Joint blockchain service vendor-platform selection using social network relationships: A multi-provider multi-user decision perspective

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Abstract

Blockchain technology has been widely touted for building and supporting supply chain management capabilities. The technology has substantial potential to enhance operational effectiveness and profitability. Blockchain platform evaluation and selection still requires investigation. Blockchain platform selection and adoption decision making in a multi-organizational supply chain context is complex. Effective blockchain adoption and operations requires consideration of multiple vendors—service providers—and platforms while satisfying multiple users and stakeholders. This study introduces a managerial decision support method to assist organizations evaluate and select joint blockchain service vendor and platforms for multiple organizational functions and organizations. Using literature and practice, we introduce blockchain service vendor and platform attributes from user, vendor, and platform perspectives. A social network theory lens sets the foundation for an innovative group decision-making method—a DEMATEL-based hierarchical best-worst method—integrating characteristics from this decision environment. The technological and distributed network nature of blockchain technology requires evaluation by decision makers from various levels of a supply chain network. These decision makers will likely have varying blockchain technology knowledge and subjective preferences that need integration. The proposed method helps to operationalize social network relationships to comprehend partial and idiosyncratic expert opinions about blockchain technology. An illustrative example and various scenarios are presented to identify managerial and research implications. Methodological limitations and future research are presented for this emergent managerial and technological concern across supply chains.

Introduction

Blockchain technology proponents have argued for its use across numerous use cases (Zile and Strazdina, 2018). Supply chain application potential for blockchain is substantive (Saberi et al., 2019a, 2019b). Blockchain technology was introduced as the fundamental platform for bitcoin transactions (Nakamoto, 2008). Beginning as a financial tool, researchers and practitioners sought to explore its potential for improving business and supply chain productivity (Bai and Sarkis, 2020; Saberi et al., 2019a, 2019b; Pearson et al., 2019).

Today's supply chains have initiated promising blockchain pilot projects for their information technological infrastructure and data governance. There are many complexities in the management of potential blockchain applications within a supply chain environment (Bai et al., 2020; Kouhizadeh et al., 2021; Wamba et al., 2020). As blockchain vendors evolve and various service packages emerge, organizations across multiple supply chain network levels will face an array of issues. Major technology providers such as IBM, Microsoft, and Oracle provide infrastructures that utilize blockchain technology to track products for organizations and their supply chains. These software systems allow supply chains to leverage cloud-based and blockchain solutions to enhance transaction traceability and security. For example, Walmart tested a blockchain-based application on an IBM infrastructure that traces pork production and transportation processes by authenticating transactions improving the accuracy and efficiency of global supplier and logistical partner record keeping. For Walmart, finding the expertise to develop and maintain the technology platform; and integrating inter- and intra-organizational stakeholders within legacy systems was complex and they faced difficult decisions. Critical managerial questions include how organizations will share information with supply chain partners; the challenges that might prevent broader adoption and collaborative execution; and establishing common standards and governance rules. All these questions relate to one important issue—how organizations may select and justify the selection of blockchains when multiple organizations are involved. How to select the best blockchain service vendor and platform has yet to be effectively addressed—although it is a critical issue in blockchain design, development, and implementation (Bai and Sarkis, 2020).

The joint blockchain service vendor-platform selection decision is difficult. It is especially complex in the supply chain context. Multiple supply chain actors and multiple providers are involved. An operating blockchain will likely require multiple vendors and satisfy multiple users to be effective. There are also other complex considerations related to life-cycle aspects, from implementation, operation, development, and maintenance (Farshidi et al., 2020). The vendor-platform selection process includes steps to evaluate the most fitting blockchain vendor and service platform using managerial preferences and business requirements for blockchain design, constructing the blockchain, and integrating the systems needed—such as application, software providers, internet or service platform, and blockchain managers.

The blockchain service vendor-platform selection process is complicated because many vendors, platforms, and supply chain users are involved. Varied criteria such as security, inter-organizational interoperability, and consensus mechanisms must be considered and fitted to the supply chain network characteristics. Blockchain adoption in a supply chain is a critical and strategic decision for multiple supply chain actors. The decision—depending on blockchain purposes—can well determine future collaborations in product, material, financial, and information flows associated with inter-organizational and intra-organizational activities. A multi-provider, multi-user, group decision method greatly benefits this business and decision environment.

