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Blockchain adoption in supply networks: a social capital perspective

Blockchain adoption in supply networks: a social capital perspective Purpose – This study aims to contribute to the early but fervent debate on blockchain and supply networks by proposing a novel theoretical perspective on blockchain adoption grounded on social capital theory. In particular, it seeks to answer the following question: what is the role of social capital in shaping the decision to adopt blockchain in supply networks? Design/methodology/approach – Multiple case-studies, based on interviews performed with managers of eight firms, were used. Findings – The social capital theory emerged as an additional but necessary lens to investigate blockchain implementation in supply networks. The intuitions proposed highlighted the importance of managers’ sensemaking for investigating technology adoption. Relational capital emerged as a necessary but not sufficient condition to adopt blockchain in supply networks. In addition, it is argued a relationship between competitive opportunities at the firm level and the idea to adopt the blockchain. The opportunity to act as “Tertius Gaudens” or as “Tertius Iungens” information brokers in supply networks should severely affect firms’ proneness toward the adoption of blockchain solutions. Originality/value – This is one of the first studies in the literature investigating blockchain adoption in supply networks from a social capital perspective. It introduces new issues to the debate related to the role of blockchain in the supply chain by discussing the role of goal misalignment and competitive advantage, which emerged as crucial for shaping the decision to adopt blockchain in supply networks. Keywords Blockchain, Supply network, Social capital theory, Structural hole, Broker, Social capital, Technology, Environmental uncertainty, Information flow, Theories, Strategic alliances Paper type Research paper can be programmed in advance), security (the distributed and 1. Introduction encrypted nature of the system is hard to hack and single users In a very broad sense, blockchain is “a distributed, consensus- cannot alter information) and disintermediation (the system based and (mostly) immutable ledger of transaction records” eliminates the need for intermediaries). (Schmidt and Wagner, 2019, p. 1). It is considered a Also in thesupply chain environment, thedebatearound the technological and philosophical innovation that will have role played by these innovative information and communication disruptive effects on society as a whole (Hald and Kinra, 2019). technologies (ICTs) is gaining momentum, as scholars and This high expectation is raising the attention of academics, practitioners believe that this digitalization trend is already practitioners and regulators belonging to several industries shaping the supply chain landscape (Birkel and Hartmann, 2019; (Davidson et al.,2018; Gaggioli, 2018; Cong and He, 2019; Calatayud et al.,2019; Frederico et al.,2019; Garcia-Torres Allen et al.,2020). Such interest derives also from the global et al.,2019; Gligor et al.,2019; Liboni et al.,2019; Brinch et al., digitalization trend, labeled as Industry 4.0 in business 2020; Nandi et al., 2020; Pasi et al., 2020; Seepma et al., 2020). contexts, which includes also 3d printing, big data, robotics and The improved information visibility could provide products’ machine learning (Galati and Bigliardi, 2019a; Birkel and legitimacy, traceability and authenticity, thus becoming Hartmann, 2020). Blockchain technology is a central element fundamental for industries – such as the food or the of the current digital transformation (Hald and Kinra, 2019). pharmaceutical ones – that would track the provenance of There are two types of blockchain. The private ones require products (Gupta, 2017). In addition, data integrity, enabled by an invitation or permission to join, while public blockchains are security, allows the storing of information and contracts that open to anyone. Gupta (2017) suggested that private become immutable in the distributed ledger (Hald and Kinra, blockchains are ideal for the business context, as they allow 2019). Moreover, supply chain efficiency can be also improved enhanced operational efficiency and privacy. According to various authors (Yli-Huumo et al.,2016; Iansiti and Lakhani, © Francesco Galati. Published by Emerald Publishing Limited. This article is 2017), the main features of blockchain are transparency and published under the Creative Commons Attribution (CC BY 4.0) licence. trust (information is viewable by all users), automation (actions Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full The current issue and full text archive of this journal is available on Emerald attribution to the original publication and authors. The full terms of this licence Insight at: https://www.emerald.com/insight/1359-8546.htm may be seen at http://creativecommons.org/licences/by/4.0/legalcode Received 16 December 2019 Revised 17 May 2020 Supply Chain Management: An International Journal 7 January 2021 27/7 (2022) 17–32 16 February 2021 Emerald Publishing Limited [ISSN 1359-8546] [DOI 10.1108/SCM-12-2019-0448] Accepted 17 February 2021 17 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 by the adoption of smart contracts, digital transaction protocols systems and trust mechanisms. However, according to running on peers in a network that execute the terms of a contract Treiblmaier (2018) and Cole et al. (2019), these systems and (Kumar et al.,2019), which streamline supply chain processes. mechanisms are not anymore required with blockchain, given the Finally, shared information can lead to remove delays in the transparent and accessible information flow that eliminates the physical movement of papers and the duplication of records, demand for trust. enhance inventory management and reduce waste, achieve more In addition, Treiblmaier (2018) stressed the importance of accurate demand forecasts and improve decision-making network theory for explaining the impact of blockchain in supply (Treiblmaier, 2018; Cole et al.,2019; Hald and Kinra, 2019; networks. It starts by considering that companies need to Queiroz and Wamba, 2019; Queiroz et al.,2019; Schmidt and establish relationships to gain access to external resources and Wagner, 2019; Wang et al.,2019; Rogerson and Parry, 2020). information, thus creating networks that are simultaneously As argued by Cole et al. (2019), blockchain will dramatically stable and changing (Halldorsson et al., 2007; Dolci et al.,2017). alter the current supply chain landscape and traditional supply In the view of Treiblmaier (2018) blockchain solutions can alter chain models by changing the forces involved in market the concept of inter-organizational relationships by enhancing transactions. According to Schmidt and Wagner (2019), trusted information exchange between firms. understanding the relationship between blockchain and the Finally, a different perspective, labeled as a resource-based view supply chain is crucial for academia and practice. (Barney, 1991), was adopted. In the supply chain context, the However, the academic debate dealing with blockchain and perspective is concerned with the management of inter- supply chain is at the beginning (Treiblmaier, 2018; Schmidt organizational resources to increase the competitive advantage of and Wagner, 2019; Wang et al.,2019). Despite a fast-growing the partners (Dolci et al., 2017). This declination broadens the number of papers on the topic, the research is still in its infancy resource-based view by pointing out that relations are valuable and (Queiroz et al., 2019; Wang et al.,2019). The topic is in a scarce resources at the supply chain level. Blockchain technology research phase characterized by several application-oriented can lead to an increase of these types of resources through the papers (Hald and Kinra, 2019; Wang et al., 2019) and a few possibility to incorporate blockchain into chain firms’ portfolio of and preliminary attempts to develop a theoretical perspective of services and the improvement of agents’ capabilities and firms’ blockchain in the supply chain (Treiblmaier, 2018; Cole et al., competencies (Treiblmaier, 2018; Kim and Shin, 2019). 2019; Schmidt and Wagner, 2019; Wang et al., 2019). In addition to the investigation of ex-post blockchain effects on Consequently, Treiblmaier (2018), Cole et al. (2019) and Hald supply chains, very few scholars have started to explore also the ex- and Kinra (2019) stressed the need for additional research on how ante side of the problem, i.e. the antecedents of blockchain blockchain technology relates to and challenges existing theory on adoption in supply chains (Queiroz and Wamba, 2019; Cole et al., supply chains, to further stimulate the academic debate. To date, 2019; Kim and Shin, 2019; Wang et al., 2019). Cole et al. (2019) scholars have mainly tried to explain the ex-post impact of followed a traditional theoretical approach, grounded on the blockchain on supply chains by adopting theories such as technology acceptance model and on the classical unified theory of transaction cost economics, agency theory, resource-based view acceptance and use of technology. A slightly different perspective and network theory (Treiblmaier, 2018; Cole et al., 2019; Hald was that adopted by Wang et al. (2019),who proposed and Kinra, 2019; Kim and Shin, 2019; Queiroz and Wamba, sensemaking theory as useful to understand more in-depth 2019; Schmidt and Wagner, 2019). managers’ decisions to engage or not in collaborative agreements First, blockchain is expected to have a noteworthy impact on with other organizations and share information with them. supply chain transaction costs (Treiblmaier, 2018; Cole et al., According to this theory, through sensemaking managers try to 2019; Hald and Kinra, 2019; Queiroz et al.,2019; Schmidt and project how blockchains may affect their business and the supply Wagner, 2019). Following transaction cost theory (Schmidt chain in which their firms operate. Wang et al. (2019) are the first and Wagner, 2019), scholars claimed that the implementation to introduce a network perspective on the debate surrounding the of blockchain affects the efficiency of different types of adoption of blockchain in supply networks, stressing that governance mechanisms in terms of production and “technological pre-adoption cannot be better understood without transaction costs. According to Schmidt and Wagner (2019) considering multiple interpretations of supply chain actors” (Wang and Galati and Bigliardi (2019b), two assumptions ascribable et al., 2019, p. 233). to human behavior are crucial to transaction cost theory, Considering social capital, Queiroz and Wamba (2019) namely, opportunism and bounded rationality. Blockchain is investigated the role played by some of its components, considered a structural solution able to lower opportunism and focusing on structural issues and on trust but mixing the bounded rationality by reducing the costs for searching relevant individual and the organizational level. In addition, an analysis information, negotiating with partners through smart contracts of the study of Kim and Shin (2019), although its main focus and controlling partners’ actions, thereby enhancing decision- on blockchain post-adoption effects, can lead to arguing that making (Treiblmaier, 2018; Schmidt and Wagner, 2019). they considered structural features of social capital as Agency theory (Jensen and Meckling, 1976) starts from the fact antecedents of partnership efficiency and growth, which, in that organizations involved in a supply chain have different turn, can shape the decision to adopt blockchain. Kim and Shin interests, thus seeing governance as a needed set of practices (2019) also stressed the need to investigate social capital as an needed to guarantee the control and co-ordination of the chain antecedent of partnership efficiency that may enhance (van Veen-Dirks and Verdaasdonk, 2009; Dolci et al., 2017). coordination at the inter-organizational level. Treiblmaier (2018) stressed the role of asymmetric information Despite such interesting and promising research attempts, it flows between agents in the chain as the main problem highlighted is clear that these authors have begun to scratch the surface of by the agency theory, which imposes the creation of control the problem and that a satisfactory understanding of the 18 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 phenomenon from a theoretical standpoint is far from being partnership efficiency in supply networks and of technology reached. adoption. Against this background, the present study aims at For the sake of clarity, the more general concept of “supply contributing to this early but fervent debate by developing a network” is preferred instead of the narrower “supply chain.” novel theoretical perspective on the topic. It is positioned in the According to Lamming et al. (2000), the incorporation of the broad supply chain debate dealing with the role of social capital term “network” embodies the attempt to extend the concept to in supply networks (Bernardes, 2010; Cole et al., 2019; Kim more complex settings and include also strategic and Shin, 2019). One of the research gaps arising from this considerations. debate refers to the understanding of the specific contributions of social capital in the context of supply network interactions. 2. A novel perspective for understanding the These interactions are crucial when investigating blockchain adoption of blockchain in the supply chain (Treiblmaier, 2018; Kim and Shin, 2019; Wang et al., 2019) 2.1 Social capital theory in supply chain but were previously investigated in very few studies that focused Several scholars (Krause et al.,2007; Bernardes, 2010; Johnson almost only on the structural dimension of social capital (Kim et al., 2013; Mora-Monge et al., 2019) proposed social capital and Shin, 2019; Queiroz and Wamba, 2019). Moreover, while theory as fundamental to understand relationships in the supply Kim and Shin (2019) highlighted the need to investigate social chain. Social capital, according to Granovetter (1992) and capital as an antecedent of partnership efficiency when Woolcock (1998), can be defined as a valuable asset that stems considering blockchain, Cole et al. (2019) stated that social from access to resources (such as information and norms of capital may be useless in understanding blockchain in supply reciprocity) made available through social relationships. For chain settings. Burt (2001), social capital is the sum of actual or virtual Given these opposite positions, the need for additional resources that accrue to an organization by virtue of possessing research on how blockchain technology relates to and a durable network of more or less institutionalized relationships challenges existing supply chain theories and the paucity of studies dealing with social capital and blockchain adoption of mutual acquaintance and recognition. (despite its recognized helpfulness in supply chain contexts), The concept is considered important for creating inimitable value-generating resources, intrinsic in a firm’s network of we seek to answer the following question: relationships (Wu, 2008). Bernardes (2010) stressed that social Q1. What is the role of social capital in shaping the decision capital or embeddedness is one of the central tenets of social to adopt blockchain in supply networks? network theory and affects economic transactions. He distinguished between personal relations (relational This study helps to answer this question by arguing that the embeddedness) and the structure of the collective arrangement cognitive and relational dimensions of social capital impact the of such relations (structural embeddedness) and claimed that decision to adopt blockchain solutions in supply networks. This social capital has a remarkable effect on organizations’ behavior is done by considering relational capital as a necessary but not and performance. A high level of social capital should improve sufficient condition to adopt blockchain and by proposing a supply network performance because it implies the generation relationship between competitive opportunities at the firm level of shared norms, rules and routines and the adoption of similar and the idea to adopt blockchain. In fact, the opportunity to act cognitive frameworks between partners (Bernardes, 2010). as “Tertius Gaudens” or as “Tertius Iungens” information For analytical purposes, Nahapiet and Ghoshal (1998) brokers in supply networks should severely affect firms’ categorized social capital into three interrelated dimensions: proneness toward the adoption of blockchain solutions. structural, relational and cognitive. This work challenges Cole et al.’s (2019) remarks by proposing that social capital theory is key for improving our 2.1.1 Structural capital understanding of the adoption of blockchain technologies in Structural capital refers to network ties and configuration and is supply chains. Besides, this study posits that the inclusion of the linked to the flow of information in a supply chain. Considering social perspective in the academic debate could be considered a focal firm, network ties refer to its aggregated ties with other one of the missing theoretical pieces that can help to improve firms that allow access to partners’ information and other the understanding of blockchain in supply chain contexts. resources (Wu, 