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Special Section: Strategic Integration of Blockchain Technology into Organizations Rajiv Kohli and Ting-Peng Liang

Raymond A. Mason School of Business, William & Mary, Williamsburg, VA, USA; Department of Information Management, National Sun Yet-sen University, Kaohsiung, Taiwan

Introduction

Blockchain is an emerging technology that enables two or more entities to conduct secure transactions. After a blockchain transaction is executed, it cannot be altered because the transaction information is encrypted. The transactions are safeguarded because they are sealed in a block, linked with other blocks in a chain, and then shared with nodes across the Internet. These properties of blockchain technology create strategic opportunities for businesses, for example, by lowering transaction costs by eliminating the middlemen who charge a fee to verify and guarantee the authenticity of transactions. Although there are several promising use cases, we are yet to see widespread adoption and assimilation of blockchain in business strategy.

A large number of papers associated with blockchain technology have been published in recent years. They cover a broad range of applications, ranging from global supply chain to cryptocurrency and intelligent manufacturing. Many organizations consider blockchain to be a revolutionary technology that can create sustainable value and even alter business models. In order to gain full advantage of this new technology, however, it is important that managers view blockchain as strategic and integrate it into existing strategic infrastructure and in the future strategic planning. They must perceive long-term value in adopting blockchain and inducting it in organizational strategy planning. From an Information Systems scholarship perspective, it is important for us to explore what changes in skills, processes, and organizational structure are needed to realize the strategic value from blockchain. The objective of this Special Section is to analyze and publicize the building blocks and use of blockchain through exemplars that show its strategic integration into organizations.

Research Framework

Strategic use of innovative technologies is an important information systems research issue that has been broadly investigated. As blockchain is a complex technology, scholars must rely on a framework to guide their studies. A common framework for evaluation and aggregation of research findings will lead to a cumulative body of knowledge that scholars can build upon and that practitioners can apply in deploying blockchain. To facilitate such a cumulative body of knowledge, we propose six fundamental elements through which

CONTACT Rajiv Kohli [email protected] Raymond A. Mason School of Business, William & Mary, P.O. Box 8975, Williamsburg, VA 23187-8795, USA

JOURNAL OF MANAGEMENT INFORMATION SYSTEMS 2021, VOL. 38, NO. 2, 282–287 https://doi.org/10.1080/07421222.2021.1912910

© 2021 Taylor & Francis Group, LLC

existing knowledge can be assimilated, and with which future studies can identify. These are research themes, application domains, key constructs, outcomes, underlying theories, and research methods. Our proposed framework shown in Figure 1 is extracted, in part, from the corpus of 65 submissions received for this special issue. Below, we briefly describe each fundamental element in our framework.

Research Themes

Identifying a research theme is an essential element that indicates where a research project is building knowledge and the research stream to which it aims to make its contribution. Research projects must demonstrate a clear theme and how that theme connects with existing knowledge. Among the submissions to this special section, research themes covered inter-organizational integration, digital transformation, inter-organizational governance, value creation, blockchain impacts, data markets, and data sharing.

Application Domains

A new technology can be applied to many existing domains or to new domains. Given the nature of security, transparency, and trust, ideas for blockchain domains are also quite diverse. Among the submissions received, common application domains were supply chain management, healthcare, open data infrastructure, social media, initial coin offering (ICO),

Research Themes

Research Methods

• Case study • Survey • Economic modeling • Design science • Secondary panel data

analysis

Underlying Theories • Network effect model • Game theory • Motivation theory • Ecosystem theory • Affordance theory • Theory of Planned Behavior • Transaction Cost Economics • Signaling theory

Application Domains

• Organizational integration

• Digital transformation • Organizational

governance • Value creation • Blockchain impacts

Key Constructs

• Trust • Privacy • Data governance • Organizational

capabilities • Transaction costs • Technical factors • Organizational

features

Outcomes

• Adoption intention • Financial

performance • Resistance to

security coin offering • Network value • Design principles

• Supply chain • Healthcare • Open data

infrastructure • Financial industry • Initial coin offering • Smart contracts

Figure 1. A research framework for blockchain research.

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smart contracts, public administration, financial industry, and used car markets. Whether the adoption of blockchain technology can enhance performance or creates new services depends on the nature of application domains. Financial applications that need greater security and transparency tend to be more suitable for blockchain-like technologies. For example, Sarkar et al. [3] (See Table 1) apply blockchain to global shipping to overcome potential corruption in the trading process.

