Exploring the physical–digital interface in blockchain applications: Insights from the luxury watch industry

Abstract

Counterfeit products are an increasing issue across the luxury sector. Blockchain applications exhibit the potential to mitigate counterfeit risks and facilitate the growing secondary markets by enabling product authentication and digital proof of ownership. In this study, we adopt a qualitative multiple-case study design and conduct interviews with informants from four blockchain projects in the Swiss luxury watch industry. We identify the industry-specific drivers and barriers to blockchain adoption and specifically explore the challenges at the physical–digital interface. Beyond an in-depth description of the problems, our findings suggest two main data management hurdles related to the validity of input data and data synchronicity. The main challenge, however, is to establish an unequivocal link between the physical watch to its digital record on the blockchain. We present several invasive and non-invasive linking approaches and discuss their potential advantages and disadvantages. Further, we outline different areas for future research. Overall, our study addresses a timely issue of blockchain applications, contributing to the operations and supply chain management literature and supporting blockchain use case design in practice.