rooting from transactions cost theory (TCT), contractual governance originates from the understanding that governance decisions should be based on the costs of transactions and the exchange hazards associated with these transactions (Williamson, 1985, 1996). Within interorganizational relationships, contractual governance concerns the extent to which interorganizational relationships are governed by formal agreements and drawn up in legal contracts (Mayer & Argyres, 2004; Schepker et al., 2014). Particularly, composing formal agreements that represent the roles, responsibilities, and rights of the involved parties diminish opportunistic behavior and safeguard the relationship (Reuer & Arino, 2007; Williamson, 1985). Moreover, the desired performance of the involved parties and the associated outcomes can be settled through contractual governance (Hoekter & Mellewigt, 2009), even as the rules and procedures that will manage emerging contingencies that disturb desired outcomes (Poppo & Zenger, 2002). It is believed that the more specific and detailed contractual governance is constructed, the better it protects against changes (Mesquita & Brush, 2008). In this way, formal governance can offer suitable mechanisms in order to coordinate interorganizational relationships (Lui & Ngo, 2004; Mayer & Argyres, 2004)

Although its variety of implementations, contractual governance is subject to certain constraints. Namely, when formal agreements are drawn up, human’s bounded rationality can result in deficiencies that cause the contract to be incomplete (Hart & Moore, 1999; Williamson, 1979). Since incomplete contracts leave room for opportunism (Luo, 2006), their safeguarding function within interorganizational relations can be less adequate. In addition, the need for formal contracts may indicate absence of trust in the relationship, which can have destructive consequences for interorganizational relationships (Ghoshal & Moran, 1996; Poppo & Zenger, 2002). These constraints may limit the effectiveness of contractual governance in interorganizational relationships (Cao & Lumineau, 2015). Accordingly, organization and management scholars emphasize the importance of relational governance within interorganizational relationships (Dyer & Chu, 2003; Zaheer & Venkataraman, 1995).

2.2.2 Relational governance

These informal structures, rules and values facilitate governance within interorganizational relationships (Dyer & Singh, 1998). In particular, trust refers to the confidence that one party has in the behavior of the other party to perform actions that are important to the party (Das & Teng. 1998). Within interorganizational relationships, trust is identified both on the individual level and the organizational level (Schilke & Cook, 2013). Additionally, relational norms comprehend the mutual expectations that the involved parties have of each other’s behavior, and can be established through flexibility, information exchange and solidarity (Mesquita & Brush, 2008; Poppo & Zenger, 2002). Information sharing facilitates problem solving because the involved parties are willing to share plans and goals, whereas being flexible provides adaptability to contingencies, and solidarity creates mutual commitment in achieving the shared goal (Dyer & Chu, 2003; Poppo & Zenger, 2002). By establishing trust and relational norms, the risk of opportunistic behavior and exchange hazards originating from uncertainty can be mitigated (Gulati & Sytch, 2008; Noteboom, 1996), and the interorganizational relationship can be coordinated (Dyer & Singh, 1998). By doing so, mutual trust functions as a self-enforcing safeguard to the relationship (Uzzi, 1997), and relational norms govern inter-firm exchange (Zaheer & Venkataraman, 1995).

Nevertheless, relational governance knows its limitations. While it generally takes time and resources to develop (Puranam & Vanneste, 2009), it can be damaged rather quickly (Barber, 1983). Moreover, relational governance can directly reduce performance (Hoekter & Mellewigt, 2009). Solidary behavior, for example, can result in providing second chances to the other party or being more acceptable when costs increase. Lastly, relational governance can be harmed by its ambiguous nature, as misunderstandings of each other’s motives or behavior can arise easily (Cannon et al., 2000). As a consequence, scholarly discussion on the interplay between contractual and relational governance is rich and vividly.

2.2.3 The interplay between contractual and relational governance

mechanisms in order to govern inter-firm relationships. Therefore, it is essential to include the emergent blockchain technology in this research area (Lumineau et al., 2020).

2.3 Blockchain governance

Blockchain is widely hailed to establish trust in relationships (Zhao et al., 2016; Werbach, 2016), and to transform the way agreements are set-up and enforced (Murray et al., 2019), which invokes potential for the governance of inter-firm relationships. Recently, Lumineau et al. (2020) included blockchain in the academic debate on interorganizational governance and identified its governance potential relating to contractual and relational governance. However, their paper emphasizes how blockchain fundamentally differs from both governance types and views blockchain as a particular governance mechanism instead of a composition of multiple mechanisms. With regards to relational governance, it is often examined that blockchain creates trust (Werbach, 2016; Shermin, 2017), but its connection to relational norms is not explored extensively. Regarding contractual governance, Murray et al. (2019) examine how blockchain technology can alter contracting in the market and within organizations and find that it can reduce costs of observing agent motivations, firm operations, and, indirectly, unrealized profits. By transforming the management of ownership, shareholder voting and automated auditing, corporate governance could also drastically change in a blockchain based collaboration (Yermack, 2017). Moreover, Shermin (2017) theorizes how blockchain and smart contracts can completely disrupt the way organizations and even countries are governed through decentralized governance. In sum, the interest of organization scholars becomes apparent and already rich potential to govern interorganizational relationships is examined.

