Blockchain enabled traceability — An analysis of pricing and traceability effort decisions in supply chains

Abstract

Despite numerous use cases, enterprise-wide implementations of blockchains have seen limited success. This raises the question of when do firms adopt blockchains and do blockchains benefit supply chains. To answer this, we examine a dyadic supply chain consisting of a buyer and a supplier and analyze their traceability effort and pricing decisions. Our results show that the demand-side, supply-side and reputational factors influencing blockchain adoption are primarily complementary and in the absence of one of them, firms can still adopt blockchain. Furthermore, even in the absence of individual benefits for a supply chain partner, there exist conditions under which blockchain adoption benefits the supply chain that can incentivize players to join blockchain. Overall, we contribute by offering a framework that supply chain players can use to assess the likelihood of blockchain implementation success or failure and address the challenges pertaining to incentives and cost imbalances in blockchain implementation.