2008; Johnson et al.,2013). Network Findings also suggest that social capital at the inter- configuration denotes not only the density, hierarchy and organizational level has a strategic value that can help to explain connectivity of a social network but also how these features the decision to adopt a given technology in a supply network affect the level of connection and accessibility partners provide and help to understand more in-depth blockchain technologies. (Nahapiet and Ghoshal, 1998). It is proposed that they should be intended not only as socio- 2.1.2 Relational capital technical systems that alter the functioning of supply chain Relational capital was defined as the configuration and social activities but also as solutions that can significantly alter the structure of the network through which resources are accessed strategy and the competitive position of organizations involved (Cousins et al.,2006), contending that it can be assessed by the in supply networks. Eventually, this study emphasizes the need to move beyond the traditional theoretical approaches degree of trust, interaction and mutual respect that exists grounded only on technology’s functionalities and to consider between firms. Trust has effects also on the other dimensions additional perspectives rooted in social and competitive logics, (i.e. structural and cognitive). Trust impacts information highlighting the importance of social capital as an antecedent of visibility by building confidence in sharing valuable information 19 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 and knowledge with the partners (Johnson et al., 2013), thus Trust reflects the confidence of a given firm that the chain affecting collaborative behaviors (Zacharia et al., 2009). partners will not exploit its weaknesses (Ghosh and Fedorowicz, 2008), a concept that gains importance in supply chain 2.1.3 Cognitive capital transactions characterized by asymmetric information and Cognitive capital consists of the resources providing the parties uncertainty. Trust is based on evaluations made on the basis of with shared representations, interpretations and systems of the information referred to partners’ actual characteristics and meaning (Nahapiet and Ghoshal, 1998). It is embodied in a past behaviors. According to Bourdieu (1986, p. 27), trust shared vision and is present when partners have similar depends also on symbolic capital, defined as: perceptions of common goals (Nahapiet and Ghoshal, 1998). Inkpen and Tsang (2005) stressed that goals are shared when [.. .] capital – in whatever form – insofar as it is represented, i.e. apprehended symbolically, in a relationship of knowledge or, more precisely, partners share a joint understanding and approach to the of misrecognition and recognition, presupposes the intervention of the achievement of tasks and outcomes. If goals are shared in a habitus, as a socially constituted cognitive capacity. supply chain, partners can be expected to have a shared In inter-organizational settings, symbolic capital refers to the understanding of improvements and how to accomplish it, prestige and recognition characterizing each organization, which favors continued interactions between the partners and which, in turn, shape trust. Nevertheless, social capital may should result in a self-reinforcing process of participation in strengthen symbolic capital by functioning as a certification of sensemaking (Johnson et al., 2013). social credentials and may also reinforce identity and Similarly, Krause et al. (2007) claimed that shared goals and recognition (Lin, 2002; Ihlen, 2005). business vision are the primary dimensions of cognitive capital. Information about other firmsisdifficult to be obtained. They stressed that if goals and values are shared by buyers and However, when firms collaborate, they can gain both explicit and their suppliers, continued interactions should result in an implicit information about each other. Explicit information improvement in terms of cost, quality, delivery and flexibility. refers, for example, to technological readiness or financial According to the perspective presented by Krause et al. (2007), stability, while implicit one refers to issues such as integrity or in the present study cognitive capital is considered a shared collaborative proneness, which are more difficult to obtain. representation of the business vision by all members of the Consequently, it is reasonable to suppose those past interactions supply network. In other words, this study considers cognitive that occurred between firms shape trust (Gulati, 1998). capital as a situation of strategic goals alignment, in which the Wu (2008) proposed that successful repeated transactions chain partners pursue the same objective in the long run by improve inter-organizational trust and mutual respect between adopting a shared supply chain strategy. firms. Transactions are defined asbusinessinteractionsthat occur in the long-run with the aims of combining complementary 2.2 Blockchain adoption and social capital resources and cultivating shared representations of future The present study infers that social capital theory is key for developments (Polanyi, 1962; Quintas et al.,1997). They can be understanding the adoption of blockchain technologies in supply chains. It represents one of the first attempts to explain classified in past and future transactions. Future (expected) how social capital affects the adoption of blockchain solutions. transactions depend on relational experience accumulated by In the pre-adoption stage, the idea to adopt a blockchain firms in the past and shape inter-organizational trust by reducing solution stimulates the firms’ evaluation process. During this the stimulus to behave opportunistically, as firms can have the process, firms hypothesize blockchain’s potential effects and fear of losing future business opportunities (Dyer, 1997; decide whether to adopt or not the solution. In the past, the Williamson, 1999). technology acceptance model was used to explain why firms Some authors (Ghosh and Fedorowicz, 2008; Wu, 2008; Cole implement a given technology. However, this study posits that et al.,2019) made a further step by claiming that inter- blockchain represents a completely different situation that has organizational trust affects the firms’ propensity toward an impact on issues such as information visibility, which information sharing and visibility. This because inter- involves strategic considerations at both the organizational and organizational trust mitigates problems ascribable to information inter-organizational levels that can alter the competitive asymmetries that are intrinsic in inter-firm relationships by position of firms. allowing a more open and honest sharing of information, which, We noticed that the literature ignored the relevance of two of in turn, alleviates the fear that partners will act speculatively (Wu, the three dimensions of social capital, namely, the relational 2008). Although firms are often afraid to share their data and and the cognitive one, in debate dealing with the investigation knowledge with others, in supply chain environments information of blockchain adoption in the supply chain. The focus, as stated visibility with trustworthy partners can be useful for coordination, above, was only on the structural capital, while the others were integration, transparency and quality of products purposes only skimmed or ignored. For this reason, this study focuses on (Treiblmaier, 2018; Cole et al., 2019; Wang et al., 2019). the relational and cognitive dimensions of social capital. However, a private blockchain forces information visibility among selected partners. Information shared with partners can 2.2.1 Relational capital range from inventory levels or product certification to financial Previously, it was stressed that relational capital is related to the and legal issues. Consequently, firms should carefully assess degree of trust, interaction and mutual respect that exists partners before adopting a blockchain solution. In so doing, between firms. Inter-organizational trust, in particular, can they should rely also upon past actions to assume future help to reduce uncertainty in supply chain decision-making and intensifies mutuality in goal settings (Ghosh and Fedorowicz, trustworthy behavior, to assess more rationally the blockchain 2008). implementation. 20 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 2.2.2 Structural issues and cognitive capital The “Tertius Gaudens” scenario refers to the opportunity Supply chains may range from simple to complex structures that the organization connecting the other two has to leverage involving a network of firms performing different tasks (Pathak on the disunion of the others (Baker and Obstfeld, 1999). By so et al., 2014). Both in simple and in complex network structures, doing, the broker intermediates the exchange of resources and firms collectively attempt to meet demand through individual information between the brokered organizations by acting as firm-level activities while responding to variations in the the only route through which resources and information flow environment and in activities performed by other firms in the across the structural hole (Quintane and Carnabuci, 2016). Under this perspective, the broker firm can benefit by not supply chain (Choi et al.,2001). According to this perspective, intervening in the disconnection between the other supply chain firms can cooperate, compete or co-opete (Wu organizations or by playing off disconnected organizations and Choi, 2005; Pathak et al.,2014). Before deciding to engage in collaborative agreements and adopt a blockchain solution, against one another (Obstfeld et al., 2014). firms should assess the pros and cons of this choice through an The “Tertius Iungens” scenario refers to a situation in which often heuristic process based on their intuitions, feelings and the broker organization finds it beneficial to facilitate the presumed frames. The idea is that firms are strongly influenced connection – and thus, at least, the flow of information – across by the evaluation of their actual and potential competitive/ the structural hole by allowing a connection between the cooperative position with reference to the opportunity to act or brokered organizations (Obstfeld et al.,2014). This not as information brokers, thus exploiting structural holes in opportunity is related to the union and combination of the the supply network. disconnected organizations, in which the broker considers To understand the structural hole concept, it is possible to advantageous the potential synergistic effects deriving from recall an example involving a triad of organizations belonging to directly connecting the brokered organizations (Pathak et al., 2014). This decision is not easy for the broker organization, as a supply network. In this case, a structural hole occurs between two organizations when they are linked to the same it implies giving up power and control, act as “non-partisan” organization but are not linked to each other (Carnovale et al., and embrace self-coordination in the supply network triad to 2016). The concept is linked to the resource dependence create group unity (Obstfeld, 2005). theory (Pfeffer and Salancik, 1978), which treats firms as Depending on the context and timing in which such entities embedded in a network of exchange relationships brokerage alternates are adopted, previous research within an uncertain environment and dependent on other demonstrates that these strategies can help to explain firms’ resources for survival. Within supply networks, firms’ organizations’ behaviors in supply networks and be both power resides in others’ dependence on their resources effective (Long Lingo and O’Mahony, 2010; Obstfeld et al., (Schmidt and Wagner, 2019). Resources generate dependence 2014). when they are important and control over them is exerted by a Blockchain forces network closure, a situation in which every partner is connected such that no one can escape the notice of few organizations (Pfeffer and Salancik, 1978). Information others, characterized by a high level of information visibility. and knowledge are considered crucial resources in supply networks, as they decrease environmental and behavioral This was often recognized, in supply chain environments, as a uncertainty (Carnovale et al., 2016). For this reason, firms are desirable situation for information transparency, quality of strongly dependent on organizations possessing them. products, coordination and integration (Pathak et al., 2014; Consequently, it is possible to consider structural holes as Treiblmaier, 2018; Cole et al.,2019; Wang et al.,2019). Some missing connections that hinder information flow between of these authors stressed that, through blockchain, supply chain chain firms (Burt, 2007; Swierczek, 2020). firms can comply with differentiated demands from consumers, The competitive implications deriving from the existence of quickly recall products from markets when incidents occur, this structural feature in supply networks are grounded on the optimize business processes through integrated information brokerage activity that the organization connecting the others and cope with the quality of products by tracing products’ can fulfill. The brokerage was defined as the process by which chain. However, these considerations were always made at the organizations acting as intermediaries can smooth connections between other organizations lacking access to or trust in one supply chain level, while the single firm perspective was only another (Carnovale et al.,2016). Firms acting as brokers in skimmed (Wang et al.,2019). Nevertheless, the supply networks may take advantage of structural holes by implementation of blockchain solutions relies upon inter- having access to and manage a diverse set of partners, resources organizational agreements that must be accepted by all and non-redundant information and “translate it across partners. Thus, it should be of interest also to understand why groups” (Carnovale et al., 2016). Furthermore, Burt (2009) each individual-firm in a supply network can find suggests that brokers gain benefits also from the control that counterproductive the adoption of blockchain. For example, it allows the broker to leverage the disengaged organizations could be possible that firms are interested in preserving some against one another. Accordingly, Pathak et al. (2014) and sort of information asymmetry to keep competitive advantages. Schmidt and Wagner (2019) suggested that the competitive This study posits that the crux of the problem could be the power of a broker resides in the opportunity to block a potential cognitive capital concept, inferring a relationship between connection or to link two otherwise disengaged organizations, a structural and cognitive issues. In the above, it was stressed that situation that can alter the existing relational dynamics in the cognitive capital is embodied in a shared vision and is present supply network. These two distinct scenarios (Pathak et al., when partners have similar perceptions of common goals and 2014) were labeled as “Tertius Gaudens” and “Tertius how they should interact and that goals are shared when Iungens”. partners share a joint understanding and approach to the 21 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 achievement of tasks and outcomes. The decision to adopt a the trader, who store and then sell products to the food blockchain solution involves different firms, each with its own company, who process these products. Firms are named here as goals, ideas and constraints. P1, P2, P3, P4, FT1, FT2, IFC1 and IFC2 and specific details Therefore, if at least one organization acting as a broker in a relating to their locations and the names of managers and firms supply network that is assessing the possibility to adopt a are disguised to preserve anonymity. blockchain solution does not judge as competitively convenient this scenario (Tertius Gaudens scenario), the degree of cognitive 3.2 Data collection capital at the supply network level should diminish, as well as The core data of this study are made up of semi-structured the probability that the supply network would adopt the interviews across the eight firms involved. For each firm, we blockchain. Conversely, if organizations acting as brokers in a selected those individuals involved in the decision to implement the supply network that are assessing the possibility to adopt a blockchain solution (Table 1). The interviewees selected were blockchain solution judge as competitively convenient this expected to have an understanding of supply chain flows (i.e. scenario (Tertius Iungens), the degree of cognitive capital at the material, service, information and money) before the supply network level should increase, as well as the probability implementation of the blockchain. Each interview was conducted that the supply network would adopt the blockchain. at the organizational level because of the aim of the study, to understand the role of social capital in shaping the decision to adopt 3. Methodology blockchain in supply networks. To judge the level of social capital in each case performed, we considered it important to understand the 3.1 Research design perspective of each organization involved in the chain and then To answer our research question, we used the multiple case- made a judgment at the network level. We sought multiple studies methods. It is particularly suited