Nevertheless, literature on blockchain remains rather theoretical (Xu et al., 2019), and the scarce empirical studies focus particularly on the field of cryptocurrencies (Cennamo et al., 2020) or are limited to specific use cases (Ziolkowski et al., 2018). As a consequence, much of what is proclaimed about blockchain is theorical, and empirical evidence remains deficient. For instance, blockchain is widely hailed to completely disrupt trust as we know it (Shermin, 2017; Zhao et al., 2016), but this is not yet assessed empirically (Miscione et al., 2018). The infancy state of the literature that incorporates blockchain in the field of organizations and governance, and the lack of empirical evidence, leave much room for enhancement. Therefore, in the interorganizational governance literature we do not have a clear understanding of how blockchain technology complements or substitutes contractual and relational governance. This study addresses this research gap.

3. METHODOLOGY

3.1 Research Design

understanding of the phenomenon (Corbin & Strauss, 2014), expose underlying mechanisms, and investigate critical relationships (Gephart, 2004). Exploratory studies are conducted when concepts of a particular phenomenon are not identified, fully developed or poorly understood (Corbin & Strauss, 2014). To systematically build this understanding, a grounded theory approach was used as it “provides deep and rich theoretical descriptions of the contexts within which organizational phenomena occur” (Gioia et al., 2012, p. 16). In particular, the grounded theory method as defined by Gioia was used (Gioia & Chittipeddi, 1991; Gehman et al., 2018). This method builds on interview data, which is systematically analysed and aggregated to develop a data structure from which a grounded model is derived and around which the finding’s narrative is generated (Gioia et al., 2012). Two sources of interview data were used to assure triangulation of the data (Corbin & Strauss, 1998). Moreover, interviews allow for the gathering and retrieval of rich empirical data, which accommodates the development of a theory (Corbin & Strauss, 2014). Hence, it enabled building a bridge between the empirical world of the emerging blockchain technology in organizations and the established interorganizational governance literature.

3.2 Research setting

The interview data was sourced within the International Business Machine Corporation (IBM). IBM is a leading global IT multinational, specialized in software, cloud services and cognitive solutions (IBM, 2019). The company is on the forefront of developing blockchain solutions and is working on more than 500 blockchain projects in a variety of industries (Garcia, CNN, 2018). Its current CEO, Arvind Krishna, defined blockchain as one of the most fundamental technologies since the early days of the internet (Carville, 2020). IBM’s blockchain practices, which are mostly on consulting basis, address technology development, business value design and governance. Therefore, IBM provided a research setting which captures blockchain applications at their width.

3.3 Data collection

and the maturity of the project, only the streams were covered that were applicable to the respective project. An overview of the informants and the scope of the interviews can be found in Appendix 1.

Over a five-month period, I carried out 29 interviews with 60 representatives of blockchain projects. Additionally, 31 interviews that were conducted by IBM were used to triangulate the data sources. These interviews were conducted by a system specialist and a project manager of the IBM Client Innovation Center in Groningen, who are both experienced with blockchain projects. In total, this resulted in a dataset of 60 interviews with input of 124 informants. The interviews were structured by nature and based on a comprehensive, predefined interview schema with both open ended and closed questions (Appendix 2). The structured nature of the interviews ensured that all interviewees were exposed to the same context of questioning, which make the outcomes mutually comparable (Strauss & Corbin, 1998). By this means, the validity of the data is increased. Despite the structured nature, follow up questions were used to provide flexibility in uncovering the grounded theory. The interviews were conducted through WebEx and, depending on the scope and the maturity of the project, lasted between 25 to 90 minutes.

Quantitative Details of Blockchain Projects

Industries Geographies1 Technological maturity2

Finance & Banking 16 Europe 25 Production 12

Government 8 North America 14 Pilot 10

Energy & Utilities 5 Asia-Pacific 9 MVP 24

Logistics & Travel 5 Latin America 4 Proof of Concept 10

Manufacturing 4 Japan 4 N/A 4

Retail 3 China 1

Insurance 3 Middle East - Africa 3

Mining 3 Telecommunications 3 Automotive 2 Entertainment 2 Food 2 Other 4 Total projects: 60 3.4 Data analysis

To familiarize with the data and the research setting, I first transcribed 10 interviews that were conducted by IBM. After familiarization, I conducted interviews and compiled the transcribed data using Microsoft Excel, making sure that the volume of the data was adequately handled, and visibility was insured. Subsequently, the data was analysed following the grounded theory method that was first

1 This division of geographical regions is used by IBM

initiated by Glaser & Strauss (1967) and later enhanced by Gioia (Gehman et al., 2018; Gioia & Chittipeddi, 1991). Firstly, the interview transcripts were coded using the coding process as defined by Strauss & Corbin (1998). A multitude of informant’s terms, codes, categories and concepts emerged from this first-order analysis. By constantly comparing these data points across the various blockchain projects and over time, recurring patterns surfaced. These patterns were compiled into first-order concepts, and thus directly derived from the interview data (Gioia et al., 2012). This resulted in a systematic compilation of similarities and differences that addressed the underlying mechanisms of blockchain. Secondly, by building on this compilation of first-order concepts, second-order themes were identified and developed. These themes captured linkages and similarities among the first-order concepts. In parallel with the data collection and analysis, the interorganizational governance literature was continuously consulted to guide the development of relevant concepts and themes. Lastly, the second-order concepts where further distilled into aggregate dimensions (Gioia et al., 2012). This threefold approach laid the foundation for building the data structure. Adopting this method allowed to rigorously develop a grounded theory and present the process of progression from raw data to the central concepts and themes of the phenomenon (Gioia et al., 2012).

