Blockchain technology has been sold to companies, governments, and individuals as a revolutionary solution to myriad problems. But while some have raced to implement it, blockchain’s relative novelty and the breathless headlines around its drawbacks have placed its use into murky territory.
A new study published in the Global Strategy Journal provides a better understanding of blockchain merits and drawbacks, specifically in the global multinational corporation (MNC) sphere. The authors — Tuuli Hakkarainen of the University of Liverpool, Anatoli Colicev of the University of Liverpool, and Torben Pedersen of Copenhagen Business School — focused on three particular applications of the technology in this sector: financial transactions, collaboration, and data analytics.
The researchers noticed the role of blockchain had been addressed by academic research in other fields, such as finance and operations management, but had gained much less attention in international business and strategy. Their article, “A perspective on three trade-offs of blockchain technology for the global strategy of the MNC,” focuses on blockchain technology in areas they deemed to be the most promising, feasible, and less-researched aspects of the technology for MNCs: cryptocurrencies, smart contracts, and blockchain data.
Their study consisted of an in-depth investigation of the technology across countries and industries to determine whether cryptocurrencies, smart contracts, or data analytics were de facto implemented in the companies. They combined industry and company reports, third-party materials, case studies, news outlets, and social media discussions in addition to other publicly available sources.
The trade-offs they identified can be used to help companies weigh their potential use. They found that cryptocurrencies’ merits include lower transaction fees, better security, and higher speed, but they necessitate expensive infrastructure and carry a stigma because of negative headlines. Smart contracts can streamline agreements between parties, yet they lack the flexibility that global firms need when interacting with suppliers and partners. Novel blockchain data can be plugged into marketing dashboards, but this can also threaten consumer privacy.
“We believe blockchain is here to stay and potentially revolutionize multiple aspects for firms and their consumers,” Colicev says. “There are a lot of examples where we can see concrete evidence of how blockchain is already helping firms, not to mention the huge potential to help manage different hassles when operating abroad.”
The thoughtful approach, the authors say, is to not adopt the technology across the whole business model all at once: Firms can limit the potential risks by piloting the use of blockchain in some parts of the organization in one country, or trying smart contracts with specific partners.
“We are especially excited about the third trade-off related to the role of blockchain intelligence and how firms can leverage blockchain data,” Colicev says. “The value of such data is enormous and, we believe, will eventually be one of the new frontiers in firm analytics.”
As one ambitious example, the authors point to Synaptic Health Alliance, a provider data exchange founded by Humana, MultiPlan, Quest Diagnostics, and United Health Group. The venture uses distributed ledger technology to decrease data maintenance costs and improve coordination and overall data quality through synchronizing data.
“The burning question will become how to build the mechanisms to offer strategic insights while protecting consumer privacy,” Colicev says. “Only time will tell whether blockchain technology will be a major factor for firms, but we think it will.”