to investigate a real-life, viewpoints to enable a deep and informed understanding of specific complex and non-routine phenomenon in-depth – such as the situations and reactions in relation to the topic investigated. role of social capital in shaping the decision to adopt blockchain We arranged semi-structured interviews, one for each firm, in supply networks – and is appropriate for theory development lasting five months. Almost all interviews were performed using (Yin, 2009). Further, an abductive approach (Timmermans and Skype face-to-face calls. Only the interview conducted on IFC2 Tavory, 2012) was adopted, using constructs developed by was performed personally. For each firm, the interview was combining the extant literature on social capital theory, supply recorded and transcribed by the researchers. We performed several chain theories on brokerage activities and blockchain. Abductive follow-up phone calls with interviewees to add missing details and reasoning smooths the discovery of knowledge, which begins to confirm the validity of our transcribed data and interpretation. with preliminary theoretical knowledge before collecting The literature review inspired the development of the empirical data, continues with theory matching and suggests interview protocol. Each interview followed a standard protocol propositions based on observations and ends with theory (to allow data comparison) organized under broadly defined development or extension. themes and through open-ended questions. It includes a We focused our analysis on the strategic behavior and the general question to investigate the background and position of social capital of sets of firms operating in a supply network with the interviewee, the competitive position of the firm and the reference to the decision to adopt blockchain. To allow us to perceived strategic importance of blockchain adoption in the draw conclusions on these issues, we decided to use extreme supply network with reference to each firm’s relationships, cases due to their potential to offer potent depictions of some of advantages and competitive position. Interviewees were asked the target phenomenon’s characteristics (Galati and Bigliardi, to recall specific motives and related behaviors/decisions with 2019b; Scholten et al., 2019). The selection of cases for this study reference to blockchain adoption. Interviewees were also asked was, therefore, based on theoretical replication (Yin, 2009). The to judge social capital issues (such as trust in chain partners, the theoretical sampling plan considered groups of a firm belonging flow of information, frequency of collaborations, convergent or toaspecific supply network involved in the decision to adopt a divergent strategic perspectives) at the time of blockchain blockchain and, following Yin, (2009), polar types were selected evaluation. Following the recommended approach for (i.e. decision to adopt or not the blockchain). This sampling plan triangulating data from multiple sources, we also collected data was designed to obtain a more in-depth understanding of not only from interviews but also from additional documents, the phenomenon by replicating similar conditions (such as the archival data, mass media articles, social media comments and industry in which firms operates, size of firms, their role in the websites, for improving data reliability. supply chain) but altering only one experimental condition (i.e. decision to adopt or not the blockchain) to verify the possibility to predicts contrasting results but for predictable reasons. 3.3 Data analysis With this in mind, we conducted two case studies in the food We followed multiple case-studies guidelines for theory development as we collected and analyzed the data, thus industry (Figure 1). This industry was chosen due to its continuously contrasting initial theory and data gathered economic importance for many countries and for the potential throughout our interviews (Yin, 2009). The analysis focused on relevance of blockchain in food supply chains (Cole et al., 2019). The structure of the parts of the supply networks examining the antecedents of the decision-making process in investigated is the same for the two cases. Each case is terms of social capital considering all different perspectives. Each interview was first transcribed and then codified composed of two producers of fruits and vegetables, one food trader operating in different supply chains and an international according to the literature review. Such structure helps to food company. In brief, producers sell their food products to summarize our findings. 22 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 Figure 1 The two case studies performed (arrows show the flows of food products) Table 1 People interviewed for each firm and duration of the interview Case Firm Position of the interviewees Duration of the main interview Case 1 P1 Owner 70 min Have adopted a blockchain solution IT manager P2 Owner 100 min Sales manager FT1 Owner 90 min Sales manager IFC1 Purchasing manager 140 min Supply chain manager IT manager Case 2 P3 Sales manager 60 min Have not adopted a blockchain solution IT manager P4 Owner 50 min IT manager FT2 Purchasing manager 100 min Sales manager IFC2 Purchasing manager 220 min Logistics manager Supply chain manager IT global manager Marketing manager Data analysis began with respect to both the firms’ perceived relevance of blockchain for their business. Then, we codified advantages and challenges related to blockchain, as we were the other issues referred to as social capital. More in detail, the interested in detecting their attitude toward the specific level of relational capital was considered high/low by judging technological solution and their understanding of the strategic the frequency of contacts within supply chain partners, the 23 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 nature of personal links, the level of trust and commitment blockchain’s features also with reference to their specific devoted to the partnership. Cognitive capital was investigated business and their role in the supply chain. We noticed that the and then codified in our study by assessing the presence or not proposal to adopt the blockchain in both cases started from the of a shared vision along the supply chain. This means to international food companies involved in the supply networks. understand whether supply chain players have a common They were ready to invest in this technology for specific reasons understanding of consumers’ needs, market trends and but this positive attitude toward blockchain emerged from all partners’ action and priorities and of strategic issues. In other firms. words, if the business vision was the same in all firms belonging The most cited benefits were products’ legitimacy, to each case study, the level of cognitive capital within the traceability and authenticity, as well as the achievement of more supply chain was considered high. This includes the case in accurate coordination and flexibility. For example, as stated by which broker firms find it beneficial to facilitate the information the supply chain manager of IFC2: flow across the structural hole by allowing a link between the [.. .] firms operating in industries in which products’ authenticity plays a brokered organizations (Tertius Iungens scenario). Conversely, crucial role for firms in the chain and for consumers are increasingly interested in such digital technologies, who can assist and improve our work. if we noticed a different business perspective by one or more firms belonging to the chain, the level of cognitive capital was The owner of P2 stressed that “Authenticity and traceability considered low. This includes the case in which broker firms allowed by blockchain’s features help food producers that pay find it beneficial to limit the information flow across the attention to foods’ superior quality and ensure process structural hole (Tertius Gaudens scenario). monitoring, which is critical in our industry.” Moreover, as We then group them according to the structure that emerged argued by the IT manager of P4: from the literature, analyzed themes and sought commonalities Our firm is very small and is at the beginning of the network. Blockchain and interrelationships (Galati et al., 2019), which were solutions improve demand forecasts and can help us in improving our firm’s identified through the continuous reading and re-reading of identity and sense of belonging to a wider community. interviews. The phases of the empirical investigation were As for the challenges, various issues appeared. Among the alternated with theoretical reconsideration. For each firm, we others, the lack of a standardized solution and of regulation, as performed several follow-up phone calls with interviewees to well as the required implementation and integration costs confirm the validity of our interpretation. The within-case was resulted to be the most evident. However, we noticed that these performed at the (part of the) supply network level by challenges were perceived the most by large firms (IFC1 and combining the different organizational perspectives. Finally, IFC2). This was linked to the required IT investments and with through the cross-case phase, we compared the results the difficulty of integrating a specific blockchain solution with collected through the within-case analysis to derive similarities, firms’ ERP systems: differences and new issues. The reiteration of this process leads Blockchain development is still at an early stage, in which food firms are to identify the suggested set of theoretical propositions. exploring some business implementation cases and are not ready to fully exploit blockchain potential. In addition, there is still a lack of regulation, IT competencies are not largely diffused and consumers do not recognize the 3.4 Methodological rigor value that these technologies can provide to their day-to-day purchasing To assess the trustworthiness of the methodology underlying activities. Therefore, I’m not surprised about the low level of blockchain this study, our data and analyzes were designed to meet the adoption, stressed the IT manager of IFC1. quality criteria of fit, understanding, generality and control However, also the sales managers of FT1 and FT2 raised (Strauss and Corbin, 1998). As for the fit, data collection and similar doubts. More in detail, that of FT1 claimed: analysis were based on an initial idea stimulated by the The lack of regulation and standard solutions make difficult for traders to literature and participants were strongly integrated into the choose a specific blockchain solution, as we can face the risk of being study (they also participate in the development of involved in different supply chain adopting different blockchain solutions, thus increasing the technological complexity of our activities. propositions). As for the understanding, transcription and results were sent back to participants, thus they understood and approved the findings. In terms of generality, interviews’ length 4.2 Relational capital and cognitive capital and openness allow capturing diverse aspects of the The second part of our investigation identifies the different phenomenon because of the different perspectives of firms social capital mechanisms that shape the decision to adopt or included in the study. Finally, control was ensured by involving not blockchain in supply networks. As for the investigation of interviewees who can exert a decisive influence on the decision relational embeddedness, the within-case analysis depicted a to adopt blockchain at both the organizational and the supply clear relationship between relational elements – such as inter- network levels. organizational trust, obligation and partners’ symbolic capital – and firms’ proneness to adopt blockchain. Trust was 4. Findings considered crucial and necessary by all firms. The purchasing manager of IFC1 stressed: 4.1 Preliminary information The first part of the study was aimed at understanding the We cannot implement a blockchain, which requires an intimate interaction, with untrustworthy partners. The supply network you are analyzing is made objective motives that drive the decision to adopt or not of some of our historical partners, we totally trust them. blockchain solutions. Findings from both within and cross-case He was echoed by the logistics manager of IFC2 “It’s analysis showed that the objective operational advantages provided by blockchain solutions were recognized by all impossible to adopt blockchain in a supply network in which interviewees. All of them were sufficiently informed about trust and respect are not diffused within actors. Our blockchain 24 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 adoption attempt was developed only with trustworthy relational embeddedness. All firms are strongly linked together, suppliers.” The purchasing manager of FT2 claimed that: not only in terms of trust and respect but also when considering strategic fit at the inter-organizational level. All firms stressed We trust the firms considered in your study, we have a long history of the need to improve coordination, even at the expense of their success together [...] we also feel obliged to them, as they continuously help us in improving our performance [.. .]it’s an honor for us to work with own negotiating power (such as the case of FT1). This context IFC2, given their recognized prestige at an international level [...]if seems ideal for the adoption of a technological solution such as considering only our relational closeness, we would accept blockchain implementation. blockchain, characterized among the others by the presence of immutable, traceable and shared data, which allows network Underlying new issues such as obligation and symbolic capital. closure. These issues emerged also from the words of P1: Case 2 highlighted different considerations. Also, in this We are prone to do anything FT1 and IFC1 ask to improve the case, almost all the interviewees considered important technological readiness of chain [...] we consider them our business family, coordination activities. This was stressed by both producers, P3 a distinguished business family recognized globally. and P4 and IFC2. The supply chain manager of IFC2 From the within- and the cross-case analyzes, it emerged that synthesize their thoughts: blockchain adoption was evaluated (and implemented by firms We cannot act in isolation [...] we face global competition, thus included in Case 1 by involving only trustworthy and respected coordination with supply chain actors is essential to respond quickly to the partners. Partners in both cases appeared to be very well evolving customers’ needs and preferences [...] the emergence of the new connected, recognized and trusted. Relational capital seems to technologies give us unprecedented opportunities to coordinate our action [.. .] we can act as a single entity that provides benefits to all the partners be a necessary condition to adopt blockchain in a supply involved in the game. network, according to the interviewees. However, we are aware However, not all firms share a similar vision. FT2’s managers, that only firms belonging to the supply network depicted in although recognizing the importance of coordination at the Case 1 have decided to implement the blockchain solution, chain level, considered less desirable the transparent and thus relational capital alone could not be considered sufficient distributed sharing of data with its partners: to explain why supply networks decide to adopt this technological way. Our activity is too much related to the effective management of data, which can be considered our main resource [...] our profits are strongly related to Our investigation goes further through the analysis of the our negotiating decisions and derives from our competitive power [...]we cognitive capital dimension, which includes considerations at are intermediaries, so our brokerage power is vital for us [...] after the the strategic and competitive level. First, the within-case exploration of blockchain potential and drawbacks, we believe that is impossible to accept this kind of technology [...] this was not an easy analysis was performed. The analysis started with reference to decision to take, we are strongly connected with our partners [...] the Case 1. Managers stressed the need to coordinate their activity mismatch between the coordination of information deriving from our suppliers and customers is our strength, we need to preserve it and limit to obtain benefits at the supply chain level. The IT manager of others’ control stated the purchasing manager of FT2. P1 stated, “Blockchain gives us the opportunity to align In this case, a focus on the strategic perspective of FT2 information flows within the chain, which could be very useful for us in the long run.” The same perspective emerged from the highlighted a tertius gaudens scenario, in which the broker firm IT manager of IFC1: acts to preserve its information broker position. This player in the supply chain did not accept blockchain implementation, Blockchain solutions can help to create a shared vision at the network level thus impeding its adoption in the chain. This case represents a [...] we feel somehow incentivized to define a unified strategy at the chain level [...] we hope that the implementation of blockchain would improve low level of cognitive capital at the supply network level, given the chain resilience through meetings