4. RESULTS

Representative Quotes Underlying Second-Order Themes

First-Order

Concepts Second-Order Themes Dimensions Aggregate

Trust antecedents Immutability provides

trust. Blockchain gives that level of immutability and trust that allows for that to happen in the network as it is. – BVD Consultant, Project 2

You need the trust in the credentials. There are a few different use cases, depending on what you want to look at. But one is the core tenant, which makes it able to provide trust through the immutability of credentials that have been issued to you by some sort of institution. – BVD Consultant, Project 59

Transparency provides trust.

As part of the selection of the use case we went through a step where we looked at if it fits blockchain. So, does it have characteristics where blockchain would be the right solution? So, for example, is there a lack of trust between participants? And clearly there was. […] we have got blockchain that would certainly help from that perspective. – BVD Consultant, Project 37

So, there was no single source of truth for them. So, some team depended on an application, and another team depended on something completely different, and they would see a slightly different variation in data, a duplication of data everywhere and those kinds of things. We proved that blockchain could be a good solution for them to implement this single source of truth and to overcome challenges that most of these companies have. – Project Manager, Project 57

Decentralization

provides trust. There are all the data files and there's a lot of friction in communicating because the lack of trust in the data that delays. All of these led to having some distributed system where

you can easily transact with people who you know and also decide what level of information you want to share as well as should be able to permission the shared data between parties and try and build something, which has a lot of trust in the data and the network we can say. – Architect, Project 18

Blockchain allows to digitize most of these things and decentralizes its locality. It's a single source of truth, because all those bodies sit on the single source of information. – Project Manager, Project 19

Network level trust Trust consequences

Blockchain

establishes trust in the network.

Blockchain gives that level of immutability and trust that allows for that to happen in the network as it is. – BVD Consultant, Project 2

Because from the technology perspective, the three participants that exchange information want to have a single version or a single source of truth of their information and blockchain is a good way to achieve that. – BVD Consultant, Project 38

Blockchain

establishes trust in an unprecedented manner.

Blockchain is the only way to solve the problem around trust –lack of trust between different parts of the ecosystem. - Project Manager, Project 12

Representative Quotes Underlying Second-Order Themes (Continued)

First-Order

Concepts Second-Order Themes Dimensions Aggregate

Shared goal We use blockchain to

achieve a shared goal.

We had an overarching goal. – BVD Consultant, Project 18

What we're addressing is a pain points that is concerning all the players on the market. – Project Manager, Project 24

Our main goal is to transform home purchasing and ownership experience for all those ecosystem participants - players in that ecosystem today. That's quite a high arching goal. […] So, we had an overarching goal and then pretty much goals for each participant. – BVD Consultant, Project 18

The shared goal can only be achieved by blockchain.

So, the goal is to create a platform with several automobiles to optimize the processes in the supply chain of the participants. […]. The thing is that the participants have never worked on a digital project together, because in some areas of their business they are competitors and there has never been a technology that created enough trust for them to work together. – BVD Consultant, Project 24

Blockchain is the only way to solve the problem around trust –lack of trust between different parts of the ecosystem. – Project Manager, Project 12

The collaboration was unsustainable because it lacked a shared goal.

[The project stopped because] What [Customer] realized is: this use case in particular is not valuable enough for them to have a node on their own. And if they didn't have their own node it’s more like a centralized database. So, they wanted to stop it. – Architect, Project 32

For them to actually be on the network was not so valuable. They knew that going in, but they finally did not agree to participate– Architect, Project 42

Relational norms

Blockchain goals are efficiency,

optimization, transparency and security.

[The goal of the network is] To make the exchange of information between the participants more efficient. – BVD Consultant, Project 38

Project 28 is intended to be a pre-competitive space where industry participants can collaborate together in order to create a solution that solves industry inefficiencies. – BVD Consultant, Project 28

So, the goal is to create a platform with several automobiles to optimize the processes in the supply chain of the participants. – BVD Consultant, Project 24

That was the original goal; they wanted to automate everything; they wanted to make it seamless for the customers. – Architect, Project 32

The goal of the network is to allow [Client] to have visibility into their shipping supply chain. – Project Manager, Project 56

So, these losses were a huge thing, as they do two hundred million in business, but they lose about twenty million. They wanted us to essentially create a network where the items are tracked end-to-end and can actually enable a quick discovery of issues as to where they have been, how they happened, etc. – Architect, Project 42

So, this platform improves security and prevents new frauds in the banking system. – Business Analyst, Project 27

Representative Quotes Underlying Second-Order Themes (Continued)

First-Order

Concepts Second-Order Themes Dimensions Aggregate

Information exchange Blockchain improves

information exchange.

Blockchain establishes trust in the network and sharing the information is much faster. – Architect, Project 6

The network allows one inspector to collect data or multiple inspectors to collect data and have that data shared with all the different agencies that have an interest in it. So, it solved the problem of sharing with the government, and also reduces the burden on the business owner. – BVD Consultant, Project 37

The information exchange of

blockchain is critical.

Up until now, they haven't found a technology or means through which they could do this, this is why blockchain is a way to go: shared and distributed ownership of data, transparency of where my car is. - BVD Consultant, Project 11

Whenever there are multiple parties and you are exchanging these documents, verified by one authority, and used by other authorities. In this case, a blockchain comes into place where you have a digital trust on the data being shared between participants. I think this is one of the most suitable use cases for blockchain. – Architect, Project 26

Relational norms

Only information that needs to be shared is shared.

