Blockchain is a game-changing disruptive technology that is being applied in various fields, including supply chain management and SCF. Blockchain’s unique features of decentralization, disintermediation, immutability, and transparency make it a good solution to the current problems in SCF. This is prompting companies across the globe to look at adopting this technology for their SCF.
However, given that both blockchain and supply chain financing (SCF) are relatively new, there are almost no commercially viable large-scale implementations yet in this area, although there are several pilots. Research in this area in also scarce, particularly on what drives the adoption of blockchain in SCF.
Therefore, we conducted a study aimed at bridging the research gap in the area of the adoption of blockchain in SCF. The research included an extensive review of the literature. Information system theories of technology adoption were examined, particularly at the organizational level. The diffusion of innovations (DOI) and technology-organization-environment (TOE) theories of adoption were identified as the most appropriate for this research. A combination of the two theories provided the theoretical framework for this research.
In addition, the literature review revealed that trust is often a key factor in the adoption of any technology, including blockchain. Although neither theory specifically identified trust, we used trust as a key factor in the research model. Thus, a model was developed wherein six determinants, namely, relative advantage, compatibility, complexity (from the DOI theory), technology readiness, organization readiness, and environment readiness (from the TOE theory), influence the adoption of blockchain in SCF.
The model also included trust as a factor that mediates the relationship between the six determinants and adoption, thereby arriving at seven groups. We involved five experts in blockchain and SCF to group the twenty-seven factors that were found in the literature review into seven groups.
This quantitative, cross-sectional study collected empirical survey data from two hundred and forty-nine qualified respondents, spread across the globe. The data was analyzed using ADANCO 2.3.1, a software package for variance-based structural equation modeling. The model passed the tests of reliability, validity, and multicollinearity. In addition, the twelve hypotheses were validated. Of the six identified determinants, the study found four to be significant. Relative advantage, compatibility, organization readiness, and environment readiness influence the adoption of blockchain in SCF.
Complexity and technology readiness were found to be non-significant as determinants, indicating a technically mature industry that is capable of handling current blockchain implementation in SCF and associated changes. We also found that trust has a mediating effect between compatibility and adoption and between environment readiness and adoption. These conclusions were supplemented by a validation study that subjected the findings of our research to a panel of academic and industry experts.
We believe that this research is ground-breaking and contributes to both the theory and practice in this area. We used a combination of two theories to evaluate the adoption of blockchain in SCF as well as looking at the role of trust in this process. To the best of our knowledge, this had never been done in research on blockchain in SCF, although we did see it in other areas of technology adoption.
The literature review revealed that most research on blockchain in SCF was confined to a single geographic area (e.g. India, China, or the US). This study’s respondents were from across the world. This adds to the global applicability of the findings. Therefore, researchers from across the world can leverage our model and findings. Thus, we laid the groundwork for future research with a well-articulated theoretical approach to the study of the adoption of blockchain in SCF.
This research will benefit private sector managers in both buying and selling organizations as well as those working in financial institutions, government, and academia. Managers will understand the types and benefits of SCF as well as its pain points. They will get an introduction to blockchain, including its features, advantages and drawbacks, and the conditions for its implementation, particularly in the area of SCF. They will gain an understanding of how blockchain can help address the current pain points of SCF.
In particular, they will understand the key determinants that influence the adoption of blockchain in SCF, and those that do not, as well as the role of trust in this process. In summary, managers will benefit by using this research to help them set out their roadmap for the implementation of blockchain in SCF in their organization.
This research will also benefit public sector policy analysts and managers. The existing literature repeatedly emphasized the importance of government (public sector policy analysts and managers) in facilitating the adoption and scaling of blockchain in SCF. This was reiterated by the global respondents to our survey, who also emphasized the importance of government and trust in government as part of the environment readiness.
It is also crucial to know that we found that trust fully mediates environment readiness factors. This means that all the stakeholders need to trust that the environment’s conditions, including those relating to government, will facilitate the adoption of blockchain in SCF. This translates to having clear regulations that facilitate SCF and blockchain in SCF, with a transparent process of adopting and administering them (e.g. no retrospective laws). In particular, there need to be clear government policies and regulations in the areas of treatment of SCF, blockchain regulations, digitalization including digital identity, smart contract legitimacy, tokens, and cross-border regulations.