devoted to the development of tactics the partners’ goal misalignment: able to strengthen our competitive position. After several months of experiments and meeting, our attempt to implement Interesting findings resulted from the position of the managers blockchain in our supply chain was judged as not convenient by FT2, so we belonging to the trader firm (FT1), which could be decided to abandon this path [...] maybe FT2’s managers were right and although we had different views, we believe that our partnership would not fundamental (according to the literature review on the role of be affected [...] maybe we would consider other chains in which blockchain brokers) for cognitive capital reasons. could be implemented stressed the marketing manager of IFC2. The words of the sales manager highlighted something that This confirmed that the level of relational capital was high in previous literature on blockchain in the supply chain does not the chain but also that the low level of cognitive capital due to yet consider: the different perspective of FT2 has led to the impossibility for [...] coordinating activities at the network level is of primary importance for the chain partners to adopt blockchain. our success, also due to the reduction of the bullwhip effect that provides Cross-case analysis highlights two different behaviors of the benefits to the entire chain [...] our power resides in the ability to match and negotiate information about products and prices [...] blockchain could parts of the supply networks investigated (Figure 2). reduce our negotiating power, but we believe that allowing the While it emerged that the level of relational capital was high implementation of blockchain in our work can be viewed as a signal of trust in both cases, which was considered a sine qua non for the by our customers [...] our customers can believe that we have nothing to hide [...] we are confident that these technological advancements would implementation of blockchain, the analysis of the cognitive improve our business. dimension of social capital brings to light crucial issues. The It resulted that FT1 act as tertius iungens, as they prefer to actor that plays a critical role in the decision-making process at establish a connection between its suppliers and customer the supply network level is the information broker, which in our through blockchain instead of preserving its advantage deriving cases is represented by the food trader. His logic is key for the from acting as an information broker. Considering the level of decision to implement or not blockchain in the network. cognitive capital at the supply network level, Case 1 represents A comparison of cases suggests that brokers acting as a situation of high cognitive capital level, in addition to the high tertius iungens increase the level of cognitive capital at the 25 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 Figure 2 Summary of case studies inter-organizational level, while brokers acting as tertius acceptance model cannot be the only theoretical perspectives gaudens decrease such level. Given the similarity of the cases used to explain the adoption of a blockchain solution in supply selected and analyzed, as well as the analogous high level of chains because also the relational and cognitive dimensions of relational capital detected, it can be argued that the different social capital shape this decision. outputs in terms of adoption of blockchain are due to More in detail, it is first claimed that a high degree of differences in brokers’ strategic cognition. While Case 1 relational capital in a supply network should increase firms’ involves FT1, which judged it convenient to facilitate predisposition toward the adoption of blockchain solutions, information flows within the network by limiting its while a low degree of relational capital should hinder the negotiation power, Case 2 includes FT2 that acts oppositely implementation of this technology. Following this line of (i.e. hindering transparent information sharing across the reasoning, firms should be more prone to share information chain). Given the similar high level of cognitive capital of all and collaborate with trustworthy, competent and respected firms included in both cases when excluding brokers, we can partners. In other words, they should be more inclined to assert that brokers make the difference with reference to the implement a blockchain solution with those with whom they decision to adopt or not blockchain in a supply network. have developed a satisfactory level of relational capital. What emerged from Case 2, however, signals that relational capital 5. Discussion alone is not able to explain why supply networks decide to adopt or not blockchain. In fact, although a high level of 5.1 Theoretical implications relational capital, the network has not implemented This work is positioned in the broad supply chain debate blockchain. Therefore, by combining the theoretical arguments dealing with the role of social capital in supply network derived from the literature review and the findings emerged interactions (Bernardes, 2010; Treiblmaier, 2018; Cole et al., from case studies, we can suggest that: 2019; Kim and Shin, 2019; Wang et al.,2019). These interactions are crucial when investigating blockchain P1a. A high degree of relational capital in a supply network (Treiblmaier, 2018; Kim and Shin, 2019; Wang et al., 2019) improves chain firms’ proneness to adopt blockchain but were previously considered in very few studies that focused solutions. almost only on the structural dimension of social capital (Kim and Shin, 2019; Queiroz and Wamba, 2019). It contributes to P1b. A high degree of relational capital in a supply network is addressing the need to develop further theoretical a necessary but not sufficient condition to adopt advancements, raised by many scholars (Treiblmaier, 2018; blockchain solutions. Cole et al., 2019; Hald and Kinra, 2019; Schmidt and Wagner, In addition, it is emphasized the decisive role of cognitive 2019), by proposing a novel perspective grounded on social capital theory. This study posits that the inclusion of the social capital for the adoption of blockchain solutions in supply capital perspective in the academic debate could be considered networks. This is done by proposing a relationship between competitive opportunities at the firm level and the idea to adopt one of the missing theoretical pieces that can help to improve the understanding of blockchain in supply chain contexts. It is the blockchain. The opportunity to act as “Tertius Gaudens” suggested that the common institutional theory and technology or as “Tertius Iungens” information brokers in supply networks 26 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 should severely affect firms’ proneness toward the adoption of the degree of cognitive capital at the supply network blockchain solutions. level. This study posits that if at least one organization acting as a P2f. Supply networks involving information brokers that broker in a supply network that is assessing the possibility to prefer to act as “Tertius Iungens” are more prone to adopt a blockchain solution does not judge as competitively adopt blockchain solutions. convenient this scenario, the degree of cognitive capital at the supply network level will diminish, as well as the probability Among these two different scenarios (Tertius Gaudens and that the supply network will adopt the blockchain. The focus is Tertius Iungens), this study does not suggest which one is better on brokers as they represent important nodes in the network or preferable for firms operating in supply networks. They can according to the resource dependence theory (e.g. they possess be considered effective in the appropriate context. Our findings significant information about other nodes). In this situation, try also to relate each of them with a given level of cognitive which was labeled as “Tertius Gaudens,” the degree of capital at the supply network level, which, in turn, should affect cognitive capital at the supply network level should diminish the decision to adopt blockchain at the inter-organizational because not all partners in the supply network share common level. Figure 3 resumes what has been proposed, thus depicting goals. It is proposed that the organization acting as a broker the entire process. would be less inclined to accept the implementation of a This study can be considered complementary to those of technological solution, the blockchain, that would close a Kim and Shin (2019) and Queiroz and Wamba (2019). The structural hole that the broker organization is exploiting. intuitions proposed with reference to the pre-adoption stage Therefore, it is argued that: support also those provided by Wang et al. (2019), which P2a. Firms that prefer to act as “Tertius Gaudens” highlighted the importance of pre-adoption sensemaking at the information brokers in supply networks are less prone organizational level for investigating technology adoption. to adopt blockchain solutions. Blockchain pre-adoption cannot be completely understood without considering the different urges and perspectives of each P2b. Firms that prefer to act as “Tertius Gaudens” organization in the supply network. Furthermore, this study information brokers in supply networks will diminish introduces new issues to the debate related to the role of the degree of cognitive capital at the supply network blockchain in the supply chain by discussing goal misalignment level. and competitive advantage. They can exert a decisive influence on the decision to adopt or not blockchain in networks of firms. P2c. Supply networks involving information brokers that In addition, our findings help to shed light on the future prefer to act as “Tertius Gaudens” are less prone to research avenue introduced by Kim and Shin (2019), who adopt blockchain solutions. highlighted the need to investigate social capital as an Conversely, if organizations acting as brokers in a supply antecedent of partnership efficiency that may enhance network that are assessing the possibility to adopt a blockchain coordination at the inter-organizational level. Our study solution judge as competitively convenient in this scenario, the suggests that social capital is a necessary pre-requisite for degree of cognitive capital at the supply network level should enhancing coordination at the supply network level. This increase, as well as the probability that the supply network will because the decision to implement a technology (blockchain) adopt the blockchain. In this situation, which was labeled as that is widely recognized for improving partnership efficiency “Tertius Iungens,” the degree of cognitive capital at the supply and coordination in supply chains can be neglected by a low network level should increase because the brokers will sponsor level of relational or cognitive capital. the connection between unconnected partners in the supply Findings also suggest that social capital at the inter- network (to increase their own competitive positions). organizational level has a strategic value that can help to explain Moreover, there is at least an additional organization in the the decision to adopt a given technology in a supply network. It supply network (i.e. that acting as a broker) that would not can help to understand more in-depth not only the adoption of pursue its own interest alone but with chain partners, which blockchain but also other technologies having similar results in lower opportunism at the supply network level. In this characteristics such as information sharing and transparency, case, brokers can consider the possibility that customers may who can alter the competitive power of firms in supply prefer to buy products from firms that make available more networks. detailed information about the products’ supply chain. By so doing, brokers adopting blockchain before the others can 5.2 Managerial implications consider it a strategic decision that would provide them a Although many managers are aware of the potential and competitive advantage, at least in the short-run. Consequently, challenges of blockchain in supply networks, they may be less it would be probable that higher levels of shared visions and familiar with the role of relational and cognitive capital in shaping goal alignment can be achieved. Therefore, it is argued that: the decision to adopt or not blockchain at the supply network level and more in general to partnership efficiency. This study P2d. Firms that prefer to act as “Tertius Iungens” provides valuable insights to address this practitioner’s information brokers in supply networks are more requirement. prone to adopt blockchain solutions. We show how the decision to adopt blockchain is related to P2e. Firms that prefer to act as “Tertius Iungens” the convergence (or divergence) of competitive and strategic information brokers in supply networks will increase goals of firms involved in the network, as well as to the level of 27 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 Figure 3 A relational and cognitive capital perspective on the blockchain adoption process in supply networks relational embeddedness achieved with partners. In particular, Managers need to understand why and with whom they wish to our study reveals that firms’ managers that want to adopt start this process. In the pre-adoption stage, each firm’s blockchain within their supply chain need to undertake a managers need to evaluate not only the benefits and drawbacks thorough and exhaustive assessment of relational capital and arising from blockchain implementation when considering cognitive capital at the inter-organizational level, in addition to their own perspective but need to reflect also the partners. This the structural dimension that was investigated and confirmed as must be done by considering the level of relational capital at the relevant in previous studies. supply network level, which means an assessment of partners’ 28 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 trustworthiness, the presence of strong or weak bonds between leveraging, for example, on the co-opetitive dynamics in supply buyers and suppliers (by evaluating, for example, the frequency chain archetypes proposed by Pathak et al. (2014). of joint problem-solving, the presence of obligations or the Second, it could be also of interest to investigate network distance maintained between them) and the existence of shared closure implications by relying on social network theory or on additional theoretical perspectives with reference to the post- norms between firms. As stressed in this study, this can be adoption stage. Future research could start by considering that considered a necessary condition to start a blockchain the closure of a structural hole prompts a network-wide implementation journey. reaction, as stressed by Pathak et al. (2014). Blockchain could However, that’s not all. After evaluating relational issues, potentially fill several structural holes in the supply network, each firm’s managers need also to assess the competitive thereby triggering several adaptive behaviors at the network position and the strategic outlook of the other partners, those level, which, in turn, could have implications on social capital who are evaluating the blockchain adoption process. More in and on competitive dynamics at the supply chain level. detail, our study identifies brokers as crucial firms to be assessed in these terms. Therefore, each firm should deepen the understanding of traders’ and brokers’ competitive and References strategic thinking. 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Miles, M.B. and Huberman, M.A. (1994), Qualitative Data Analysis: An Expanded Sourcebook, Sage, Thousand Oaks, CA. About the author Nelson, R.R. and Winter, S.G. (1982), “The Schumpeterian tradeoff revisited”, The American Economic Review, Vol. 72 Francesco Galati graduated (with distinction) in 2009 in No. 1, pp. 114-132. Industrial Engineering and Management at the University of Reuer, J.J., Zollo, M. and Singh, H. (2002), “Post-formation Parma and received his PhD in Industrial Engineering from dynamics in strategic alliances”, Strategic Management the same University. He is a researcher at the University of Journal, Vol. 23 No. 2, pp. 135-151. Parma. His research activities mainly concern knowledge asset Subramani, M.R. and Venkatraman, N. (2003), “Safeguarding and intellectual capital management, innovation and inter- investments in asymmetric interorganizational relationships: organizational relationships. He has authored or co-authored theory and evidence”, Academy of Management Journal, more than 60 papers published in an international journal, as Vol. 46 No. 1, pp. 46-62. well as on national and international conference proceedings. Teece, D.J. (1986), “Profiting from technological innovation: He acts as a referee for more than 30 international scientific implications for integration, collaboration, licensing and journals. Francesco Galati can be contacted at: francesco. public policy”, Research Policy, Vol. 15 No. 6, pp. 285-305. galati@unipr.it For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: permissions@emeraldinsight.com http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Supply Chain Management An International Journal Emerald Publishing

Blockchain adoption in supply networks: a social capital perspective

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Publisher
Emerald Publishing
Copyright
© Francesco Galati.