All of these led to having some distributed system where you can easily transact with people who you know and also decide what level of information you want to share, as well as you should be able to permission the shared data between parties and try and build something, which has a lot of trust in the data and the network we can say. – Architect, Project 18

Right from the beginning we made clear what information needs to be shared and what information should not be shared. So that means that the confidentiality, and how to classify information was really an important thing, and upfront with all the parties. And second, they took away the discussion and the conflict of interest in terms of anti-trust type of things and sharing commercial information on an unwanted level. – Architect, Project 21

Network roles It is important to have

different roles in the blockchain network

They understand the roles that all of them play. […] We’ve done some flavours of the design thinking approach, with a focus on more understanding the different roles. - Project Manager, Project 33

Instead of adding peers, we feel that what's important is that all members have an identity, that they sign their transactions. But we don't necessarily believe that everybody needs to have a node to be able to view the ledger. So, through the workshop we mapped all these different roles. – Architect, Project 19

We created different roles in the

blockchain network

Some potential participants were the agents of the energy market. We did actually create the role of an agent in the MVP, but they didn’t participate because the initial three entities didn’t invite them. – BVD Consultant, Project 38

An entity can just onboard without having its own inspection system and take up one of the roles that the networks provides. For example, an enforcer or an inspection agency and so on. Or even something like a regulator. – Architect, Project 37

Membership rules

Network rights There are different

rights among the network participants.

Representative Quotes Underlying Second-Order Themes (Continued)

First-Order

Concepts Second-Order Themes Aggregate Dimensions

Network rights There is different

access permission among the network participants.

And there was a requirement for segregating information, only accessible to some parties. – Project Manager, Project 55

Blockchain offers the ability to connect many different players within the industry. Some are partners or competitors, some are not, so you need to have a platform to share data via access control. – Project Manager, Project 25

Membership rules

Table 2. Representative Quotes Underlying Second-Order Themes

4.1 Network level trust

The first dimension that emerged from the data analysis concerns network level trust. The interviews revealed that blockchain creates trust through three characterizing antecedents that form the foundation of this dimension: immutability, transparency and decentralization. Subsequently, these antecedents invoke trust consequences that define how trust in the network is established and how this leads to unprecedented collaborations that were not feasible without blockchain. This paragraph proceeds with a more detailed explanation of the trust antecedents followed by the resulting trust consequences.

4.1.1 Trust antecedents

Three antecedents consistently appeared to be playing a key role in establishing trust in blockchain networks. Firstly, the immutability of blockchain assures that when transactions are made, they cannot be rolled back. Secondly, its transparency assures that the participants know that they are looking to the same data, which forms an important characteristic of blockchain, as the architect of Project 37 said, “The transparency provided by blockchain was critical”. Thirdly, the decentralized nature of blockchain is identified as an important antecedent to create trust in the network. While some informants explicitly mentioned one or two antecedents, indicating that trust thrives on different antecedents in different networks, collectively they lay the foundation for participants in a blockchain to trust the network. The architect of Project 50 exemplified how these antecedents lead to trust:

Moreover, the combination of these characteristics has not been captured in a technology before. It is therefore that the architect of Project 37 explained that these antecedents distinguish blockchain from traditional collaboration methods:

“It could have been a centralized platform in which case the information could have been shared, but the transparency and trust because of immutability, those properties would not be in there. And based on the adoption properties of trust and transparency and having a process which is agreed by all the nodes for making changes to these records. This solves the problem of trusting inspections.”

4.1.2 Trust consequences

Blockchain’s unique composition of characteristics results in trust consequences that, together with the preceding trust antecedents, create trust on the network level. While trust had formerly been identified on the personal and organizational level, the architect of Project 16 described “The blockchain establishes trust in the network.”. Other informants defined this as a ‘single source of truth’, as the PM of Project 19 also put it, “It is a single source of truth, because all those bodies sit on the single source of information.”. By creating this unprecedented network level trust, blockchain enables collaborations that were previously not feasible. For instance, the BVD Consultant of Project 24 exemplified this tendency:

“The thing is that the participants have never worked on a digital project together, because in some areas of their business they are competitors and there has never been a technology that created enough trust for them to work together. […] we finally managed to get them to share information together and that was mainly because of blockchain.”

4.2 Relational norms

The second dimension comprises how blockchain collaborations, by nature, incorporate a set of relational norms that consists of a shared goal and information exchange. Sharing data is fundamental to blockchain and thereby creates a certain threshold level of cooperative activity. In addition, the data analysis suggested that blockchain networks are based on a shared goal and, particularly, reveals that blockchains are initiated in order to achieve one or multiple of the following four goals: efficiency, optimization, transparency and security. This dimension is defined by firstly explaining how blockchain networks rely on a shared goal, and secondly describing how information exchange is inherent to using blockchain.

A recurrent theme that emerged throughout the data defines how blockchain based collaborations are intrinsically driven by a shared goal. That a shared goal is essential for setting up a blockchain network was illustrated by an architect, who answered what lesson he had learned from Project 50:

“I would like to say it is less so about the technology and more about the people. If you have these people that want to increase trust and visibility etcetera in the system, we can make the technology happen. We can build what they're looking for as long as we have aligned incentives and the common understanding of the problem, and a shared vision.”

