The impacts of blockchain adoption on a dual-channel supply chain with risk-averse members

Abstract

Blockchain technology is believed to leverage the potential of supply chain performance. However, its benefits and related costs need to be balanced when implementing blockchain solutions. This study constructs a dual-channel supply chain where a manufacturer sells products through both the direct sales channel and the retail channel. Three blockchain adoption scenarios are considered in this study. We analytically find the blockchain adoption strategies of supply chain members are dependent on unit blockchain-operational cost, direct selling cost, and demand volatility. When blockchain adoption is cost-effective and demand volatility is small and medium, the adoption of blockchain solutions by both the manufacturer and the e-retailer (Model B) is more beneficial for the individual and the supply chain, but if demand volatility is large, it is more advantageous when only the e-retailer initiates blockchain solutions (Model R). When blockchain adoption is costly and demand volatility is medium and large, it is more valuable when only the manufacturer initiates blockchain solutions (Model D). We also conduct numerical experiments to inspect the impacts of an imperfectly competitive market and the variation of stakeholders’ risk-averse level on the model to present the robustness of our results. Based on these findings, we further provide theoretical and practical guidance for supply chain managers in determining the optimal blockchain adoption scenarios in a dual-channel supply chain.