Influence of blockchain and smart contracts on partners’ trust, visibility, competitiveness, and environmental performance in manufacturing supply chains
Abstract
This study investigates the influence of blockchain and smart contracts on partners’ trust, increasing visibility, competitiveness, and environmental performance when implemented in manufacturing supply chains. Partial least squares (PLS) was the main method used to test and verify the research model and hypotheses. According to the test results, blockchain and smart contracts positively influence partners’ trust. Increasing trust produces a positive effect on increasing visibility, further promoting competitiveness and environmental performance. However, the vulnerability of smart contracts still causes information security concerns. If smart contracts are adopted for an extended time, partners will worry about problems of information vulnerability stemming from the smart contract, further reducing trust and affecting visibility. Regarding academic implications, this study not only proves the relationship between blockchain, smart contracts, partners’ trust, increasing visibility, competitiveness, and environmental performance. In addition, we also proved the vulnerability of smart contracts; our test results fill these gaps. Regarding practical implications, with extended contract periods, partners may expand their doubt in the smart contract and reduce information sharing, further affecting visibility. Manufacturers are reminded that smart contracts may carry hidden trouble that disrupts the relationship between partners’ trust and visibility.
First published online 02 March 2022
Keyword : supply chain, blockchain, smart contract, trust, visibility, competitiveness, environmental performance
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Al-Doori, J. A. (2019). The impact of supply chain collaboration on performance in automotive industry: Empirical evidence. Journal of Industrial Engineering and Management, 12(2), 241–253. https://doi.org/10.3926/jiem.2835
Alharby, M., & Van Moorsel, A. (2017). Blockchain-based smart contracts: A systematic mapping study. arXiv:1710.06372. https://doi.org/10.5121/csit.2017.71011
Angelis, J., & da Silva, E. R. (2019). Blockchain adoption: A value driver perspective. Business Horizons, 62(3), 307–314. https://doi.org/10.1016/j.bushor.2018.12.001
Azzi, R., Chamoun, R. K., & Sokhn, M. (2019). The power of a blockchain-based supply chain. Computers & Industrial Engineering, 135, 582–592. https://doi.org/10.1016/j.cie.2019.06.042
Badi, S., Ochieng, E., Nasaj, M., & Papadaki, M. (2021). Technological, organisational and environmental determinants of smart contracts adoption: UK construction sector viewpoint. Construction Management and Economics, 39(1), 36–54. https://doi.org/10.1080/01446193.2020.1819549
Barratt, M., & Oke, A. (2007). Antecedents of supply chain visibility in retail supply chains: A resource-based theory perspective. Journal of Operations Management, 25(6), 1217–1233. https://doi.org/10.1016/j.jom.2007.01.003
Benitez, G. B., Ayala, N. F., & Frank, A. G. (2020). Industry 4.0 innovation ecosystems: An evolutionary perspective on value cocreation. International Journal of Production Economics, 228, 107735. https://doi.org/10.1016/j.ijpe.2020.107735
Brandon‐Jones, E., Squire, B., Autry, C. W., & Petersen, K. J. (2014). A contingent resource‐based perspective of supply chain resilience and robustness. Journal of Supply Chain Management, 50(3), 55–73. https://doi.org/10.1111/jscm.12050
Brusset, X. (2016). Does supply chain visibility enhance agility? International Journal of Production Economics, 171, 46–59. https://doi.org/10.1016/j.ijpe.2015.10.005
Chang, S. E., Chen, Y. C., & Lu, M. F. (2019). Supply chain re-engineering using blockchain technology: A case of smart contract based tracking process. Technological Forecasting and Social Change, 144, 1–11. https://doi.org/10.1016/j.techfore.2019.03.015
Chen, J., Xia, X., Lo, D., Grundy, J., & Yang, X. (2020). Maintaining smart contracts on Ethereum: Issues, techniques, and future challenges. arXiv:2007.00286.