While a mutual objective is thus required for a blockchain to operate, it was even suggested that the shared goal that participants of some projects intended to achieve could be merely achieved by blockchain. This reciprocal relationship accentuates the importance for blockchain collaborations to have a shared goal. In addition, a pattern that surfaced from the data suggests that blockchains that were not built upon a congruent goal, were not able to proceed. Namely, when the involvement of a participant is required in order for the blockchain to run, but they do not embrace the goal of the network, there is no reason for them to engage. For example, a PM explained that Project 56 was stopped because of this reason:

“We had a misalignment of objectives where the value lied with the corporations, but it was the registered agents that we needed in order for the network to work effectively and there wasn't much value in it for them.”

Besides the importance of a shared goal of blockchain networks, the data indicated consistently recurring goals that blockchain based collaborations tend to achieve. Specifically, blockchain networks are initiated to increase or improve one or multiple of the following shared goals: efficiency, optimization, transparency and security. For example, in order to increase transparency, blockchain can be used to track and trace goods that circulate through a supply chain. Moreover, efficiency could be achieved by automating processes, while optimization can result from information sharing, and decentralization can improve security. Whereas some projects intended to achieve one of these blockchain goals, others aimed for multiple, as the architect of Project 31 outlined:

4.2.2 Information exchange

Besides a shared goal, information exchange is the second theme through which blockchain establishes relational norms. The data analysis suggested that information exchange plays a twofold role in blockchain collaborations, as it is a critical feature of blockchain, but also has to be limited to avoid undesirable information sharing. The first concept composes how the interviewees emphasized that blockchain facilitates data sharing across the network and that this functionality led to improvements compared to traditional ways of information exchange, as it could be done faster, with less friction and more transparently. This enhancement of conventional data sharing was substantiated by the BVD consultant of Project 11:

“By having this top-layer, they facilitate their data sharing for a win-win situation for all the parties involved and willing to share their data.”

In addition to improving how information is exchanged, the interview data also shows that it is a critical feature of blockchain technology, since it allowed data sharing in a way that was not possible without using blockchain technology. Accordingly, the following was commented by the lead developer of Project 2 when asked why he identifies their solution as a blockchain use case:

“We need to share information in a transparent way with multiple parties. At the moment there is not information sharing in like a triangular network or a circular network where you actually need to share information with more parties.”

Yet, the inherent exchange of information through blockchain can also have negative consequences when data is exchanged that is not intended to be shared. For example, this could occur when confidential information is revealed in a blockchain that involves competitors of a particular industry. To safeguard against this threat, blockchains can be designed in such a way that undesirable information sharing is prevented. The importance of this capability to only share information that needs to be shared and control ownership over important data is emphasized by various informants. For instance, the BVD consultant of Project 15 exemplified:

“With our solution we can guarantee that the overarching process given by law is shared between everyone, but everyone has only the data that they need about their own processes, but not about other's processes.”

4.1 Membership rules

The third dimension of membership rules consists of two themes that consistently emerged from the data analysis. The first theme captures how blockchain can reflect different roles that can be at play within inter-firm collaborations. Furthermore, blockchain allows to assign particular rights to participants in the network, forming the second theme of network rights. How these network roles and rights function in a blockchain collaboration is exemplified in the following vignette:

“Let’s call them buyers and sellers. Because, essentially, those are the roles that they are performing. And then supply chain finance or invoice financing or IO financing or working capital, those are different products. And then there are entitlements. So, we could look at this business problem from that angle. Like there are buyers and sellers and then there are different products available and, depending on their eligibility, they could go for a particular financing. So, with this concept, it is a much more natural fit or easier to abstract and code probably. So, when particular SMEs, when they're working either as a buyer, or either as a seller, then they would have a different view or perspective, like they would be seeing all the invoices they raised versus they will be seeing all the invoices they received.” – Architect, Project 35

4.3.1 Network roles

The theme of network roles captures how blockchain technology facilitates the presence, creation and the characterization of different roles in the network. As different types of entities can be involved in a blockchain, like buyers and sellers, an important feature of the technology is to reflect these roles in the network. This was substantiated by a BVD consultant who shared a lesson that he learned from Project 24, “The importance of the scoping phase. It is really important to define the roles.”. Moreover, the relationship among network participants can also vary, like business partners or competitors. Therefore, it can be required to reflect different identities in the blockchain. For example, the PM of project 26 defined the following:

“What they wanted, and we used the power of what blockchain can do, we also have another identity provider entity. Like, it's another node.”

parties or the relationship among them. Nevertheless, it can be an essential element in order to coordinate the collaboration, like the architect of Project 55 emphasized when he explained the choice of the blockchain technology on which they developed their solution:

“One of the features that [Hyperledger] Fabric did have that the other networks didn't have very well developed, was this concept of organizations and multiple users with separate identities within the organizations. That really facilitates the modelling of networks where not everyone can own a node.”

