Leveraging blockchain technology to control contextualized business risks: Evidence from China

Abstract

The complexity and diversity of socio-economic environments call for a more nuanced consideration of contextualized risks confronting enterprises operating in these environments. By dissecting six cases that successfully adopted blockchain technology in China, we present findings of a grounded theory study into the deployment of blockchain for managing contextualized risks and opportunistic risks. Findings reveal that applying blockchain can augment risk management by controlling opportunistic risk, the latter of which denotes the variability arising from opportunistic practices of internal agents or external parties afforded by their immediate socio-economic environment. Particularly, we not only identify credibility, predatory, and compliance risk as three distinct types of opportunistic risk stemming from the unique socio-economic environment of China, but we also illustrate how blockchain could be leveraged to deal with such opportunistic risks through trust-evoking mechanisms. We discovered that blockchain could evoke trust between individuals-to-organization, organization-to-organization, and organization-to-individuals by bolstering competency, fostering benevolence, and gauging integrity in individual, inter-organizational and intra-organizational contexts, respectively.