ISSN
1359-8546
eISSN
1359-8546
DOI
10.1108/scm-12-2019-0448
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Abstract

Purpose – This study aims to contribute to the early but fervent debate on blockchain and supply networks by proposing a novel theoretical perspective on blockchain adoption grounded on social capital theory. In particular, it seeks to answer the following question: what is the role of social capital in shaping the decision to adopt blockchain in supply networks? Design/methodology/approach – Multiple case-studies, based on interviews performed with managers of eight firms, were used. Findings – The social capital theory emerged as an additional but necessary lens to investigate blockchain implementation in supply networks. The intuitions proposed highlighted the importance of managers’ sensemaking for investigating technology adoption. Relational capital emerged as a necessary but not sufficient condition to adopt blockchain in supply networks. In addition, it is argued a relationship between competitive opportunities at the firm level and the idea to adopt the blockchain. The opportunity to act as “Tertius Gaudens” or as “Tertius Iungens” information brokers in supply networks should severely affect firms’ proneness toward the adoption of blockchain solutions. Originality/value – This is one of the first studies in the literature investigating blockchain adoption in supply networks from a social capital perspective. It introduces new issues to the debate related to the role of blockchain in the supply chain by discussing the role of goal misalignment and competitive advantage, which emerged as crucial for shaping the decision to adopt blockchain in supply networks. Keywords Blockchain, Supply network, Social capital theory, Structural hole, Broker, Social capital, Technology, Environmental uncertainty, Information flow, Theories, Strategic alliances Paper type Research paper can be programmed in advance), security (the distributed and 1. Introduction encrypted nature of the system is hard to hack and single users In a very broad sense, blockchain is “a distributed, consensus- cannot alter information) and disintermediation (the system based and (mostly) immutable ledger of transaction records” eliminates the need for intermediaries). (Schmidt and Wagner, 2019, p. 1). It is considered a Also in thesupply chain environment, thedebatearound the technological and philosophical innovation that will have role played by these innovative information and communication disruptive effects on society as a whole (Hald and Kinra, 2019). technologies (ICTs) is gaining momentum, as scholars and This high expectation is raising the attention of academics, practitioners believe that this digitalization trend is already practitioners and regulators belonging to several industries shaping the supply chain landscape (Birkel and Hartmann, 2019; (Davidson et al.,2018; Gaggioli, 2018; Cong and He, 2019; Calatayud et al.,2019; Frederico et al.,2019; Garcia-Torres Allen et al.,2020). Such interest derives also from the global et al.,2019; Gligor et al.,2019; Liboni et al.,2019; Brinch et al., digitalization trend, labeled as Industry 4.0 in business 2020; Nandi et al., 2020; Pasi et al., 2020; Seepma et al., 2020). contexts, which includes also 3d printing, big data, robotics and The improved information visibility could provide products’ machine learning (Galati and Bigliardi, 2019a; Birkel and legitimacy, traceability and authenticity, thus becoming Hartmann, 2020). Blockchain technology is a central element fundamental for industries – such as the food or the of the current digital transformation (Hald and Kinra, 2019). pharmaceutical ones – that would track the provenance of There are two types of blockchain. The private ones require products (Gupta, 2017). In addition, data integrity, enabled by an invitation or permission to join, while public blockchains are security, allows the storing of information and contracts that open to anyone. Gupta (2017) suggested that private become immutable in the distributed ledger (Hald and Kinra, blockchains are ideal for the business context, as they allow 2019). Moreover, supply chain efficiency can be also improved enhanced operational efficiency and privacy. According to various authors (Yli-Huumo et al.,2016; Iansiti and Lakhani, © Francesco Galati. Published by Emerald Publishing Limited. This article is 2017), the main features of blockchain are transparency and published under the Creative Commons Attribution (CC BY 4.0) licence. trust (information is viewable by all users), automation (actions Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full The current issue and full text archive of this journal is available on Emerald attribution to the original publication and authors. The full terms of this licence Insight at: https://www.emerald.com/insight/1359-8546.htm may be seen at http://creativecommons.org/licences/by/4.0/legalcode Received 16 December 2019 Revised 17 May 2020 Supply Chain Management: An International Journal 7 January 2021 27/7 (2022) 17–32 16 February 2021 Emerald Publishing Limited [ISSN 1359-8546] [DOI 10.1108/SCM-12-2019-0448] Accepted 17 February 2021 17 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 by the adoption of smart contracts, digital transaction protocols systems and trust mechanisms. However, according to running on peers in a network that execute the terms of a contract Treiblmaier (2018) and Cole et al. (2019), these systems and (Kumar et al.,2019), which streamline supply chain processes. mechanisms are not anymore required with blockchain, given the Finally, shared information can lead to remove delays in the transparent and accessible information flow that eliminates the physical movement of papers and the duplication of records, demand for trust. enhance inventory management and reduce waste, achieve more In addition, Treiblmaier (2018) stressed the importance of accurate demand forecasts and improve decision-making network theory for explaining the impact of blockchain in supply (Treiblmaier, 2018; Cole et al.,2019; Hald and Kinra, 2019; networks. It starts by considering that companies need to Queiroz and Wamba, 2019; Queiroz et al.,2019; Schmidt and establish relationships to gain access to external resources and Wagner, 2019; Wang et al.,2019; Rogerson and Parry, 2020). information, thus creating networks that are simultaneously As argued by Cole et al. (2019), blockchain will dramatically stable and changing (Halldorsson et al., 2007; Dolci et al.,2017). alter the current supply chain landscape and traditional supply In the view of Treiblmaier (2018) blockchain solutions can alter chain models by changing the forces involved in market the concept of inter-organizational relationships by enhancing transactions. According to Schmidt and Wagner (2019), trusted information exchange between firms. understanding the relationship between blockchain and the Finally, a different perspective, labeled as a resource-based view supply chain is crucial for academia and practice. (Barney, 1991), was adopted. In the supply chain context, the However, the academic debate dealing with blockchain and perspective is concerned with the management of inter- supply chain is at the beginning (Treiblmaier, 2018; Schmidt organizational resources to increase the competitive advantage of and Wagner, 2019; Wang et al.,2019). Despite a fast-growing the partners (Dolci et al., 2017). This declination broadens the number of papers on the topic, the research is still in its infancy resource-based view by pointing out that relations are valuable and (Queiroz et al., 2019; Wang et al.,2019). The topic is in a scarce resources at the supply chain level. Blockchain technology research phase characterized by several application-oriented can lead to an increase of these types of resources through the papers (Hald and Kinra, 2019; Wang et al., 2019) and a few possibility to incorporate blockchain into chain firms’ portfolio of and preliminary attempts to develop a theoretical perspective of services and the improvement of agents’ capabilities and firms’ blockchain in the supply chain (Treiblmaier, 2018; Cole et al., competencies (Treiblmaier, 2018; Kim and Shin, 2019). 2019; Schmidt and Wagner, 2019; Wang et al., 2019). In addition to the investigation of ex-post blockchain effects on Consequently, Treiblmaier (2018), Cole et al. (2019) and Hald supply chains, very few scholars have started to explore also the ex- and Kinra (2019) stressed the need for additional research on how ante side of the problem, i.e. the antecedents of blockchain blockchain technology relates to and challenges existing theory on adoption in supply chains (Queiroz and Wamba, 2019; Cole et al., supply chains, to further stimulate the academic debate. To date, 2019; Kim and Shin, 2019; Wang et al., 2019). Cole et al. (2019) scholars have mainly tried to explain the ex-post impact of followed a traditional theoretical approach, grounded on the blockchain on supply chains by adopting theories such as technology acceptance model and on the classical unified theory of transaction cost economics, agency theory, resource-based view acceptance and use of technology. A slightly different perspective and network theory (Treiblmaier, 2018; Cole et al., 2019; Hald was that adopted by Wang et al. (2019),who proposed and Kinra, 2019; Kim and Shin, 2019; Queiroz and Wamba, sensemaking theory as useful to understand more in-depth 2019; Schmidt and Wagner, 2019). managers’ decisions to engage or not in collaborative agreements First, blockchain is expected to have a noteworthy impact on with other organizations and share information with them. supply chain transaction costs (Treiblmaier, 2018; Cole et al., According to this theory, through sensemaking managers try to 2019; Hald and Kinra, 2019; Queiroz et al.,2019; Schmidt and project how blockchains may affect their business and the supply Wagner, 2019). Following transaction cost theory (Schmidt chain in which their firms operate. Wang et al. (2019) are the first and Wagner, 2019), scholars claimed that the implementation to introduce a network perspective on the debate surrounding the of blockchain affects the efficiency of different types of adoption of blockchain in supply networks, stressing that governance mechanisms in terms of production and “technological pre-adoption cannot be better understood without transaction costs. According to Schmidt and Wagner (2019) considering multiple interpretations of supply chain actors” (Wang and Galati and Bigliardi (2019b), two assumptions ascribable et al., 2019, p. 233). to human behavior are crucial to transaction cost theory, Considering social capital, Queiroz and Wamba (2019) namely, opportunism and bounded rationality. Blockchain is investigated the role played by some of its components, considered a structural solution able to lower opportunism and focusing on structural issues and on trust but mixing the bounded rationality by reducing the costs for searching relevant individual and the organizational level. In addition, an analysis information, negotiating with partners through smart contracts of the study of Kim and Shin (2019), although its main focus and controlling partners’ actions, thereby enhancing decision- on blockchain post-adoption effects, can lead to arguing that making (Treiblmaier, 2018; Schmidt and Wagner, 2019). they considered structural features of social capital as Agency theory (Jensen and Meckling, 1976) starts from the fact antecedents of partnership efficiency and growth, which, in that organizations involved in a supply chain have different turn, can shape the decision to adopt blockchain. Kim and Shin interests, thus seeing governance as a needed set of practices (2019) also stressed the need to investigate social capital as an needed to guarantee the control and co-ordination of the chain antecedent of partnership efficiency that may enhance (van Veen-Dirks and Verdaasdonk, 2009; Dolci et al., 2017). coordination at the inter-organizational level. Treiblmaier (2018) stressed the role of asymmetric information Despite such interesting and promising research attempts, it flows between agents in the chain as the main problem highlighted is clear that these authors have begun to scratch the surface of by the agency theory, which imposes the creation of control the problem and that a satisfactory understanding of the 18 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 phenomenon from a theoretical standpoint is far from being partnership efficiency in supply networks and of technology reached. adoption. Against this background, the present study aims at For the sake of clarity, the more general concept of “supply contributing to this early but fervent debate by developing a network” is preferred instead of the narrower “supply chain.” novel theoretical perspective on the topic. It is positioned in the According to Lamming et al. (2000), the incorporation of the broad supply chain debate dealing with the role of social capital term “network” embodies the attempt to extend the concept to in supply networks (Bernardes, 2010; Cole et al., 2019; Kim more complex settings and include also strategic and Shin, 2019). One of the research gaps arising from this considerations. debate refers to the understanding of the specific contributions of social capital in the context of supply network interactions. 2. A novel perspective for understanding the These interactions are crucial when investigating blockchain adoption of blockchain in the supply chain (Treiblmaier, 2018; Kim and Shin, 2019; Wang et al., 2019) 2.1 Social capital theory in supply chain but were previously investigated in very few studies that focused Several scholars (Krause et al.,2007; Bernardes, 2010; Johnson almost only on the structural dimension of social capital (Kim et al., 2013; Mora-Monge et al., 2019) proposed social capital and Shin, 2019; Queiroz and Wamba, 2019). Moreover, while theory as fundamental to understand relationships in the supply Kim and Shin (2019) highlighted the need to investigate social chain. Social capital, according to Granovetter (1992) and capital as an antecedent of partnership efficiency when Woolcock (1998), can be defined as a valuable asset that stems considering blockchain, Cole et al. (2019) stated that social from access to resources (such as information and norms of capital may be useless in understanding blockchain in supply reciprocity) made available through social relationships. For chain settings. Burt (2001), social capital is the sum of actual or virtual Given these opposite positions, the need for additional resources that accrue to an organization by virtue of possessing research on how blockchain technology relates to and a durable network of more or less institutionalized relationships challenges existing supply chain theories and the paucity of studies dealing with social capital and blockchain adoption of mutual acquaintance and recognition. (despite its recognized helpfulness in supply chain contexts), The concept is considered important for creating inimitable value-generating resources, intrinsic in a firm’s network of we seek to answer the following question: relationships (Wu, 2008). Bernardes (2010) stressed that social Q1. What is the role of social capital in shaping the decision capital or embeddedness is one of the central tenets of social to adopt blockchain in supply networks? network theory and affects economic transactions. He distinguished between personal relations (relational This study helps to answer this question by arguing that the embeddedness) and the structure of the collective arrangement cognitive and relational dimensions of social capital impact the of such relations (structural embeddedness) and claimed that decision to adopt blockchain solutions in supply networks. This social capital has a remarkable effect on organizations’ behavior is done by considering relational capital as a necessary but not and performance. A high level of social capital should improve sufficient condition to adopt blockchain and by proposing a supply network performance because it implies the generation relationship between competitive opportunities at the firm level of shared norms, rules and routines and the adoption of similar and the idea to adopt blockchain. In fact, the opportunity to act cognitive frameworks between partners (Bernardes, 2010). as “Tertius Gaudens” or as “Tertius Iungens” information For analytical purposes, Nahapiet and Ghoshal (1998) brokers in supply networks should severely affect firms’ categorized social capital into three interrelated dimensions: proneness toward the adoption of blockchain solutions. structural, relational and cognitive. This work challenges Cole et al.’s (2019) remarks by proposing that social capital theory is key for improving our 2.1.1 Structural capital understanding of the adoption of blockchain technologies in Structural capital refers to network ties and configuration and is supply chains. Besides, this study posits that the inclusion of the linked to the flow of information in a supply chain. Considering social perspective in the academic debate could be considered a focal firm, network ties refer to its aggregated ties with other one of the missing theoretical pieces that can help to improve firms that allow access to partners’ information and other the understanding of blockchain in supply chain contexts. resources (Wu, 2008; Johnson et al.,2013). Network Findings also suggest that social capital at the