4.3.2 Network rights

While different participants can have distinct roles in the blockchain network, another membership rule contains the rights that can be assigned to participants. These network rights can be associated to a specific network role or they can be assigned to certain participants. Furthermore, network roles can be assigned rights that do not have to be reflected in the technology. For instance, incorporating a particular role can be associated with certain decision or voting rights on the governance board, which, in this case, is not reflected in the blockchain. More interestingly, different network rights can also be implemented in the blockchain, which incorporates the network rights in the technology, like the PM of Project 17 described how their solution incorporates ‘policy enforcement mechanisms’ that ensure that certain printing rights are lived up to:

“You have different members involved in this value chain and very IP-relevant data is transferred between these different companies. What we are trying to do with this solution is to connect these different ecosystem members and make sure that only those, who should have access, have access to the content and that they only do what they are supposed to do with the information. […] So, we have a provenance machine and also a policy enforcement mechanism to make sure that it can only be printed 3 times when it's supposed to only be printed 3 times.” Moreover, the foregoing statement also outlines how different participants only have access to the information that they are supposed to see. These ‘access rights’ or ‘visibility rights’ continuously surfaced from the data analysis. For instance, a blockchain network can involve multiple competitors within a particular industry, which forms a collaboration in which privacy and confidentiality is of critical importance to the participants. Blockchain allows this distinction of rights to be implemented in the technology. In particular, it was defined as an important strength by the PM of Project 30:

that the data streams are secure and that you're only sharing data with folks who have permission to access something, so it is the permissioning and the security. That's very useful.” Although these distinct rights within a blockchain become apparent as a valuable characteristic, it can result in discrepancies in combination with blockchain’s transparent nature. This tendency was reflected in a forthright statement of the PM of Project 25:

“Every blockchain has the same issues, but you can manage them. Just because data is updated in a blockchain doesn't mean everyone has access rights and the same visibility. But you have to manage these concerns, especially with people who are not so educated about blockchain.” Table 3 presents an overview of the main findings. Furthermore, while this study builds on two data sources – conducted interviews and obtained interviews – in order to assure triangulation, there is no difference found in the results among those data sources.

Table 3. Overview of the results

Overview of the results

Dimensions Themes Governance

type Relation to governance type Network level trust Trust antecedents: Blockchain establishes trust

through immutability, transparency and decentralization.

Relational Complementary

Trust consequences: Blockchain establishes trust in the network in an unprecedented manner. Relational Norms Shared goal: Without a shared goal, a blockchain

collaboration is unsustainable. Blockchain is used to achieve efficiency, optimization, transparency and security and some of these goals can only be achieved by blockchain.

Relational Substitutive

Information exchange: Blockchain improves information exchange, which is a critical characteristic. Besides, blockchain is able to control what information is shared.

Membership rules Network roles: Blockchain allows to reflect roles of participants in the network, which is an important characteristic.

Contractual Substitutive

4.2 Grounded model of blockchain governance

While the findings reveal a consistently recurring set of concepts, an essential part of building a grounded theory involves clarifying the dynamics and assimilating them in order to define the phenomenon (Corley & Gioia, 2011). By integrating the second-order themes and aggregate dimensions that are presented in the data structure (Figure 1), together with the finding’s narrative, a grounded model of blockchain governance becomes apparent, which is illustrated in Figure 2.

As depicted, the first dimension composes how trust antecedents precede trust consequences in order to establish network level trust. Consequently, blockchain possesses three characteristics that form the foundation of trust in the network as a whole. Because this level of trust was formerly unknown and the data does not indicate that other forms of trust are directly replaced, it suggests a complementary relationship with relational governance. That network level trust enables collaborations that were not possible prior to blockchain’s existence substantiates this tendency.

The second dimension consists of two relational norms that are evident for collaborations that utilize blockchain, relating substitutive to relational governance. First, the importance of having a shared goal is consistently present throughout the data and is withal essential for a blockchain to operate, replacing the need to specify such a shared goal through additional governance mechanisms. Second, the information exchange that is associated with using blockchain recurs as a crucial norm of blockchain. Blockchain can enable data sharing, which can even improve conventional ways of doing so, but contrarily it possesses the capability to limit what information is shared to avoid undesirable information sharing. On that account, it works substitutive to other forms of relational governance that would organize information sharing. For example, a steering committee might have to meet less often, because there is a continuous flow of information exchange through the blockchain solution.

5. DISCUSSION AND CONCLUSION

While governance literature comprehensively captures both relational and contractual governance, and blockchain’s governance potential is identified by management scholars (Murray et al., 2019; Lumineau et al., 2020), it is yet merely theorized how blockchain functions as a mode of governance. It is therefore that this study empirically uncovers the interplay between blockchain and interorganizational governance. In order to do so, the following research question is addressed: “How does blockchain technology complement or substitute contractual and relational governance?”. Building on 60 interviews with representatives of blockchain projects and adopting a grounded theory approach, the emergent grounded model resulting from this study situates how blockchain functions as a new form of governance (Figure 2). Particularly, blockchain governance complements and substitutes relational governance through network level trust and relational norms respectively and substitutes contractual governance with membership rules. This section describes how this grounded model of blockchain governance enhances the growing understanding of blockchain in organization research and how it relates to the rich body of governance literature. By doing so, it also aims to uncover what governance mechanisms are barely or not at all complemented or substituted by blockchain technology. Some of these mechanisms are integrated in the grounded model, so that its implications elucidate and can be better understood. The concluding implications are explored theoretically and for practice. Lastly, the limitations of the study are examined followed by a guidance for future research.

5.1 Blockchain for relational governance

key antecedents that conclude from this study - decentralization, immutability and transparency – seem to be the underlying force that drive these ‘trust enablers’ as defined in literature.

