Blockchain-Based Governance: Implications for Organizational Boundaries and Structures

Abstract

Blockchain has emerged as a key Industry 4.0 technology, enabling novel forms of governance and coordination mechanism among organizations and markets. However, extant literature has largely focused on the technical aspects of blockchain, with limited attention to the behavioural and institutional aspects. In this paper, we argue that blockchain-based smart contracts and decentralized autonomous organizations represent the potential for a radical departure from traditional forms of contractual governance and hierarchy, carrying profound implications for the design and governance of economic transaction and organizational structures. We elucidate how blockchain technologies, characterized by transparency, immutability, programmability and decentralization, reduce transaction costs and establish an industrialized and trustless transactional governance system. Finally, we present an agenda for future research, highlighting the need for new theoretical frameworks and empirical evidence to understand the impact of blockchain on organizational design and forms.