inter- configuration denotes not only the density, hierarchy and organizational level has a strategic value that can help to explain connectivity of a social network but also how these features the decision to adopt a given technology in a supply network affect the level of connection and accessibility partners provide and help to understand more in-depth blockchain technologies. (Nahapiet and Ghoshal, 1998). It is proposed that they should be intended not only as socio- 2.1.2 Relational capital technical systems that alter the functioning of supply chain Relational capital was defined as the configuration and social activities but also as solutions that can significantly alter the structure of the network through which resources are accessed strategy and the competitive position of organizations involved (Cousins et al.,2006), contending that it can be assessed by the in supply networks. Eventually, this study emphasizes the need to move beyond the traditional theoretical approaches degree of trust, interaction and mutual respect that exists grounded only on technology’s functionalities and to consider between firms. Trust has effects also on the other dimensions additional perspectives rooted in social and competitive logics, (i.e. structural and cognitive). Trust impacts information highlighting the importance of social capital as an antecedent of visibility by building confidence in sharing valuable information 19 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 and knowledge with the partners (Johnson et al., 2013), thus Trust reflects the confidence of a given firm that the chain affecting collaborative behaviors (Zacharia et al., 2009). partners will not exploit its weaknesses (Ghosh and Fedorowicz, 2008), a concept that gains importance in supply chain 2.1.3 Cognitive capital transactions characterized by asymmetric information and Cognitive capital consists of the resources providing the parties uncertainty. Trust is based on evaluations made on the basis of with shared representations, interpretations and systems of the information referred to partners’ actual characteristics and meaning (Nahapiet and Ghoshal, 1998). It is embodied in a past behaviors. According to Bourdieu (1986, p. 27), trust shared vision and is present when partners have similar depends also on symbolic capital, defined as: perceptions of common goals (Nahapiet and Ghoshal, 1998). Inkpen and Tsang (2005) stressed that goals are shared when [.. .] capital – in whatever form – insofar as it is represented, i.e. apprehended symbolically, in a relationship of knowledge or, more precisely, partners share a joint understanding and approach to the of misrecognition and recognition, presupposes the intervention of the achievement of tasks and outcomes. If goals are shared in a habitus, as a socially constituted cognitive capacity. supply chain, partners can be expected to have a shared In inter-organizational settings, symbolic capital refers to the understanding of improvements and how to accomplish it, prestige and recognition characterizing each organization, which favors continued interactions between the partners and which, in turn, shape trust. Nevertheless, social capital may should result in a self-reinforcing process of participation in strengthen symbolic capital by functioning as a certification of sensemaking (Johnson et al., 2013). social credentials and may also reinforce identity and Similarly, Krause et al. (2007) claimed that shared goals and recognition (Lin, 2002; Ihlen, 2005). business vision are the primary dimensions of cognitive capital. Information about other firmsisdifficult to be obtained. They stressed that if goals and values are shared by buyers and However, when firms collaborate, they can gain both explicit and their suppliers, continued interactions should result in an implicit information about each other. Explicit information improvement in terms of cost, quality, delivery and flexibility. refers, for example, to technological readiness or financial According to the perspective presented by Krause et al. (2007), stability, while implicit one refers to issues such as integrity or in the present study cognitive capital is considered a shared collaborative proneness, which are more difficult to obtain. representation of the business vision by all members of the Consequently, it is reasonable to suppose those past interactions supply network. In other words, this study considers cognitive that occurred between firms shape trust (Gulati, 1998). capital as a situation of strategic goals alignment, in which the Wu (2008) proposed that successful repeated transactions chain partners pursue the same objective in the long run by improve inter-organizational trust and mutual respect between adopting a shared supply chain strategy. firms. Transactions are defined asbusinessinteractionsthat occur in the long-run with the aims of combining complementary 2.2 Blockchain adoption and social capital resources and cultivating shared representations of future The present study infers that social capital theory is key for developments (Polanyi, 1962; Quintas et al.,1997). They can be understanding the adoption of blockchain technologies in supply chains. It represents one of the first attempts to explain classified in past and future transactions. Future (expected) how social capital affects the adoption of blockchain solutions. transactions depend on relational experience accumulated by In the pre-adoption stage, the idea to adopt a blockchain firms in the past and shape inter-organizational trust by reducing solution stimulates the firms’ evaluation process. During this the stimulus to behave opportunistically, as firms can have the process, firms hypothesize blockchain’s potential effects and fear of losing future business opportunities (Dyer, 1997; decide whether to adopt or not the solution. In the past, the Williamson, 1999). technology acceptance model was used to explain why firms Some authors (Ghosh and Fedorowicz, 2008; Wu, 2008; Cole implement a given technology. However, this study posits that et al.,2019) made a further step by claiming that inter- blockchain represents a completely different situation that has organizational trust affects the firms’ propensity toward an impact on issues such as information visibility, which information sharing and visibility. This because inter- involves strategic considerations at both the organizational and organizational trust mitigates problems ascribable to information inter-organizational levels that can alter the competitive asymmetries that are intrinsic in inter-firm relationships by position of firms. allowing a more open and honest sharing of information, which, We noticed that the literature ignored the relevance of two of in turn, alleviates the fear that partners will act speculatively (Wu, the three dimensions of social capital, namely, the relational 2008). Although firms are often afraid to share their data and and the cognitive one, in debate dealing with the investigation knowledge with others, in supply chain environments information of blockchain adoption in the supply chain. The focus, as stated visibility with trustworthy partners can be useful for coordination, above, was only on the structural capital, while the others were integration, transparency and quality of products purposes only skimmed or ignored. For this reason, this study focuses on (Treiblmaier, 2018; Cole et al., 2019; Wang et al., 2019). the relational and cognitive dimensions of social capital. However, a private blockchain forces information visibility among selected partners. Information shared with partners can 2.2.1 Relational capital range from inventory levels or product certification to financial Previously, it was stressed that relational capital is related to the and legal issues. Consequently, firms should carefully assess degree of trust, interaction and mutual respect that exists partners before adopting a blockchain solution. In so doing, between firms. Inter-organizational trust, in particular, can they should rely also upon past actions to assume future help to reduce uncertainty in supply chain decision-making and intensifies mutuality in goal settings (Ghosh and Fedorowicz, trustworthy behavior, to assess more rationally the blockchain 2008). implementation. 20 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 2.2.2 Structural issues and cognitive capital The “Tertius Gaudens” scenario refers to the opportunity Supply chains may range from simple to complex structures that the organization connecting the other two has to leverage involving a network of firms performing different tasks (Pathak on the disunion of the others (Baker and Obstfeld, 1999). By so et al., 2014). Both in simple and in complex network structures, doing, the broker intermediates the exchange of resources and firms collectively attempt to meet demand through individual information between the brokered organizations by acting as firm-level activities while responding to variations in the the only route through which resources and information flow environment and in activities performed by other firms in the across the structural hole (Quintane and Carnabuci, 2016). Under this perspective, the broker firm can benefit by not supply chain (Choi et al.,2001). According to this perspective, intervening in the disconnection between the other supply chain firms can cooperate, compete or co-opete (Wu organizations or by playing off disconnected organizations and Choi, 2005; Pathak et al.,2014). Before deciding to engage in collaborative agreements and adopt a blockchain solution, against one another (Obstfeld et al., 2014). firms should assess the pros and cons of this choice through an The “Tertius Iungens” scenario refers to a situation in which often heuristic process based on their intuitions, feelings and the broker organization finds it beneficial to facilitate the presumed frames. The idea is that firms are strongly influenced connection – and thus, at least, the flow of information – across by the evaluation of their actual and potential competitive/ the structural hole by allowing a connection between the cooperative position with reference to the opportunity to act or brokered organizations (Obstfeld et al.,2014). This not as information brokers, thus exploiting structural holes in opportunity is related to the union and combination of the the supply network. disconnected organizations, in which the broker considers To understand the structural hole concept, it is possible to advantageous the potential synergistic effects deriving from recall an example involving a triad of organizations belonging to directly connecting the brokered organizations (Pathak et al., 2014). This decision is not easy for the broker organization, as a supply network. In this case, a structural hole occurs between two organizations when they are linked to the same it implies giving up power and control, act as “non-partisan” organization but are not linked to each other (Carnovale et al., and embrace self-coordination in the supply network triad to 2016). The concept is linked to the resource dependence create group unity (Obstfeld, 2005). theory (Pfeffer and Salancik, 1978), which treats firms as Depending on the context and timing in which such entities embedded in a network of exchange relationships brokerage alternates are adopted, previous research within an uncertain environment and dependent on other demonstrates that these strategies can help to explain firms’ resources for survival. Within supply networks, firms’ organizations’ behaviors in supply networks and be both power resides in others’ dependence on their resources effective (Long Lingo and O’Mahony, 2010; Obstfeld et al., (Schmidt and Wagner, 2019). Resources generate dependence 2014). when they are important and control over them is exerted by a Blockchain forces network closure, a situation in which every partner is connected such that no one can escape the notice of few organizations (Pfeffer and Salancik, 1978). Information others, characterized by a high level of information visibility. and knowledge are considered crucial resources in supply networks, as they decrease environmental and behavioral This was often recognized, in supply chain environments, as a uncertainty (Carnovale et al., 2016). For this reason, firms are desirable situation for information transparency, quality of strongly dependent on organizations possessing them. products, coordination and integration (Pathak et al., 2014; Consequently, it is possible to consider structural holes as Treiblmaier, 2018; Cole et al.,2019; Wang et al.,2019). Some missing connections that hinder information flow between of these authors stressed that, through blockchain, supply chain chain firms (Burt, 2007; Swierczek, 2020). firms can comply with differentiated demands from consumers, The competitive implications deriving from the existence of quickly recall products from markets when incidents occur, this structural feature in supply networks are grounded on the optimize business processes through integrated information brokerage activity that the organization connecting the others and cope with the quality of products by tracing products’ can fulfill. The brokerage was defined as the process by which chain. However, these considerations were always made at the organizations acting as intermediaries can smooth connections between other organizations lacking access to or trust in one supply chain level, while the single firm perspective was only another (Carnovale et al.,2016). Firms acting as brokers in skimmed (Wang et al.,2019). Nevertheless, the supply networks may take advantage of structural holes by implementation of blockchain solutions relies upon inter- having access to and manage a diverse set of partners, resources organizational agreements that must be accepted by all and non-redundant information and “translate it across partners. Thus, it should be of interest also to understand why groups” (Carnovale et al., 2016). Furthermore, Burt (2009) each individual-firm in a supply network can find suggests that brokers gain benefits also from the control that counterproductive the adoption of blockchain. For example, it allows the broker to leverage the disengaged organizations could be possible that firms are interested in preserving some against one another. Accordingly, Pathak et al. (2014) and sort of information asymmetry to keep competitive advantages. Schmidt and Wagner (2019) suggested that the competitive This study posits that the crux of the problem could be the power of a broker resides in the opportunity to block a potential cognitive capital concept, inferring a relationship between connection or to link two otherwise disengaged organizations, a structural and cognitive issues. In the above, it was stressed that situation that can alter the existing relational dynamics in the cognitive capital is embodied in a shared vision and is present supply network. These two distinct scenarios (Pathak et al., when partners have similar perceptions of common goals and 2014) were labeled as “Tertius Gaudens” and “Tertius how they should interact and that goals are shared when Iungens”. partners share a joint understanding and approach to the 21 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 achievement of tasks and outcomes. The decision to adopt a the trader, who store and then sell products to the food blockchain solution involves different firms, each with its own company, who process these products. Firms are named here as goals, ideas and constraints. P1, P2, P3, P4, FT1, FT2, IFC1 and IFC2 and specific details Therefore, if at least one organization acting as a broker in a relating to their locations and the names of managers and firms supply network that is assessing the possibility to adopt a are disguised to preserve anonymity. blockchain solution does not judge as competitively convenient this scenario (Tertius Gaudens scenario), the degree of cognitive 3.2 Data collection capital at the supply network level should diminish, as well as The core data of this study are made up of semi-structured the probability that the supply network would adopt the interviews across the eight firms involved. For each firm, we blockchain. Conversely, if organizations acting as brokers in a selected those individuals involved in the decision to implement the supply network that are assessing the possibility to adopt a blockchain solution (Table 1). The interviewees selected were blockchain solution judge as competitively convenient this expected to have an understanding of supply chain flows (i.e. scenario (Tertius Iungens), the degree of cognitive capital at the material, service, information and money) before the supply network level should increase, as well as the probability implementation of the blockchain. Each interview was conducted that the supply network would adopt the blockchain. at the organizational level because of the aim of the study, to understand the role of social capital in shaping the decision to adopt 3. Methodology blockchain in supply networks. To judge the level of social capital in each case performed, we considered it important to understand the 3.1 Research design perspective of each organization involved in the chain and then To answer our research question, we used the multiple case- made a judgment at the network level. We sought multiple studies methods. It is particularly suited to investigate a real-life, viewpoints to enable a deep and informed understanding of specific