Besides network level trust, the results indicate that blockchain facilitates relational governance through a set of relational norms. Firstly, having a shared goal plays a prominent role in blockchain governance. Management scholars have defined how a shared goal functions as a relational norm which invokes solidarity, as it relies on mutual dependence and a shared vision (Dyer & Chu, 2003; Cannon et al., 2000). When parties have a shared goal, they tend to behave in the benefit of the other party, which safeguards the relationship against opportunistic behaviour (Gundlach, 1995). Since setting up a blockchain network requires an assessment of the objective that the participants share, it evokes mutual dependence and commitment, that in turn lead to solidarity within the relationship. Furthermore, the results show that blockchain endeavours are initiated in order to improve efficiency, optimization, transparency and security. These goals are in line with the advantages that blockchain applications offer over governance modes that rely on a trusted third party, as defined by Lacity & Khan (2019).

The second relational norm that blockchain enables concerns the inherent exchange of information. Governance literature points out that sharing information advances intention transparency and problem solving (Mesquita & Brush, 2008; Poppo & Zenger, 2002). For instance, negotiations can be done more efficiently because the parties spend less time and resources to check if the other party meets the spirit of the particular agreement (Dyer & Chu, 2003). Contrarily, an important capability of blockchain is to limit what information is shared with whom, preventing undesirable information sharing. Although this restricts information sharing, the combination of features comprises an advantageous set of relational governance mechanisms, since it gives more options to control the information exchange. This is in line with the findings of Schmeiss et al. (2019), who point out the importance of this functionality in order to solve the openness paradox. Nevertheless, Lumineau et al., (2020) argue that blockchain is especially appropriate for codifiable transactions and thus its suitability to exchange tacit information is considerably lower. This is an important deficiency when considering blockchain as a mode of governance.

Taken together, blockchain’s relational norms in the form of a shared goal and information sharing foster mutuality and cooperation (Poppo & Zenger, 2002). This creates an evident set of relational norms and, therefore, the findings run contrarian to the view of Miscione et al. (2018), who argue that blockchain fails to overcome inhibitors within interorganizational collaborations.

5.2 Blockchain for contractual governance

voting rights within public blockchains are repeatedly identified (Murray et al., 2019; Hsieh et al. 2016; Shermin, 2017), this study solely finds voting rights that are enforced off-chain. This might be because the blockchains of this study are all permissioned, meaning that the participants are known, which makes off-chain voting possible. Though, the findings exposed other rights that are reflected in blockchain technology, like printing rights and access permission. Within interorganizational relationships, the specification of rights is pointed out as an effective way to protect against opportunistic behavior of the involved parties (Li et al., 2010; Williamson 1985). Furthermore, the division of roles concerns an important mechanism in order to coordinate inter-firm relationships (Lui & Ngo, 2004). Hence, to a certain extent, blockchain facilitates contractual governance through mechanisms that are prominently defined in the governance literature. This suits the analysis of Lumineau et al. (2020) who have examined blockchain’s capacity to provide contractual governance and suggest its ability to coordinate relationships. Nonetheless, roles and rights in a blockchain network are written in code and enforced through smart contracts, while interorganizational governance literature emphasizes the legal enforceability of contractual governance (Schepker et al., 2014; Zhou & Poppo, 2010). This important distinction is previously theorized by Lumineau et al. (2020). Along these lines of relating the findings to the vivid literature on contractual and relational governance, further shortcomings of blockchain become apparent, which are explored in the following section.

5.3 What blockchain is not

By revealing the mechanisms trough which blockchain complements and substitutes contractual and relational governance, this study also uncovers the mechanisms that are not, or barely, established by blockchain. Namely, the findings narrative, as captured in the grounded model (Figure 2), exposes what forms of governance are ‘present in absence’ in blockchain-based collaborations. This advances the governance by blockchain, to exploring the governance of blockchain (Pelizza & Khulmann, 2017). To clarify these dynamics, several of these mechanisms are integrated in the grounded model, as displayed in Figure 3. Most notably, the mechanisms are comprised as ‘Blockchain Complementary Model’, suggesting that blockchain governance might be complemented with other forms of governance when the interorganizational relationship demands these mechanisms to be present. Hence, the mechanisms that are incorporated in the Blockchain Complementary Model are by no means exhaustive, but rather an exploration of how blockchain governance could be supplemented.

Moreover, fairness might be increased through immutability, as this ensures that the blockchain cannot be tampered with (Lumineau et al., 2020). Though, the findings of this study indicate that fairness is not prominently apparent within enterprise blockchains. A plausible reason for this is that enterprise blockchains do not necessarily have to rely on shared ownership or equal incentives (Yermack, 2017). Moreover, the results indicate that access permissions do not have to be equal. By that means, this finding runs counter to the suggestion of Shermin (2017), who argues that blockchains should increase fairness.

As aforementioned, literature on contractual governance emphasizes the legal enforceability of its mechanisms (Schepker et al., 2014; Zhou & Poppo, 2010), but the contractual governance that is established through blockchain is often not legally enforceable (Sklaroff, 2018). This causes that blockchains cannot distinguish between routine cases and edge-cases, which could need a different approach (De Fillipi & Hassan, 2018). Therefore, it is suggested that blockchain based collaboration needs to be complemented with law (Werbach, 2018). Moreover, the implementation of roles and rights within a blockchain network is certainly limited to what the network operates. Hence, blockchain based collaborations presumably need contracts to accompany the contractual governance as established by blockchain.