Chia, V., Hartel, P., Hum, Q., Ma, S., Piliouras, G., Reijsbergen, D., Staalduinen, M. Van, & Szalachowski, P. (2018). Rethinking blockchain security: Position paper. In 2018 IEEE International Conference on Internet of Things (iThings) and IEEE Green Computing and Communications (GreenCom) and IEEE Cyber, Physical and Social Computing (CPSCom) and IEEE Smart Data (SmartData) (pp. 1273–1280). IEEE. https://doi.org/10.1109/Cybermatics_2018.2018.00222
Choo, K. K. R., Dehghantanha, A., & Parizi, R. M. (Eds.). (2020). Advances in information security: Vol. 79. Blockchain cybersecurity, trust and privacy. Springer Nature. https://doi.org/10.1007/978-3-030-38181-3
Christopher, M., & Lee, H. (2004). Mitigating supply chain risk through improved confidence. International Journal of Physical Distribution & Logistics Management, 34(5), 388–396. https://doi.org/10.1108/09600030410545436
Çolak, M., Kaya, I., Özkan, B., Budak, A., & Karaşan, A. (2020). A multi-criteria evaluation model based on hesitant fuzzy sets for blockchain technology in supply chain management. Journal of Intelligent & Fuzzy Systems, 38(1), 935–946. https://doi.org/10.3233/JIFS-179460
De Giovanni, P. (2020). Blockchain and smart contracts in supply chain management: A game theoretic model. International Journal of Production Economics, 228, 107855. https://doi.org/10.1016/j.ijpe.2020.107855
Demir, M., Alalfi, M., Turetken, O., & Ferworn, A. (2019). Security smells in smart contracts. In 2019 IEEE 19th International Conference on Software Quality, Reliability and Security Companion (QRS-C) (pp. 442–449). IEEE. https://doi.org/10.1109/QRS-C.2019.00086
Domingo, R. S., Piñeiro-Chousa, J., & López-Cabarcos, M. Á. (2020). What factors drive returns on initial coin offerings? Technological Forecasting and Social Change, 153, 119915. https://doi.org/10.1016/j.ijpe.2020.107855
Dubey, R., & Altay, N. (2018). Drivers of coordination in humanitarian relief supply chains. In The Palgrave handbook of humanitarian logistics and supply chain management (pp. 297–325). Palgrave Macmillan. https://doi.org/10.1057/978-1-137-59099-2_10
Dubey, R., Gunasekaran, A., Childe, S. J., Papadopoulos, T., Blome, C., & Luo, Z. (2017). Antecedents of resilient supply chains: An empirical study. IEEE Transactions on Engineering Management, 66(1), 8–19. https://doi.org/10.1109/TEM.2017.2723042
Dubey, R., Gunasekaran, A., Childe, S. J., Papadopoulos, T., Luo, Z., & Roubaud, D. (2020). Upstream supply chain visibility and complexity effect on focal company’s sustainable performance: Indian manufacturers’ perspective. Annals of Operations Research, 290(1), 343–367. https://doi.org/10.1007/s10479-017-2544-x
Dujak, D., & Sajter, D. (2019). Blockchain applications in supply chain. In A. Kawa & A. Maryniak (Eds.), SMART supply network (pp. 21–46). Springer, Cham. https://doi.org/10.1007/978-3-319-91668-2_2
Falcone, E. C., Steelman, Z. R., & Aloysius, J. A. (2021). Understanding managers’ reactions to blockchain technologies in the supply chain: The reliable and unbiased software agent. Journal of Business Logistics, 42(1), 25–45. https://doi.org/10.1111/jbl.12263
Fawcett, S. E., Osterhaus, P., Magnan, G. M., Brau, J. C., & McCarter, M. W. (2007). Information sharing and supply chain performance: The role of connectivity and willingness. Supply Chain Management: An International Journal, 12(5), 358–368. https://doi.org/10.1108/13598540710776935
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. https://doi.org/10.1177/002224378101800104
Francisco, K., & Swanson, D. (2018). The supply chain has no clothes: Technology adoption of blockchain for supply chain transparency. Logistics, 2(1), 2. https://doi.org/10.3390/logistics2010002
Frazier, G. L., Maltz, E., Antia, K. D., & Rindfleisch, A. (2009). Distributor sharing of strategic information with suppliers. Journal of Marketing, 73(4), 31–43. https://doi.org/10.1509/jmkg.73.4.031
Ghorbani, A., Danaei, A., Zargar, S. M., & Hematian, H. (2019). Designing of smart tourism organization (STO) for tourism management: A case study of tourism organizations of South Khorasan province, Iran. Heliyon, 5(6), e01850. https://doi.org/10.1016/j.heliyon.2019.e01850
Ha, B. C., Park, Y. K., & Cho, S. (2011). Suppliers’ affective trust and trust in competency in buyers: Its effect on collaboration and logistics efficiency. International Journal of Operations & Production Management, 31(1), 56–77. https://doi.org/10.1108/01443571111098744
Habib, M. A., Sardar, M. B., Jabbar, S., Faisal, C. N., Mahmood, N., & Ahmad, M. (2020). Blockchain-based supply chain for the automation of transaction process: Case study based validation. In 2020 International Conference on Engineering and Emerging Technologies (ICEET) (pp. 1–7). IEEE. https://doi.org/10.1109/ICEET48479.2020.9048213
Hair Jr, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2016). A primer on partial least squares structural equation modeling (PLS-SEM) (2nd ed.). Sage publications.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing Theory and Practice, 19(2), 139–152. https://doi.org/10.2753/MTP1069-6679190202
Hamledari, H., & Fischer, M. (2021). Measuring the impact of blockchain and smart contract on construction supply chain visibility. arXiv:2104.07532.
