Operational efficiency effects of blockchain technology implementation in firms

Abstract

<jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>The purpose of this study is to evaluate the effect of blockchain technology on firms’ operational efficiency in the context of China.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>The authors use panel data for blockchain-based companies listed on stock exchanges in China (Shanghai, Shenzhen and Hong Kong) between 2014 and 2018. The operational efficiency of firms that deploy blockchain technology is evaluated using ordinary least squares and system generalized method of moments estimation.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>Results suggest that companies’ current year performance exceeds the previous year performance because of blockchain deployment in firms’ operations. Firms with higher financial leverage and return on assets reap more benefits from blockchain. Larger and older firms benefit less from blockchain implementation. Stochastic frontier estimation suggests that, on average, firms attain a 57.76 per cent technical efficiency level, or, put differently, they operate 42.24 per cent below their maximum level of potential output.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>Blockchain can benefit firms in terms of consensus, security and trust, spurring the evolution of a new form of organizational dynamics. This study explores the theory of transactional cost analysis under blockchain technology. In addition, this study hypothesizes and empirically demonstrates the significant impacts of blockchain technology on corporations’ operational efficiency, using audited, externally reported financial data. Industry professionals can reap benefits from this research by noticing the magnitude of changes in firms’ financial parameters attributable to blockchain adoption.</jats:p> </jats:sec>

Can blockchain-technology fight corruption in MNEs’ operations in emerging markets?

“…While this setup did not create an automatic consensus and a decentralized system, it still provided a protocol to control transactions while simultaneously inhibiting the social processes of corruptive practices. Resting on the assumption that blockchain implementation occurs incrementally, the functionality evolves and effectiveness can be enhanced over time (Hasan et al, 2020) There is also some evidence of blockchain technology that has been used in pilots by MNEs to fight corruption in EM supply-chains. For example, the world leading brewing giant AB InBev was sourcing local crops like cassava and sorghum in Uganda, as ingredients for its locally produced beers.…”

The Impact of GDP on Cross-Country Efficiency in Wealth Maximization: a Joint Analysis Through the Stochastic Frontier and Generalized Method of Moments

“…Unlike other studies, this paper has used separate but joint methodology for SFA and regression models. Earlier, this method has been used for studying the impact of block-chain effects [31]. Stochastic frontier is recommended for technical efficiency analysis [32].…”

“…Thirdly, it has scrutinized and identified the nature and magnitude of impacts of the factors affecting wealth efficiency of a nation. The joint use of SFA and GMM models in analyzing the efficiency can be widely used in academic arena [65]. Also, the concept of wealth efficiency and its determinants can be used in broad theoretical discussion of the economic world in upcoming future.…”

Guest editorial: Blockchain and the multinational enterprise: progress, challenges and future research avenues

“…Before we explore the underlying themes and highlight the future avenues that result from the articles, we first summarise each article's contribution. Hasan et al (2020) draw on panel data from the Shanghai, Shenzhen and Hong Kong stock exchanges between 2014 and 2018 to evaluate the effect that blockchain technology has had on firms' operational efficiency. Grounding their study in transactional cost analysis (Williamson, 1975) and the problems associated with contracting and the asymmetry of information, the authors were interested in how blockchain could be used to decrease operational costs and, thus, increase operational efficiency, and how an incremental versus big bang approach to blockchain implementation changes the operational efficiency.…”