Automating governance: Blockchain delivered governance for business networks

Abstract

This conceptual article seeks to integrate blockchain into current theory on the governance of inter-organizational exchanges within business networks. It posits that a blockchain governance structure comprised of administrative, platform, and application level mechanisms represents a significant new antecedent and causal factor determining the extent of the need for the traditional contractual and relational mechanisms of governance. Further, that blockchain delivered governance can perform the functions of transaction coordination and safeguarding which are required in order to substitute for those traditional mechanisms of governance. A discussion points the way towards empirical verification of the framework created, and towards avenues for further theoretical research, and examines the implications of blockchain delivered governance for practitioners. In developing this framework, this article also seeks to make a contribution by placing attention on the need for the building of theory applying to blockchain, and for quantitative measurement of the effects of blockchain on organizations and business networks. This article concludes that the emergence of blockchain technology now provides the means by which automation of the specification, validation, and enforcement of private ordering between exchange participants can be achieved, and that this should stimulate a reevaluation of existing theories of inter-organizational governance.