Blockchain technology and the sustainable supply chain: Theoretically exploring adoptions barriers

Blockchain technology has the potential to revolutionize sustainable supply chain management. It could improve efficiency, transparency, and traceability within supply chains and offers secure, decentralized ledgers, smart contracts, and networks for sustainable supply chain management,  which could lead to cost-savings for corporations. Yet, blockchain technology has not been readily adopted. In this study, Kouhizadeh et al. investigate why this may be so and how barriers to adoption might be overcome.

Kouhizadeh et al. highlight four main research questions, namely:

• Why has blockchain technology not been implemented to a greater degree in sustainable supply chain management? What barriers impede adoption?

• What are the levels of importance and relationships amongst the barriers?

• Is there potential for sequencing and overcoming these barriers to accelerate blockchain implementation?

• How do two study groups – scholars and practitioners – perceive the importance and relationships among the barriers? What are the similarities and differences in their perspectives?

Technology adoption by a firm is influenced by three major elements: the technological, organizational, and environmental contexts. Technological barriers include basic challenges that are present with blockchain technology like security, accessibility, and immaturity of technology. Organizational dimensions include organizational management commitment, policies, and culture. It also includes challenges that might crop up between organizations, such as information disclosure, problems with collaboration, and lack of awareness. The environmental context presents the characteristics of markets, industries, and the regulatory environment. This includes government policies, and general normative, and ethical practices.

Key Takeaways of the Research:

• Different stakeholders will perceive underlying factors differently especially in emergent and complex technological and organizational relationships.

• A lack of management commitment and support, hesitation to convert to new systems, and lack of knowledge and expertise are top three prominent barriers for both academics and practitioners. Companies initially need to address lack of management commitment and support and financial constraints.

• Both academics and practitioners found that security challenges, a negative perception toward technology, and immaturity of the technology are critical barriers to the adoption of blockchain technology in sustainable supply chain management.

• A lack of standard policies and frameworks for blockchain technology and sustainability are preventing adoption. For blockchain and sustainability standards to be effective, a critical mass of organizations need to support their adoption. In order to increase industry involvement in using blockchain, governments and external stockholders need to support blockchain adoption.

• Joining consortia or networks and forming blockchain-based supply chains were identified as the biggest challenges for adopting blockchain technology for supply chains. It’s necessary to convince, incentivize, and find creative approaches to encourage partners – both upstream and downstream within the supply chain – to join consortia or cooperate. Contractual, preferred selection, and supporting blockchain learning and partner development could be ways to support these adoption efforts. Finding the right collaborators to build effective governance structures is necessary for successful adoption of blockchain.

• Some of the general challenges that prevent the diffusion of blockchain technology across the supply chain industry include technological challenges, poor interoperability, lack of trust and standards, and legal issues.

• Clear disclosure policies that allow for protection of some proprietary and sensitive information will be necessary. The initial stages of adoption, to enhance greater acceptance, should be sharing less sensitive information, such as good sustainability practices – rather than information on poor or critical sustainability practices. These more positive practices and collaborations with this type of information sharing may help more companies gain competitive advantage and spur blockchain adoption.