Operational efficiency effects of blockchain technology implementation in firms: Evidence from China
Review of International Business and Strategy
ISSN: 2059-6014
Article publication date: 23 March 2020
Issue publication date: 1 June 2020
Abstract
Purpose
The purpose of this study is to evaluate the effect of blockchain technology on firms’ operational efficiency in the context of China.
Design/methodology/approach
The authors use panel data for blockchain-based companies listed on stock exchanges in China (Shanghai, Shenzhen and Hong Kong) between 2014 and 2018. The operational efficiency of firms that deploy blockchain technology is evaluated using ordinary least squares and system generalized method of moments estimation.
Findings
Results suggest that companies’ current year performance exceeds the previous year performance because of blockchain deployment in firms’ operations. Firms with higher financial leverage and return on assets reap more benefits from blockchain. Larger and older firms benefit less from blockchain implementation. Stochastic frontier estimation suggests that, on average, firms attain a 57.76 per cent technical efficiency level, or, put differently, they operate 42.24 per cent below their maximum level of potential output.
Originality/value
Blockchain can benefit firms in terms of consensus, security and trust, spurring the evolution of a new form of organizational dynamics. This study explores the theory of transactional cost analysis under blockchain technology. In addition, this study hypothesizes and empirically demonstrates the significant impacts of blockchain technology on corporations’ operational efficiency, using audited, externally reported financial data. Industry professionals can reap benefits from this research by noticing the magnitude of changes in firms’ financial parameters attributable to blockchain adoption.
Keywords
Acknowledgements
The authors thank anonymous referees, editors, guest editor and guest editorial panel for their very constructive comments on the drafts of the article. This work was supported by the National Natural Science Foundation of China (Grant Nos 71671075, 71931005) and the Program for Huazhong University of Science and Technology Academic Frointier Youth Team (2017QYTD14).
This paper forms part of a special section “Blockchain and the Multinational Enterprise”, guest edited by Rui Torres de Oliveira, Marta Indulska and Tatiana Zalan.
Citation
Hasan, M.R., Shiming, D., Islam, M.A. and Hossain, M.Z. (2020), "Operational efficiency effects of blockchain technology implementation in firms: Evidence from China", Review of International Business and Strategy, Vol. 30 No. 2, pp. 163-181. https://doi.org/10.1108/RIBS-05-2019-0069
Publisher
:Emerald Publishing Limited
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