Figure 3. Blockchain Complementary Model

5.4 Theoretical implications

The main outcome of this study is an inductive model that shows how blockchain technology complements and substitutes contractual and relational governance. Thereby, it incorporates blockchain to the lively debate on the interplay between contractual and relational governance (Poppo & Zenger, 2002; Cao & Lumineau, 2005), and advances the understanding of blockchain’s role in this discussion, as initiated by Lumineau et al. (2020), with new insights and empirical evidence. Furthermore, several particular findings have implications for the interorganizational governance literature and the upcoming blockchain literature.

Firstly, network level trust adds a new type of trust to the governance literature that formerly only covered trust on the personal and the organizational level (Schilke & Cook, 2013). In addition, blockchain allows for trust to be implemented instead of being built over time, as is required for conventional types of trust (Dekker, 2004). Moreover, it advances the understanding of trust by introducing the unique combination of immutability, transparency and decentralization, that form important trust antecedents. By identifying network level trust, this research also deepens the understanding of blockchain literature with empirical evidence and fulfils the demand of Miscione et al., (2018) to empirically substantiate the theoretical argument that blockchain establishes trust in inter-firm relationships (Shermin, 2017; Lumineau et al., 2020).

Secondly, current research adds to the academic perspective on relational governance by revealing how blockchain comprises a set of relational norms. Organization scholars emphasize information exchange, flexibility and solidarity as the core of relational norms (Mesquita & Brush, 2018). Through a shared goal, which evokes solidarity (Poppo & Zenger, 2002), and evident information exchange, this study assimilates the relational norms that blockchain creates. Regarding shared goals, this study finds that blockchain collaborations intend to achieve efficiency, optimization, transparency and security, which deepens the understanding of blockchain in organization literature. Furthermore, by solely revealing a shared goal and information exchange as relational norms, the research indicates a lack of flexibility of blockchain, which is in line with previous blockchain studies (Murray et al., 2019; Werbach, 2018).

Thirdly, this study contributes to the literature on contractual governance by shedding light on the extent to which blockchain facilitates the integration of roles and rights in the network. The study finds that the division of roles within inter-firm collaborations can be reflected by blockchain technology, which is identified as an important function of contractual governance (Hoekter & Mellewigt, 2009; Reuer & Arino, 2007). In addition, the research shows that rights can be assigned to certain participants, and also indicates the lack of legal enforceability thereof, supporting prior research on blockchain (Sklaroff, 2018; De Fillipi & Hassan, 2018).

5.5 Practical implications

shows that blockchain can be used as a mode of governance that comprises a particular set of both contractual and relational governance mechanisms. Within interorganizational relationships, trust had formerly to be build (Dekker, 2004), while this study shows that blockchain allows for the direct implementation of network level trust. This offers managers an immediate safeguard against the threat of opportunistic behavior of counterparties in a collaboration. It also helps managers and leaders to recognize the opportunities that blockchain provides by both enabling and limiting information exchange, and to identify what shared goals can be pursued. Furthermore, the roles and rights of participants in a network that can be reflected by blockchain offer informative concepts to create awareness of how contractual governance mechanisms can be enabled. Together, these insights support practicing managers and leaders to assess blockchain as a mode of governance and to create a subsequent strategy, whether they are already utilizing blockchain or not.

For managers who are working with blockchain, this research provides insights by illustrating how blockchain establishes governance and through what mechanisms this is achieved. Leaders of blockchain collaborations can use these findings to develop a better understanding of how blockchain establishes governance and how it falls short. Moreover, the model gives a perspective that can help to assess if the contractual and relational governance of their collaboration is balanced or might benefit from adjustments. In addition, by clarifying how blockchain functions as a mode of governance, it also becomes apparent what blockchain is not. The resulting Blockchain Complementary Model that is discussed in section 5.3 gives managers insights in how to complement blockchain governance and what mechanisms are important to consider. For example, a blockchain based collaboration in a volatile industry or fluctuating environment may have to deal with many contingencies. In that case, managers should carefully consider additional governance mechanisms that ensure contingency adaptation, because blockchains are rather rigid (Sklaroff, 2018). These mechanisms could consist of relational norms that assure flexibility, but also additional contracts that define agreements on how to respond to changes.

For managers and leaders without blockchain experience, this study shows what blockchain is capable of as a novel mode of governance. This insight can support them in assessing whether blockchain governance is suitable to organize their inter-firm relationships. Furthermore, the findings present how blockchain can govern collaborations that were not feasible without blockchain, which helps practicing managers to uncover what unprecedented collaborations they could exploit by using blockchain.

5.5 Limitations and future research

setting entails that the collected data solely concerns permissioned blockchains. Hence, future research may extend the findings of this study to public blockchains.

A second limitation is that the research setting merely allowed rather structured interviews, based on an interview protocol provided by IBM (Appendix 2). Possible follow-up questions were used to ensure that underlying meanings and structures are revealed in order to develop the grounded model (Aken et al., 2012). Nevertheless, it poses a limitation as the interviews offered limited opportunity to go into detail.

Thirdly, the scope of the study is reasonably broad. The blockchain projects of which informants are interviewed widely differ in their technological maturity, the use case of the implementation, and the industry and geography in which they are active. This variety of the sample and the limited allowance to get into detail, cause the findings to be quite broad. Therefore, future research can utilize the findings of this study and benefit from in-depth cases that further add to the research area.