Group decision-making has gained popularity in the study of multi-attribute decision-making (MADM) methods (Bai et al., 2019). It has been applied to the evaluation of blockchain technology (Bai and Sarkis, 2020)—although it was a focused approach on one characteristic of a blockchain, transparency, and didn't consider partner and technology elements and complexity fully.

Building an effective group decision-making method for the blockchain service vendor-platform selection problem faces two major challenges. First, due to limited understanding and varying priorities, each decision maker (DM) can only provide partial and idiosyncratic evaluation information. Therefore, we need to construct effective methods to eliminate inaccuracies caused by human biases and incomplete information. Second, the inter-related influence of relationships among DMs needs to be considered.

According to social network theory (SNT), how people think and act in social situations will be influenced by others in the relationship network (Krause et al., 2007). Evaluating and selecting a blockchain service platform involves many supply chain actors, and the decision will exacerbate the connectivity and interoperability complexity of these actors in a supply chain. Therefore, the opinions of closely connected DMs will also influence each other. The social network relationships among DMs have not been effectively considered and applied to decision-making methods in the blockchain technology evaluation literature.

The group decision-making methods proposed in this study will consider the evaluation behavior of DMs, such as judgment uncertainty, the psychological characteristics of DMs, and relative importance of DMs (Bai and Sarkis, 2020). We introduce a new group decision-making approach using a DEMATEL-based hierarchical best-worst method (BWM) for blockchain service platform evaluation and selection. A hierarchical BWM is introduced to determine attribute weights and candidate blockchain service platforms weights under each attribute and will eventually be used to rank these platforms. DEMATEL—the decision-making trial and evaluation laboratory—is introduced in the method to determine the social network relationships (impact degree) among DMs which complements BWM by addressing interconnectivity limitations.

This work contributes to the body of knowledge on blockchain management in supply chains. It provides insights into the necessary factors for blockchain adoption from multiple perspectives for the blockchain service vendor-platform selection decision. A new analytical modeling approach is also introduced that considers important decision environment dimensions missing in other models and approaches. It expands BWM to include hierarchical relationships amongst factors and alternatives. We also provide practical guidance on applying the analytical approach.

The remainder of the paper begins with providing a background on related literature and issues that set the foundation to inform later sections; this section also clarifies and develops a framework for factors to consider in the evaluation. The proposed methodology is then introduced with an overview of the DEMATEL and BWM methods. Detailed aspects of the methodology with specific analytic developments and calculations are presented using an illustrative application. Some scenarios for sensitivity analysis are then introduced to determine the robustness of initial solutions. The penultimate section provides some discussion and implications of the methodology. The final section summarizes the study, results, and implications. It also provides insights into the limitations of the study which inform future research directions.

Section snippets

Background

This section provides some theoretical and practical foundation for this study. We firstly summarize the key characteristics of blockchain technology and its application in supply chain management. We propose a list of key criteria that may be included in strategic blockchain platform selection in a supply chain management context. Next, we thematically review the extant decision methods that have been used in blockchain technology—or strategic technology—evaluation and selection decisions. In

Methodology

The selection methodology process refers to the steps involved in selecting the best fitting blockchain infrastructure provider and blockchain service platform. This section will illustrate a detailed application procedure of the proposed methodology. Initially, some background is required for general aspects of the methodology including BWM and DEMATEL.

An illustrative case for blockchain service platform selection

In this section, the integrated DEMATEL and BWM method is applied to evaluate and select the best blockchain service platform using a practical illustrative application.

BWM is a simple and effective multi criteria decision making (MCDM) method to determine attribute weights or candidate weights with fewer pairwise comparisons—especially when compared to popular techniques such as the analytical hierarchy process (AHP) (Rezaei, 2015). But it is difficult to use BWM in group decision-making,

Sensitivity analysis

In order to complete the sensitivity analysis, the basic values and assumptions related to the illustrative examples are altered to determine the robustness of the results.

Discussion and implications

This study has important managerial, methodological and theoretical implications. These implications are now summarized.

Summary and conclusion

Blockchain technology can aid supply chains govern inter-organizational interactions and transactions with a secure, transparent, immutable information service infrastructure (Koh et al., 2020). Much is still to be learned and evaluated in blockchain technology and supply chain management (Wamba et al., 2020). Existing studies—albeit still in their early phases—have investigated the promising benefits and barriers of adopting blockchain for organizations and their supply chains (Kouhizadeh et

Acknowledgements

This work is supported by the National Natural Science Foundation of China Project (72072021,71172032).

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