Blockchain for compliance: an information processing case study of mandatory supply chain transparency in conflict minerals sourcing

Abstract

Purpose Firms are increasingly pressured to comply with mandatory supply chain transparency (SCT) regulations. Drawing on information processing theory (IPT), this study aims to show how blockchain technology can address information uncertainty and equivocality in assuring regulatory compliance in an interorganizational network (ION). Design/methodology/approach IPT is applied in a single case study of an ION in the mining industry that aimed to implement blockchain to address mandatory SCT regulations. The authors build on a rich proprietary data set consisting of interviews and substantial secondary material from actors along the supply chain. Findings The case shows that blockchain creates equality between actors, enables compliance and enhances efficiency in an ION, reducing information uncertainty and equivocality arising from conflict minerals regulation. The system promotes engagement and data sharing between parties while protecting commercial sensitive information. The lack of central authority prevents larger partners from taking control. The system provides mineral provenance and a regulation-compliant record. System cost analysis shows that the system is efficient as it is inexpensive relative to volumes and values of metals transacted. Issues were identified related to collecting richer human rights data for assurance and compliance with due diligence regulations. Originality/value The authors provide some of the first evidence in the operations and supply chain management literature of the specific architecture, costs and limitations of using blockchain for SCT. Using an IPT lens in an ION setting, the authors demonstrate how blockchain-based systems can address two key IPT challenges: environmental uncertainty and equivocality.

Guest editorial: Supply chain transparency: opportunities, challenges and risks

“…Moreover, various stakeholders have diverse demands for a firm's SCT. For instance, carbon transparency in greenhouse gas emissions from the SC is a result of complex interactions among normative, mimetic and coercive pressures (Tuladhar et al, 2024). Similarly, while firms need to disclose their information openly, they also need to maintain their legitimacy by achieving their sustainable development goals.…”

“…Blockchain refers to a shared distributed ledger where transactions are digitally recorded and linked in a chain containing the entire history or provenance of an asset (Baharmand et al, 2021). It promotes SCT and traceability through its key attributes of traceability, immutability, auditability and provenance (Menon and Jain, 2024;Saurabh and Dey, 2021;Tuladhar et al, 2024). Smart contracts, one of the most notable innovations in blockchain technology, facilitate the automation of business processes and include member information within the upstream and downstream SC (Ahmed et al, 2022).…”

“…Second, it is crucial to ensure that each link in the SC has adequate visibility and traceability, thereby enabling the entire operational process of the SC to be tracked and recorded (Ahmed et al, 2022;Keller et al, 2021;Tuladhar et al, 2024). Regarding visibility, it actually involves multiple levels, determined by the quantity and quality of information shared within the SC (Barratt and Oke, 2007).…”