Outcomes

Outcomes are dependent variables used in a specific research setting for investigating their relationships and underlying mechanisms. Some constructs are chosen from the adopted theory while others may be selected from the nature of domain or technology. Among the submissions to this special issue, key constructs were trust, privacy, affordance, data governance, organizational capabilities, transaction costs, technical factors, organizational features, task-technology fit, and others. Outcomes under study were adoption intention, financial performance, resistance to security coin offering, network value, and design principles, among others.

Underlying Theories

Although the submissions to this special section used a variety of research methods, many did not specify an underlying theory. Among those that provided theoretical foundations, theories included technology-organization-environment (TOE) model and information systems success model and expected value perspective. Other theories in submitted papers were network effect model, game theory, motivation theory, ecosystem theory, affordance theory, theory of planned behavior (TPB), technology acceptance model (TAM), dynamic capability theory, transaction cost economics (TCE), adaptive structuration theory, signal- ing theory, and self-disclosure theory.

Table 1. Papers in this special section. Authors of Articles

Research Theme

Application Domain Key constructs Outcomes

Underlying theory

Research method

Cho et al. [1]

Economic impacts

Value-added tax reporting

Adoption of blockchain by retailers and vendors, incentives

Profit and social welfare

Game theory Economic modeling

Liang et al. [2]

Organizational technology adoption

Public and private businesses

Task-technology fit, Environment-technology fit, symbolic benefits, function benefits, viability, adoption intention

Adoption intention

Fit-viability Survey

Sarker et al. [3]

Anti- corruption

Global shipping

Social actors, schemas and routines, resources, framing, practices, addressed corruption

Corruption mitigation

Socio- technical system

Case study

Zhang et al. [4]

Design of a Blockchain system

Long-term care insurance

Transaction costs, information privacy, trust

Insurance Model

Transaction cost economics

Design Science

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Research Methods

Research methods applied in a study document the process of how scholars convert data collected into their findings. Common research methods such as survey, design science, and case study are deployed by scholars to extract data for analysis. The proportion of papers using economic modeling was higher in blockchain research than for research associated with other technologies, perhaps because there are fewer applications of blockchain. Authors also used statistical analysis with secondary panel data to analyze real world phenomena such as ICO or cryptocurrency price prediction.

With our framework comprising the six elements, researchers can position their research for better understanding and comparison so that we can build a cumulative body of knowledge.

Papers in this Special Section

All submissions went through a rigorous two- or three-rounds of reviews and revisions. We thank the reviewers for their thoughtful and constructive comments to authors. We also thank Professor Stephan Kudyba for serving as an ad hoc associate editor to manage the review process for the Liang et al. [2] paper. Four full papers were eventually accepted for publication in this special section. They cover a variety of research themes, application domains, key constructs, major outcomes, underlying theory, and research methodology. In Table 1 we summarize how these accepted papers fit into the aforementioned research framework.

Cho et al. [1] investigate economic impacts of blockchain implementation in value- added tax (VAT) reporting. They build a game-theoretic model that involves a retailer and two vendors to analyze the strategic decisions regarding blockchain adoption and to examine the effects on social welfare. They demonstrate that the decision to adopt block- chain depends on financial considerations such as adoption costs, the retailer’s profit margins, as well as actions such as the vendors’ VAT reporting behavior and inter-vendor competition. They found that policymakers can provide subsidies to encourage blockchain adoption and expand social welfare.

Liang et al. [2] report findings from a survey of managers in the public and private sectors. They build a research model based on the fit-viability model and extend the model with value-based perspective to include both symbolic and functional benefits. The model is evaluated with data collected from industrial organizations in Taiwan. Their results indicate that functional and symbolic benefits have positive impact on managers’ assessment of task- technology fit. Their findings highlight managers’ view that viability is an important criterion in adopting blockchain technology.

Sarker et al. [3] report a case study on applying blockchain technology to combat corruption in global shipping. This topic is important because blockchain is expected to increase transparency and data security. They find that adoption of blockchain mitigates corruption related to the shipping process, as well as its documentation. Based on the findings, they develop a sociotechnical understanding of how to combat corruption through the use of social and digital/informational resources, including blockchain technology. Through the interplay among identity, institutional actors, technical and other resources, and practices, they articulate conditions to combat corruption.

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Zhang et al. [4] deploy theory-based design science for evaluating long-term care insurance (LTCI). They focus on reshaping the insurance industry through the use of blockchain technology. Specifically, they design a model, InsurModel, to handle business interdependence in blockchain and utilization of the zero-knowledge proof (ZKP) protocol to reduce the ex-post transaction cost for a LTCI initiative to deal with two technical challenges that are of strategic importance: inefficiency in data auditing and verification of encrypted data. The theory underlying the design is transaction cost economics, one that goes beyond the traditional cost-benefit analysis. Their empirical evaluation indicates that the model is efficient, scalable, and is applicable in China.