complex and non-routine phenomenon in-depth – such as the situations and reactions in relation to the topic investigated. role of social capital in shaping the decision to adopt blockchain We arranged semi-structured interviews, one for each firm, in supply networks – and is appropriate for theory development lasting five months. Almost all interviews were performed using (Yin, 2009). Further, an abductive approach (Timmermans and Skype face-to-face calls. Only the interview conducted on IFC2 Tavory, 2012) was adopted, using constructs developed by was performed personally. For each firm, the interview was combining the extant literature on social capital theory, supply recorded and transcribed by the researchers. We performed several chain theories on brokerage activities and blockchain. Abductive follow-up phone calls with interviewees to add missing details and reasoning smooths the discovery of knowledge, which begins to confirm the validity of our transcribed data and interpretation. with preliminary theoretical knowledge before collecting The literature review inspired the development of the empirical data, continues with theory matching and suggests interview protocol. Each interview followed a standard protocol propositions based on observations and ends with theory (to allow data comparison) organized under broadly defined development or extension. themes and through open-ended questions. It includes a We focused our analysis on the strategic behavior and the general question to investigate the background and position of social capital of sets of firms operating in a supply network with the interviewee, the competitive position of the firm and the reference to the decision to adopt blockchain. To allow us to perceived strategic importance of blockchain adoption in the draw conclusions on these issues, we decided to use extreme supply network with reference to each firm’s relationships, cases due to their potential to offer potent depictions of some of advantages and competitive position. Interviewees were asked the target phenomenon’s characteristics (Galati and Bigliardi, to recall specific motives and related behaviors/decisions with 2019b; Scholten et al., 2019). The selection of cases for this study reference to blockchain adoption. Interviewees were also asked was, therefore, based on theoretical replication (Yin, 2009). The to judge social capital issues (such as trust in chain partners, the theoretical sampling plan considered groups of a firm belonging flow of information, frequency of collaborations, convergent or toaspecific supply network involved in the decision to adopt a divergent strategic perspectives) at the time of blockchain blockchain and, following Yin, (2009), polar types were selected evaluation. Following the recommended approach for (i.e. decision to adopt or not the blockchain). This sampling plan triangulating data from multiple sources, we also collected data was designed to obtain a more in-depth understanding of not only from interviews but also from additional documents, the phenomenon by replicating similar conditions (such as the archival data, mass media articles, social media comments and industry in which firms operates, size of firms, their role in the websites, for improving data reliability. supply chain) but altering only one experimental condition (i.e. decision to adopt or not the blockchain) to verify the possibility to predicts contrasting results but for predictable reasons. 3.3 Data analysis With this in mind, we conducted two case studies in the food We followed multiple case-studies guidelines for theory development as we collected and analyzed the data, thus industry (Figure 1). This industry was chosen due to its continuously contrasting initial theory and data gathered economic importance for many countries and for the potential throughout our interviews (Yin, 2009). The analysis focused on relevance of blockchain in food supply chains (Cole et al., 2019). The structure of the parts of the supply networks examining the antecedents of the decision-making process in investigated is the same for the two cases. Each case is terms of social capital considering all different perspectives. Each interview was first transcribed and then codified composed of two producers of fruits and vegetables, one food trader operating in different supply chains and an international according to the literature review. Such structure helps to food company. In brief, producers sell their food products to summarize our findings. 22 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 Figure 1 The two case studies performed (arrows show the flows of food products) Table 1 People interviewed for each firm and duration of the interview Case Firm Position of the interviewees Duration of the main interview Case 1 P1 Owner 70 min Have adopted a blockchain solution IT manager P2 Owner 100 min Sales manager FT1 Owner 90 min Sales manager IFC1 Purchasing manager 140 min Supply chain manager IT manager Case 2 P3 Sales manager 60 min Have not adopted a blockchain solution IT manager P4 Owner 50 min IT manager FT2 Purchasing manager 100 min Sales manager IFC2 Purchasing manager 220 min Logistics manager Supply chain manager IT global manager Marketing manager Data analysis began with respect to both the firms’ perceived relevance of blockchain for their business. Then, we codified advantages and challenges related to blockchain, as we were the other issues referred to as social capital. More in detail, the interested in detecting their attitude toward the specific level of relational capital was considered high/low by judging technological solution and their understanding of the strategic the frequency of contacts within supply chain partners, the 23 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 nature of personal links, the level of trust and commitment blockchain’s features also with reference to their specific devoted to the partnership. Cognitive capital was investigated business and their role in the supply chain. We noticed that the and then codified in our study by assessing the presence or not proposal to adopt the blockchain in both cases started from the of a shared vision along the supply chain. This means to international food companies involved in the supply networks. understand whether supply chain players have a common They were ready to invest in this technology for specific reasons understanding of consumers’ needs, market trends and but this positive attitude toward blockchain emerged from all partners’ action and priorities and of strategic issues. In other firms. words, if the business vision was the same in all firms belonging The most cited benefits were products’ legitimacy, to each case study, the level of cognitive capital within the traceability and authenticity, as well as the achievement of more supply chain was considered high. This includes the case in accurate coordination and flexibility. For example, as stated by which broker firms find it beneficial to facilitate the information the supply chain manager of IFC2: flow across the structural hole by allowing a link between the [.. .] firms operating in industries in which products’ authenticity plays a brokered organizations (Tertius Iungens scenario). Conversely, crucial role for firms in the chain and for consumers are increasingly interested in such digital technologies, who can assist and improve our work. if we noticed a different business perspective by one or more firms belonging to the chain, the level of cognitive capital was The owner of P2 stressed that “Authenticity and traceability considered low. This includes the case in which broker firms allowed by blockchain’s features help food producers that pay find it beneficial to limit the information flow across the attention to foods’ superior quality and ensure process structural hole (Tertius Gaudens scenario). monitoring, which is critical in our industry.” Moreover, as We then group them according to the structure that emerged argued by the IT manager of P4: from the literature, analyzed themes and sought commonalities Our firm is very small and is at the beginning of the network. Blockchain and interrelationships (Galati et al., 2019), which were solutions improve demand forecasts and can help us in improving our firm’s identified through the continuous reading and re-reading of identity and sense of belonging to a wider community. interviews. The phases of the empirical investigation were As for the challenges, various issues appeared. Among the alternated with theoretical reconsideration. For each firm, we others, the lack of a standardized solution and of regulation, as performed several follow-up phone calls with interviewees to well as the required implementation and integration costs confirm the validity of our interpretation. The within-case was resulted to be the most evident. However, we noticed that these performed at the (part of the) supply network level by challenges were perceived the most by large firms (IFC1 and combining the different organizational perspectives. Finally, IFC2). This was linked to the required IT investments and with through the cross-case phase, we compared the results the difficulty of integrating a specific blockchain solution with collected through the within-case analysis to derive similarities, firms’ ERP systems: differences and new issues. The reiteration of this process leads Blockchain development is still at an early stage, in which food firms are to identify the suggested set of theoretical propositions. exploring some business implementation cases and are not ready to fully exploit blockchain potential. In addition, there is still a lack of regulation, IT competencies are not largely diffused and consumers do not recognize the 3.4 Methodological rigor value that these technologies can provide to their day-to-day purchasing To assess the trustworthiness of the methodology underlying activities. Therefore, I’m not surprised about the low level of blockchain this study, our data and analyzes were designed to meet the adoption, stressed the IT manager of IFC1. quality criteria of fit, understanding, generality and control However, also the sales managers of FT1 and FT2 raised (Strauss and Corbin, 1998). As for the fit, data collection and similar doubts. More in detail, that of FT1 claimed: analysis were based on an initial idea stimulated by the The lack of regulation and standard solutions make difficult for traders to literature and participants were strongly integrated into the choose a specific blockchain solution, as we can face the risk of being study (they also participate in the development of involved in different supply chain adopting different blockchain solutions, thus increasing the technological complexity of our activities. propositions). As for the understanding, transcription and results were sent back to participants, thus they understood and approved the findings. In terms of generality, interviews’ length 4.2 Relational capital and cognitive capital and openness allow capturing diverse aspects of the The second part of our investigation identifies the different phenomenon because of the different perspectives of firms social capital mechanisms that shape the decision to adopt or included in the study. Finally, control was ensured by involving not blockchain in supply networks. As for the investigation of interviewees who can exert a decisive influence on the decision relational embeddedness, the within-case analysis depicted a to adopt blockchain at both the organizational and the supply clear relationship between relational elements – such as inter- network levels. organizational trust, obligation and partners’ symbolic capital – and firms’ proneness to adopt blockchain. Trust was 4. Findings considered crucial and necessary by all firms. The purchasing manager of IFC1 stressed: 4.1 Preliminary information The first part of the study was aimed at understanding the We cannot implement a blockchain, which requires an intimate interaction, with untrustworthy partners. The supply network you are analyzing is made objective motives that drive the decision to adopt or not of some of our historical partners, we totally trust them. blockchain solutions. Findings from both within and cross-case He was echoed by the logistics manager of IFC2 “It’s analysis showed that the objective operational advantages provided by blockchain solutions were recognized by all impossible to adopt blockchain in a supply network in which interviewees. All of them were sufficiently informed about trust and respect are not diffused within actors. Our blockchain 24 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 adoption attempt was developed only with trustworthy relational embeddedness. All firms are strongly linked together, suppliers.” The purchasing manager of FT2 claimed that: not only in terms of trust and respect but also when considering strategic fit at the inter-organizational level. All firms stressed We trust the firms considered in your study, we have a long history of the need to improve coordination, even at the expense of their success together [...] we also feel obliged to them, as they continuously help us in improving our performance [.. .]it’s an honor for us to work with own negotiating power (such as the case of FT1). This context IFC2, given their recognized prestige at an international level [...]if seems ideal for the adoption of a technological solution such as considering only our relational closeness, we would accept blockchain implementation. blockchain, characterized among the others by the presence of immutable, traceable and shared data, which allows network Underlying new issues such as obligation and symbolic capital. closure. These issues emerged also from the words of P1: Case 2 highlighted different considerations. Also, in this We are prone to do anything FT1 and IFC1 ask to improve the case, almost all the interviewees considered important technological readiness of chain [...] we consider them our business family, coordination activities. This was stressed by both producers, P3 a distinguished business family recognized globally. and P4 and IFC2. The supply chain manager of IFC2 From the within- and the cross-case analyzes, it emerged that synthesize their thoughts: blockchain adoption was evaluated (and implemented by firms We cannot act in isolation [...] we face global competition, thus included in Case 1 by involving only trustworthy and respected coordination with supply chain actors is essential to respond quickly to the partners. Partners in both cases appeared to be very well evolving customers’ needs and preferences [...] the emergence of the new connected, recognized and trusted. Relational capital seems to technologies give us unprecedented opportunities to coordinate our action [.. .] we can act as a single entity that provides benefits to all the partners be a necessary condition to adopt blockchain in a supply involved in the game. network, according to the interviewees. However, we are aware However, not all firms share a similar vision. FT2’s managers, that only firms belonging to the supply network depicted in although recognizing the importance of coordination at the Case 1 have decided to implement the blockchain solution, chain level, considered less desirable the transparent and thus relational capital alone could not be considered sufficient distributed sharing of data with its partners: to explain why supply networks decide to adopt this technological way. Our activity is too much related to the effective management of data, which can be considered our main resource [...] our profits are strongly related to Our investigation goes further through the analysis of the our negotiating decisions and derives from our competitive power [...]we cognitive capital dimension, which includes considerations at are intermediaries, so our brokerage power is vital for us [...] after the the strategic and competitive level. First, the within-case exploration of blockchain potential and drawbacks, we believe that is impossible to accept this kind of technology [...] this was not an easy analysis was performed. The analysis started with reference to decision to take, we are strongly connected with our partners [...] the Case 1. Managers stressed the need to coordinate their activity mismatch between the coordination of information deriving from our suppliers and customers is our strength, we need to preserve it and limit to obtain benefits at the supply chain level. The IT manager of others’ control stated the purchasing manager of FT2. P1 stated, “Blockchain gives us the opportunity to align In this case, a focus on the strategic perspective of FT2 information flows within the chain, which could be very useful for us in the long run.” The same perspective emerged from the highlighted a tertius gaudens scenario, in which the broker firm IT manager of IFC1: acts to preserve its information broker position. This player in the supply chain did not accept blockchain implementation, Blockchain solutions can help to create a shared vision at the network level thus impeding its adoption in the chain. This case represents a [...] we feel somehow incentivized to define a unified strategy at the chain level [...] we hope that the implementation of blockchain would improve low level of cognitive capital at the supply network level, given the chain resilience through meetings devoted to the development of tactics the partners’ goal misalignment: able to strengthen our competitive