Abstract
This study explores the factors that impact the adoption of blockchain in supply chain financing (SCF). Blockchain's unique features make it a good solution to the current problems in SCF. However, given that both blockchain and SCF are relatively new, there are almost no commercially viable large-scale implementations yet in this area. Research in the factors that drive the adoption of blockchain in SCF, is also scarce. Of the six identified determinants of adoption of blockchain in SCF, 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 are insignificant determinants, indicating a technically mature industry capable of handling current blockchain implementations in SCF and associated changes. The authors also found that trust has a mediating effect between compatibility and adoption and between environment readiness and adoption.
TopIntroduction
This section provides the justification for the research and introduces the research model.
The Euro Banking Association (EBA) defined SCF as ‘The use of financial instruments, practices and technologies to optimise the management of processes for working capital and liquidity tied up in the supply chain collaborating business partners’ (Jansen, Beyer, & Taschner, 2018, p. 7). According to Strategic Treasurer (2021), SCF has been gaining importance in recent years. It is especially useful during times of high or fluctuating interest rates; in conditions of onerous compliance requirements, in cross border trade; and where there are large networks of suppliers and financers. However, traditional SCF has several issues, including too much paperwork, multiplicity and duplication of information and the need for reconciliation, as there are too many systems capturing piecemeal information (instead of an end-to-end system), a need for a common communication system, lack of trust and opportunities for fraud.
Blockchain is taking the world by storm. The concept was based on the seminal whitepaper by Satoshi Nakamoto (2008). In this system, all transactions are verified and stored in a block. Each block is linked to the previous block, thereby creating a chain. Hence, the term ‘blockchain’. The transactions are time stamped, and this prevents anyone from altering the ledger (Tapscott & Tapscott, 2016).The key blockchain characteristics are a distributed database, peer-to-peer (P2P) transmission, transparency with pseudo-anonymity, irreversibility of records and computational logic (Tapscott & Tapscott, 2017). Blockchain is still, however, in the early stage in terms of theory, methods and empirical work. Scholars only started publishing articles on this topic, in 2014 (Frizzo-Barker et al., 2020).
The review of the existing literature showed that more research is needed on blockchain in SCF. Some examples are set out in Table 1.
Table 1. Identified gaps in the research on adoption of blockchain in supply chain financing (SCF)
| Gap | Reference |
| Future research: impact of blockchain on SCF, barriers for adoption and motivation required for adoption. | Parkhi (2021) |
| Blockchain is relatively new, both technically and practically, in the field. Further research into the adoption of blockchain, including field surveys, is needed. |
Rijanto (2021)
|
| Adoption of blockchain in SCF is in its infancy. |
Rijanto (2021)
|
| Blockchain and SCF combination details are rarely mentioned. Future research: how to get core enterprises to join the SCF blockchain. In addition, quantitative research on the impact of blockchain on SCF. |
Li, Zhu, Zhang and Yu (2020)
|
| Future research: other areas of SCF. In addition, how blockchain resolves trust and commitment issues. |
Dong, Chen, Shi and Ng (2021)
|
| The database Scopus (as of 22 July 2020) had 915 publications with the phrases ‘Supply Chain’ and ‘Blockchain’ but only 70 with ‘Supply Chain + Finance + Blockchain’. Therefore, more research is required in this area as well as in the area of sustainable SCF. |
Bal and Pawlicka (2021)
|
| Adoption of blockchain by organizations is limited. There are inconsistent results in previous studies, as no mediating variable was considered. In addition, most of the research is on the technical side. |
Malik, Chadhar, Vatanasakdakul and Chetty (2021)
|
| The promising but immature state of blockchain begs the question whether blockchain in identity management in organizations is practical or just hype. More research is needed, especially using a quantitative approach to technology-organization-environment. |
Mulaji and Roodt (2021)
|
| The adoption of this technology remains low. Furthermore, barriers to adoption have been identified by only a few studies. |
Choi, Chune, Seyha and Young (2020)
|
Key Terms in this Chapter
Supply Chain Financing (SCF): In SCF, the buyers and suppliers in a supply chain enter into agreements to finance supplies to generate working capital benefits for both parties. The finance can be provided by the parties themselves or by banks or other financial institutions. SCF can either be buyer centric, where the buyer gets funded based on his accounts payable or AP, or supplier centric where the supplier gets funded based on his accounts receivable or AR.
Blockchain: Blockchain is a relatively new technology which was first used as the underlying technology for the cryptocurrency bitcoin. It is a system where data is stored in a series of blocks based on cryptography. These blocks are linked by a chain, hence the term blockchain. Blockchain has several advantages including security, privacy, immutability and decentralization. It aims to inspire trust in the system thereby enabling disintermediation. It is also called the internet of value or the internet of money.
Trust: Trust in the context of adoption of a disruptive technology like blockchain refers to the ability to take a leap of faith, particularly given the lack of complete information as the technology is relatively new. Trust can have various facets including trust in technology, trust in government, intra-organizational trust or inter-organizational trust.