Smart Contracts for Smart Supply Chains

Abstract

A smart contract is an electronic transaction protocol intended to digitally facilitate, verify, or enforce the negotiation and execution of the terms of an underlying legal contract designed to fulfil common contractual conditions comprising payments, legal obligations, and enforcement without third parties. Thus, by following the traditional perception, smart contracts target to reduce transaction costs including arbitration and enforcement costs by realising trackable and irreversible transactions by using blockchain technology for distributed databases. However, the potential of smart contracts goes far beyond cost reductions by facilitating the entrepreneurial collaboration of cross-organisational business-processes that are characteristic for smart supply chains. A closer look to existing or ongoing smart contract projects reveals that the majority of smart-contract applications in business life are linked to supply chain management, Internet of Things and Industry 4.0 solutions.The author participated in several EU projects related to transnational entrepreneurial networks and smart supply chains. Thus, the paper discusses the research question of how and to which extent smart contracting and blockchain technology can facilitate the implementation of collaborative business structures for sustainable entrepreneurial activities in smart supply chains. The research is based on expert interviews, surveys and case studies, which took place in the context of the EU projects with a focus on the Baltic Sea Region.