Financing and operating strategies for blockchain technology-driven accounts receivable chains

Abstract

We focus on blockchain technology (BCT) adoption in a three-echelon supply chain in which upstream sellers offer trade credits to capital-constrained downstream buyers, forming an accounts receivable chain. According to different supply chain partners adopting BCT, we analyze the game equilibrium of the no, upper-stream, lower-stream, and entire BCT-driven accounts receivable chains (NBC, UBC, LBC, and EBC) to understand participants’ motivation and condition to adopt BCT and the different roles of participants in blockchain introduction. We find that trade credit management cost-saving and repayment risk-sharing effects, as facilitated by BCT, help increase the equilibrium order quantity, thereby increasing supply chain efficiency and participants’ profits, although BCT cannot fully coordinate the supply chain. Regarding supply chain efficiency, EBC is superior to LBC, which is better than UBC or NBC. As a supply chain leader and creditor, the supplier plays a passive role in achieving the positive effect of BCT. Given that the retailer and manufacturer are supply chain followers and debtors, their adoption of BCT is the key to enhancing supply chain efficiency and profits. The BCT platform can set appropriate technology-usage fees to guide participants to form the EBC structure through different paths. Meanwhile, the retailer’s initial working capital can evaluate the risk-sharing degree of the supply chain, and the stable EBC selection region defined by the risk-sharing degree can be ascertained. We further find that with the trade credit insurance premium increasing, supply chain participants have become more active in adopting BCT.