position. After several months of experiments and meeting, our attempt to implement Interesting findings resulted from the position of the managers blockchain in our supply chain was judged as not convenient by FT2, so we belonging to the trader firm (FT1), which could be decided to abandon this path [...] maybe FT2’s managers were right and although we had different views, we believe that our partnership would not fundamental (according to the literature review on the role of be affected [...] maybe we would consider other chains in which blockchain brokers) for cognitive capital reasons. could be implemented stressed the marketing manager of IFC2. The words of the sales manager highlighted something that This confirmed that the level of relational capital was high in previous literature on blockchain in the supply chain does not the chain but also that the low level of cognitive capital due to yet consider: the different perspective of FT2 has led to the impossibility for [...] coordinating activities at the network level is of primary importance for the chain partners to adopt blockchain. our success, also due to the reduction of the bullwhip effect that provides Cross-case analysis highlights two different behaviors of the benefits to the entire chain [...] our power resides in the ability to match and negotiate information about products and prices [...] blockchain could parts of the supply networks investigated (Figure 2). reduce our negotiating power, but we believe that allowing the While it emerged that the level of relational capital was high implementation of blockchain in our work can be viewed as a signal of trust in both cases, which was considered a sine qua non for the by our customers [...] our customers can believe that we have nothing to hide [...] we are confident that these technological advancements would implementation of blockchain, the analysis of the cognitive improve our business. dimension of social capital brings to light crucial issues. The It resulted that FT1 act as tertius iungens, as they prefer to actor that plays a critical role in the decision-making process at establish a connection between its suppliers and customer the supply network level is the information broker, which in our through blockchain instead of preserving its advantage deriving cases is represented by the food trader. His logic is key for the from acting as an information broker. Considering the level of decision to implement or not blockchain in the network. cognitive capital at the supply network level, Case 1 represents A comparison of cases suggests that brokers acting as a situation of high cognitive capital level, in addition to the high tertius iungens increase the level of cognitive capital at the 25 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 Figure 2 Summary of case studies inter-organizational level, while brokers acting as tertius acceptance model cannot be the only theoretical perspectives gaudens decrease such level. Given the similarity of the cases used to explain the adoption of a blockchain solution in supply selected and analyzed, as well as the analogous high level of chains because also the relational and cognitive dimensions of relational capital detected, it can be argued that the different social capital shape this decision. outputs in terms of adoption of blockchain are due to More in detail, it is first claimed that a high degree of differences in brokers’ strategic cognition. While Case 1 relational capital in a supply network should increase firms’ involves FT1, which judged it convenient to facilitate predisposition toward the adoption of blockchain solutions, information flows within the network by limiting its while a low degree of relational capital should hinder the negotiation power, Case 2 includes FT2 that acts oppositely implementation of this technology. Following this line of (i.e. hindering transparent information sharing across the reasoning, firms should be more prone to share information chain). Given the similar high level of cognitive capital of all and collaborate with trustworthy, competent and respected firms included in both cases when excluding brokers, we can partners. In other words, they should be more inclined to assert that brokers make the difference with reference to the implement a blockchain solution with those with whom they decision to adopt or not blockchain in a supply network. have developed a satisfactory level of relational capital. What emerged from Case 2, however, signals that relational capital 5. Discussion alone is not able to explain why supply networks decide to adopt or not blockchain. In fact, although a high level of 5.1 Theoretical implications relational capital, the network has not implemented This work is positioned in the broad supply chain debate blockchain. Therefore, by combining the theoretical arguments dealing with the role of social capital in supply network derived from the literature review and the findings emerged interactions (Bernardes, 2010; Treiblmaier, 2018; Cole et al., from case studies, we can suggest that: 2019; Kim and Shin, 2019; Wang et al.,2019). These interactions are crucial when investigating blockchain P1a. A high degree of relational capital in a supply network (Treiblmaier, 2018; Kim and Shin, 2019; Wang et al., 2019) improves chain firms’ proneness to adopt blockchain but were previously considered in very few studies that focused solutions. almost only on the structural dimension of social capital (Kim and Shin, 2019; Queiroz and Wamba, 2019). It contributes to P1b. A high degree of relational capital in a supply network is addressing the need to develop further theoretical a necessary but not sufficient condition to adopt advancements, raised by many scholars (Treiblmaier, 2018; blockchain solutions. Cole et al., 2019; Hald and Kinra, 2019; Schmidt and Wagner, In addition, it is emphasized the decisive role of cognitive 2019), by proposing a novel perspective grounded on social capital theory. This study posits that the inclusion of the social capital for the adoption of blockchain solutions in supply capital perspective in the academic debate could be considered networks. This is done by proposing a relationship between competitive opportunities at the firm level and the idea to adopt one of the missing theoretical pieces that can help to improve the understanding of blockchain in supply chain contexts. It is the blockchain. The opportunity to act as “Tertius Gaudens” suggested that the common institutional theory and technology or as “Tertius Iungens” information brokers in supply networks 26 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 should severely affect firms’ proneness toward the adoption of the degree of cognitive capital at the supply network blockchain solutions. level. This study posits that if at least one organization acting as a P2f. Supply networks involving information brokers that broker in a supply network that is assessing the possibility to prefer to act as “Tertius Iungens” are more prone to adopt a blockchain solution does not judge as competitively adopt blockchain solutions. convenient this scenario, the degree of cognitive capital at the supply network level will diminish, as well as the probability Among these two different scenarios (Tertius Gaudens and that the supply network will adopt the blockchain. The focus is Tertius Iungens), this study does not suggest which one is better on brokers as they represent important nodes in the network or preferable for firms operating in supply networks. They can according to the resource dependence theory (e.g. they possess be considered effective in the appropriate context. Our findings significant information about other nodes). In this situation, try also to relate each of them with a given level of cognitive which was labeled as “Tertius Gaudens,” the degree of capital at the supply network level, which, in turn, should affect cognitive capital at the supply network level should diminish the decision to adopt blockchain at the inter-organizational because not all partners in the supply network share common level. Figure 3 resumes what has been proposed, thus depicting goals. It is proposed that the organization acting as a broker the entire process. would be less inclined to accept the implementation of a This study can be considered complementary to those of technological solution, the blockchain, that would close a Kim and Shin (2019) and Queiroz and Wamba (2019). The structural hole that the broker organization is exploiting. intuitions proposed with reference to the pre-adoption stage Therefore, it is argued that: support also those provided by Wang et al. (2019), which P2a. Firms that prefer to act as “Tertius Gaudens” highlighted the importance of pre-adoption sensemaking at the information brokers in supply networks are less prone organizational level for investigating technology adoption. to adopt blockchain solutions. Blockchain pre-adoption cannot be completely understood without considering the different urges and perspectives of each P2b. Firms that prefer to act as “Tertius Gaudens” organization in the supply network. Furthermore, this study information brokers in supply networks will diminish introduces new issues to the debate related to the role of the degree of cognitive capital at the supply network blockchain in the supply chain by discussing goal misalignment level. and competitive advantage. They can exert a decisive influence on the decision to adopt or not blockchain in networks of firms. P2c. Supply networks involving information brokers that In addition, our findings help to shed light on the future prefer to act as “Tertius Gaudens” are less prone to research avenue introduced by Kim and Shin (2019), who adopt blockchain solutions. highlighted the need to investigate social capital as an Conversely, if organizations acting as brokers in a supply antecedent of partnership efficiency that may enhance network that are assessing the possibility to adopt a blockchain coordination at the inter-organizational level. Our study solution judge as competitively convenient in this scenario, the suggests that social capital is a necessary pre-requisite for degree of cognitive capital at the supply network level should enhancing coordination at the supply network level. This increase, as well as the probability that the supply network will because the decision to implement a technology (blockchain) adopt the blockchain. In this situation, which was labeled as that is widely recognized for improving partnership efficiency “Tertius Iungens,” the degree of cognitive capital at the supply and coordination in supply chains can be neglected by a low network level should increase because the brokers will sponsor level of relational or cognitive capital. the connection between unconnected partners in the supply Findings also suggest that social capital at the inter- network (to increase their own competitive positions). organizational level has a strategic value that can help to explain Moreover, there is at least an additional organization in the the decision to adopt a given technology in a supply network. It supply network (i.e. that acting as a broker) that would not can help to understand more in-depth not only the adoption of pursue its own interest alone but with chain partners, which blockchain but also other technologies having similar results in lower opportunism at the supply network level. In this characteristics such as information sharing and transparency, case, brokers can consider the possibility that customers may who can alter the competitive power of firms in supply prefer to buy products from firms that make available more networks. detailed information about the products’ supply chain. By so doing, brokers adopting blockchain before the others can 5.2 Managerial implications consider it a strategic decision that would provide them a Although many managers are aware of the potential and competitive advantage, at least in the short-run. Consequently, challenges of blockchain in supply networks, they may be less it would be probable that higher levels of shared visions and familiar with the role of relational and cognitive capital in shaping goal alignment can be achieved. Therefore, it is argued that: the decision to adopt or not blockchain at the supply network level and more in general to partnership efficiency. This study P2d. Firms that prefer to act as “Tertius Iungens” provides valuable insights to address this practitioner’s information brokers in supply networks are more requirement. prone to adopt blockchain solutions. We show how the decision to adopt blockchain is related to P2e. Firms that prefer to act as “Tertius Iungens” the convergence (or divergence) of competitive and strategic information brokers in supply networks will increase goals of firms involved in the network, as well as to the level of 27 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 Figure 3 A relational and cognitive capital perspective on the blockchain adoption process in supply networks relational embeddedness achieved with partners. In particular, Managers need to understand why and with whom they wish to our study reveals that firms’ managers that want to adopt start this process. In the pre-adoption stage, each firm’s blockchain within their supply chain need to undertake a managers need to evaluate not only the benefits and drawbacks thorough and exhaustive assessment of relational capital and arising from blockchain implementation when considering cognitive capital at the inter-organizational level, in addition to their own perspective but need to reflect also the partners. This the structural dimension that was investigated and confirmed as must be done by considering the level of relational capital at the relevant in previous studies. supply network level, which means an assessment of partners’ 28 Blockchain adoption in supply networks Supply Chain Management: An International Journal Francesco Galati Volume 27 · Number 7 · 2022 · 17–32 trustworthiness, the presence of strong or weak bonds between leveraging, for example, on the co-opetitive dynamics in supply buyers and suppliers (by evaluating, for example, the frequency chain archetypes proposed by Pathak et al. (2014). of joint problem-solving, the presence of obligations or the Second, it could be also of interest to investigate network distance maintained between them) and the existence of shared closure implications by relying on social network theory or on additional theoretical perspectives with reference to the post- norms between firms. As stressed in this study, this can be adoption stage. Future research could start by considering that considered a necessary condition to start a blockchain the closure of a structural hole prompts a network-wide implementation journey. reaction, as stressed by Pathak et al. (2014). Blockchain could However, that’s not all. After evaluating relational issues, potentially fill several structural holes in the supply network, each firm’s managers need also to assess the competitive thereby triggering several adaptive behaviors at the network position and the strategic outlook of the other partners, those level, which, in turn, could have implications on social capital who are evaluating the blockchain adoption process. More in and on competitive dynamics at the supply chain level. detail, our study identifies brokers as crucial firms to be assessed in these terms. Therefore, each firm should deepen the understanding of traders’ and brokers’ competitive and References strategic thinking. 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Miles, M.B. and Huberman, M.A. (1994), Qualitative Data Analysis: An Expanded Sourcebook, Sage, Thousand Oaks, CA. About the author Nelson, R.R. and Winter, S.G. (1982), “The Schumpeterian tradeoff revisited”, The American Economic Review, Vol. 72 Francesco Galati graduated (with distinction) in 2009 in No. 1, pp. 114-132. Industrial Engineering and Management at the University of Reuer, J.J., Zollo, M. and Singh, H. (2002), “Post-formation Parma and received his PhD in Industrial Engineering from dynamics in strategic alliances”, Strategic Management the same University. He is a researcher at the University of Journal, Vol. 23 No. 2, pp. 135-151. Parma. His research activities mainly concern knowledge asset Subramani, M.R. and Venkatraman, N. (2003), “Safeguarding and intellectual capital management, innovation and inter- investments in asymmetric interorganizational relationships: organizational relationships. He has authored or co-authored theory and evidence”, Academy of Management Journal, more than 60 papers published in an international journal, as Vol. 46 No. 1, pp. 46-62. well as on national and international conference proceedings. Teece, D.J. (1986), “Profiting from technological innovation: He acts as a referee for more than 30 international scientific implications for integration, collaboration, licensing and journals. Francesco Galati can be contacted at: francesco. public policy”, Research Policy, Vol. 15 No. 6, pp. 285-305. galati@unipr.it For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: permissions@emeraldinsight.com

Journal

Supply Chain Management An International JournalEmerald Publishing

Published: Dec 19, 2022

Keywords: Blockchain; Supply network; Social capital theory; Structural hole; Broker; Social capital; Technology; Environmental uncertainty; Information flow; Theories; Strategic alliances

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