He, D., Deng, Z., Zhang, Y., Chan, S., Cheng, Y., & Guizani, N. (2020). Smart contract vulnerability analysis and security audit. IEEE Network, 34(5), 276–282. https://doi.org/10.1109/MNET.001.1900656
Hechler, E., Oberhofer, M., & Schaeck, T. (2020). AI and Blockchain. In Deploying AI in the enterprise (pp. 253–271). Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4842-6206-1_11
Javaid, U., Aman, M. N., & Sikdar, B. (2019). DrivMan: Driving trust management and data sharing in VANETS with blockchain and smart contracts. In 2019 IEEE 89th Vehicular Technology Conference (VTC2019-Spring) (pp. 1–5). IEEE. https://doi.org/10.1109/VTCSpring.2019.8746499
Kim, J. S., & Shin, N. (2019). The impact of blockchain technology application on supply chain partnership and performance. Sustainability, 11(21), 6181. https://doi.org/10.3390/su11216181
Kirkman, S. (2018). A data movement policy framework for improving trust in the cloud using smart contracts and blockchains. In 2018 IEEE International Conference on Cloud Engineering (IC2E) (pp. 270–273). IEEE. https://doi.org/10.1109/IC2E.2018.00054
Klueber, R., & O’Keefe, R. M. (2013). Defining and assessing requisite supply chain visibility in regulated industries. Journal of Enterprise Information Management, 26(3), 295–315. https://doi.org/10.1108/17410391311325243
Kshetri, N. (2018). 1 Blockchain’s roles in meeting key supply chain management objectives. International Journal of Information Management, 39, 80–89. https://doi.org/10.1016/j.ijinfomgt.2017.12.005
Kumar, R. S., Pugazhendhi, S., Muralidharan, C., & Murali, S. (2018). An empirical study on effect of information sharing on supply chain performance – the case of Indian automotive industry. International Journal of Logistics Systems and Management, 31(3), 299–319. https://doi.org/10.1504/IJLSM.2018.095821
Kurniawan, R., Zailani, S. H., Iranmanesh, M., & Rajagopal, P. (2017). The effects of vulnerability mitigation strategies on supply chain effectiveness: Risk culture as moderator. Supply Chain Management: An International Journal, 22(1), 1–15. https://doi.org/10.1108/SCM-12-2015-0482
Li, Q., & Wang, L. (2021). Research on the information sharing in the linkage between manufacturing and logistics industry based on blockchain. Journal of Physics: Conference Series, 1774(1), 012055. https://doi.org/10.1088/1742-6596/1774/1/012055
Li, S., Cui, X., Huo, B., & Zhao, X. (2019). Information sharing, coordination and supply chain performance: The moderating effect of demand uncertainty. Industrial Management & Data Systems, 119(5), 1046–1071. https://doi.org/10.1108/IMDS-10-2018-0453
Lotfi, Z., Mukhtar, M., Sahran, S., & Zadeh, A. T. (2013). Information sharing in supply chain management. Procedia Technology, 11, 298–304. https://doi.org/10.1016/j.protcy.2013.12.194
Moberg, C. R., Cutler, B. D., Gross, A., & Speh, T. W. (2002). Identifying antecedents of information exchange within supply chains. International Journal of Physical Distribution & Logistics Management, 32(9), 755–770. https://doi.org/10.1108/09600030210452431
Montes, J. M., Ramirez, C. E., Gutierrez, M. C., & Larios, V. M. (2019, October). Smart Contracts for supply chain applicable to Smart Cities daily operations. In 2019 IEEE International Smart Cities Conference (ISC2) (pp. 565–570). IEEE. https://doi.org/10.1109/ISC246665.2019.9071650
Moosavi, J., Naeni, L. M., Fathollahi-Fard, A. M., & Fiore, U. (2021). Blockchain in supply chain management: A review, bibliometric, and network analysis. Environmental Science and Pollution Research, 1–15. https://doi.org/10.1007/s11356-021-13094-3
Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system. Manubot.