Agenda for Future Research

The four papers in this special section address several perspectives in the strategic role of blockchain technology in organizations. They highlight that much remains to be explored. As blockchain will continue to evolve, it is expected to become mainstream technology for secured transactions, just like secure e-mail did in the past. For it to be a viable technology, we expect that scholars and practitioners will continue to seek ways to build applications that go beyond efficiency and cost control of transactions. Managers must seek benefits beyond symbolic and functional impacts that shape the organization’s strategy, for example, by offering new products and services. Can the risk mitigation characteristics of blockchain lead to design of new products such as insurance for authenticity of artwork or ownership title for land and real estate? Strategic applications for risk mitigation may lead to new business models that specialize in executing transactions at low costs, thus improving profitability of trading parties. For example, up to ten percent of the US healthcare costs are from administrative costs such as insurance claims processing. Similarly, lack of reliable records of a patient’s medical history result in duplicate diagnostic tests resulting in higher costs. Blockchain technologies can address the aforementioned challenges and securely deliver the medical history to authorized personnel. Other applications of blockchain are in providing a secure, verifiable maintenance history of automobiles such that blockchain can help overcome trust barriers among used cars buyers.

A second research direction is to examine how to overcome the barriers in adoption, such as the high energy consumption to process blockchain transactions, latency in processing transactions that takes hours to complete, or how secure blockchains encourage bad actors to conduct transactions for illegal activity. As blockchain makes the transaction ledger open to public, could competitors learn from the dyads of transactions between suppliers and its competitors?

Another direction for future research is to explore how blockchain can be combined with other advanced technologies to create new business models and innovative applications. For instance, blockchain may be combined with artificial intelligence to create smart contract applications that allow multi-party transactions to be executed and recorded automatically.

This special section provides four exemplars on strategic applications of blockchain technology and covers some of many possible research areas. Nonetheless, the framework proposed in this introduction can serve as a blueprint for aggregating existing knowledge and planning for future research directions. Different combinations of the six elements could yield new research directions for further studies.

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References

1. Cho, S.; Lee, K.; Cheong, A.; No, W.G.; and Vasarhelyi, M.A. Chain of values: Examining the economic impacts of blockchain on the value-added tax system. Journal of Management Information Systems, 38, 2(2021), in this issue.

2. Liang, T.P.; Kohli, R.; Huang, H.C.; and Li, Z.L. What drives the adoption of the blockchain technology? The fit-viability perspective. Journal of Management Information Systems, 38, 2 (2021), in this issue.

3. Sarker, S.; Henningsson, S.; Jensen, T.; and Hedman, J. Blockchain as a strategy for combating corruption in global shipping: An interpretive case study. Journal of Management Information Systems, 38, 2(2021), in this issue.

4. Zhang, W.; Wei, C.P.; Jiang, Q.; Peng, C.H.; and Zhao, J.L. Beyond the block: A novel blockchain-based technical model for long-term care insurance. Journal of Management Information Systems, 38, 2 (2021), in this issue.

About the Authors

Rajiv Kohli ([email protected]) is John N. Dalton Memorial Professor of Business at the Raymond A. Mason School of Business, William & Mary. Prior to joining academia, he was a Project Leader in Decision Support Services at Trinity Health. Dr. Kohli’s research has been published in Management Science, Information Systems Research, Journal of Management Information Systems, MIS Quarterly, MIS Quarterly Executive and Journal of Operations Management, among other journals. He is a coauthor of the book The IT Payoff: Measuring Business Value of Information Technology Investment, published by Financial Times Prentice-Hall. He serves as a Senior Editor for Information Systems Research.

Ting-Peng Liang ([email protected]) is Director of the Electronic Commerce Research Center of National Sun Yat-Sen University, Taiwan, ROC. He received a Ph.D. degree from the Wharton School of the University of Pennsylvania and is a Fellow, Leo Award Recipient, and Past President of the Association for Information Systems. Dr. Liang’s research interests include electronic commerce, data analytics, information systems strategy, and neural information systems. His papers have appeared in top journals such as MIS Quarterly, Journal of Management Information Systems, Journal of the AIS, Management Science, Operations Research, Decision Support Systems, Information & Management, International Journal of Electronic Commerce, among others.

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