How Can Blockchain Technology Disrupt the Existing Business Models?

Abstract

A B S T R A C T Objective:The main purpose of the paper is to show that blockchain technology may disrupt the existing business models and to explore how this may occur. Research Design & Methods: This is a theory development paper which relies on a literature review and desk re-search. The discussion of the reviewed sources leads to the formulation of three re-search propositions. Findings: The paper provides a short overview of key literature on business models and business model innovation, indicating, among others, that new technologies may be one of the drivers of business model innovation. This study also provides an overview of blockchain technology and a range of its business applications showing how it can disrupt business models. It is shown that blockchain technology may affect many dimensions of business models. We propose that there are three crucial ways in which blockchain technology can affect and disrupt business models: by authenticating traded goods, via disintermediation and via lowering transaction costs. Implications & Recommendations:This study shows that blockchain technology may affect diverse dimensions of business models in diverse industries. It is recommended that mangers should follow developments in this field in order to prepare for possible disruptions in their industries. Contribution & Value Added:This study provides an analysis of the possible impact of blockchain technology on business model innovation. Blockchain technology is gaining momentum with more and more diverse applications, as well as increasing numbers of actors involved in its applications. This paper contributes to our understanding of the possible applications of blockchain technology to businesses, and in particular to its impact on business models. Article type: research paper

The impact of blockchain technology on business models – a taxonomy and archetypal patterns

“…First, the blockchain is strongly affecting financial services (Underwood 2016), especially the realms of accounting, auditing, and bank transfer (Wang and Kogan 2018). By eliminating a trusted third party, firms can significantly reduce transaction costs (Nowiński and Kozma 2017). Moreover, blockchain enables cross-border transactions in a short amount of time without having to account for currency exchange fees.…”

“…Simultaneously, it imposes certain limitations on the design of new business models. On the advantageous side, blockchains provide various incentives to convert customers to blockchain-based business models (Nowiński and Kozma 2017;Subramanian 2018;Wörner et al 2016). Depending on its implementation, these can include significant cost reductions emerging from disintermediation (Ying et al 2018;Xu et al 2017), faster transaction times (Underwood 2016), reduced record-keeping for customers resulting from the distributed ledger technology, and enhanced data traceability and verification.…”

“…The blockchain also offers an alternative approach for authenticating assets, thus setting it apart from centralized transaction systems that rely on an individual organization (Nowiński and Kozma 2017). Blockchains substitute for the trust between entities, which is usually provided by central transaction systems.…”

“…Inspired by those firms and the expectation for added business value, an increasing number of organizations are actively considering blockchain technology to be a foundational technology (Lacity 2018;Iansiti and Lakhani 2017). In sum, blockchain technology helps authenticate traded goods, facilitate disintermediation, and improve operational efficiency, thereby influencing existing and creating new business models (Nowiński and Kozma 2017).…”

“…(Nowiński and Kozma 2017;Subramanian 2018;Wörner et al 2016), Underlying Asset (Smith and Dhillon 2017; Y. Chen 2018; Jun and Vasarhelyi 2017), DAO Affiliation(Chohan 2017;Adams et al 2017;Shermin 2017;Elsden et al 2018;Jun and Vasarhelyi 2017), and Token System…”