Namasudra, S., Deka, G. C., Johri, P., Hosseinpour, M., & Gandomi, A. H. (2021). The revolution of blockchain: State-of-the-art and research challenges. Archives of Computational Methods in Engineering, 28(3), 1497–1515. https://doi.org/10.1007/s11831-020-09426-0
Panahifar, F., Byrne, P. J., Salam, M. A., & Heavey, C. (2018). Supply chain collaboration and firm’s performance: The critical role of information sharing and trust. Journal of Enterprise Information Management, 31(3), 358–379. https://doi.org/10.1108/JEIM-08-2017-0114
Park, S., Yu, H., & Chang, H. (2021). Design of the required tasks of industrial security experts based on job openings. Security Journal. https://doi.org/10.1057/s41284-020-00279-7
Piñeiro-Chousa, J., López-Cabarcos, M. Á., & Ribeiro-Soriano, D. (2021). The influence of financial features and country characteristics on B2B ICOs’ website traffic. International Journal of Information Management, 59, 102332. https://doi.org/10.1016/j.ijinfomgt.2021.102332
Prajogo, D., Toy, J., Bhattacharya, A., Oke, A., & Cheng, T. C. E. (2018). The relationships between information management, process management and operational performance: Internal and external contexts. International Journal of Production Economics, 199, 95–103. https://doi.org/10.1016/j.ijpe.2018.02.019
Queiroz, M. M., Fosso Wamba, S., De Bourmont, M., & Telles, R. (2020). Blockchain adoption in operations and supply chain management: Empirical evidence from an emerging economy. International Journal of Production Research, 1–17. https://doi.org/10.1080/00207543.2020.1803511
Rogerson, M., & Parry, G. C. (2020). Blockchain: case studies in food supply chain visibility. Supply Chain Management: An International Journal, 25(5), 601–614. https://doi.org/10.1108/SCM-08-2019-0300
Saqib, Z. A., & Zhang, Q. (2021). Impact of sustainable practices on sustainable performance: The moderating role of supply chain visibility. Journal of Manufacturing Technology Management, 32(7), 1421–1443. https://doi.org/10.1108/JMTM-10-2020-0403
Shin, D. D. (2019). Blockchain: The emerging technology of digital trust. Telematics and Informatics, 45, 101278. https://doi.org/10.1016/j.tele.2019.101278
Singh, C. S., Soni, G., & Badhotiya, G. K. (2019). Performance indicators for supply chain resilience: Review and conceptual framework. Journal of Industrial Engineering International, 15(1), 105–117. https://doi.org/10.1007/s40092-019-00322-2
Somapa, S., Cools, M., & Dullaert, W. (2018). Characterizing supply chain visibility – a literature review. The International Journal of Logistics Management, 29(1), 308–339. https://doi.org/10.1108/IJLM-06-2016-0150
Sunmola, F., & Apeji, D. U. (2020). Blockchain characteristics for sustainable supply chain visibility. In 5th NA International Conference on Industrial Engineering and Operations Management. Detroit, Michigan, USA.
Szabo, N. (1997). The idea of smart contracts. Nick Szabo’s Papers and Concise Tutorials, 6(1).
Tian, F. (2016). An agri-food supply chain traceability system for China based on RFID & blockchain technology. In 2016 13th International Conference on Service Systems and Service Management (ICSSSM) (pp. 1–6). IEEE. https://doi.org/10.1109/ICSSSM.2016.7538424
Treiblmaier, H. (2018). The impact of the blockchain on the supply chain: A theory-based research framework and a call for action. Supply Chain Management: An International Journal. https://doi.org/10.2139/ssrn.3224145
Valero, S., Climent, F., & Esteban, R. (2020). Future banking scenarios. Evolution of digitalisation in Spanish banking. Journal of Business Accounting and Finance Perspectives, 2(2), 13. https://doi.org/10.35995/jbafp2020013
Xing, C., Chen, Z., Chen, L., Guo, X., Zheng, Z., & Li, J. (2020). A new scheme of vulnerability analysis in smart contract with machine learning. Wireless Networks, 1–10. https://doi.org/10.1007/s11276-020-02379-z
Yu, M. C., & Goh, M. (2014). A multi-objective approach to supply chain visibility and risk. European Journal of Operational Research, 233(1), 125–130. https://doi.org/10.1016/j.ejor.2013.08.037
Zhu, S., Song, J., Hazen, B. T., Lee, K., & Cegielski, C. (2018). How supply chain analytics enables operational supply chain transparency. International Journal of Physical Distribution & Logistics Management, 48(1), 47–68. https://doi.org/10.1108/IJPDLM-11-2017-0341
Zhuo, N., Ji, C., & Yin, N. (2021). Supply chain integration and resilience in China’s pig sector: Case study evidences from emerging institutional arrangements. Environmental Science and Pollution Research, 28(7), 8310–8322. https://doi.org/10.1007/s11356-020-11130-2