Blockchain technology, often celebrated as a significant innovation, still needs a comprehensive understanding of its implications for multinational corporations (MNCs). A new study in the Global Strategy Journal, led by researchers Tuuli Hakkarainen and Anatoli Colicev from the University of Liverpool and Torben Pedersen from Copenhagen Business School, provides deeper insights into the advantages and limitations of blockchain through its application in three specific areas: financial transactions, collaboration, and data analytics. Their research, titled “A perspective on three trade-offs of blockchain technology for the global strategy of the MNC,” benefits from the authors’ involvement in the MNC industry and governmental projects, focusing on less-explored applications in international business and strategy.

The study emphasizes the importance of cryptocurrencies in payment options and intelligent contracts for collaborating across borders, alongside the potential of blockchain data to provide real-time insights into consumer preferences worldwide, thus offering a competitive edge. The chosen focus areas—financial transactions, collaboration, and data analytics—are highlighted as promising, feasible, yet under-researched aspects of blockchain for MNCs. Through their investigation, which included analysis of industry and company reports, third-party materials, case studies, and social media, the researchers aimed to shed light on the practical applications and benefits of these blockchain components within the sector.

The study’s findings present a nuanced understanding of the trade-offs associated with blockchain technology. It points out that while cryptocurrencies offer lower transaction fees, enhanced security, and faster transactions, they require substantial infrastructure and often suffer from negative public perceptions. Smart contracts facilitate smoother transactions and collaborations but lack flexibility, a necessary trait for global firms dealing with diverse partners and suppliers. Moreover, although innovative, the use of blockchain for data analytics raises concerns about consumer privacy and data security.

Colicev strongly believes in the staying power and transformative potential of blockchain, which can revolutionize various aspects of business operations and consumer interactions. He cites several examples where blockchain has proven beneficial, particularly in simplifying complex operations for firms active in international markets. The authors encourage cautious optimism, suggesting companies consider limiting potential risks by piloting blockchain initiatives in controlled environments or specific segments before broader implementation.

While blockchain technology promises significant advancements and operational efficiencies for MNCs, the study advises a measured approach to its adoption. The authors recommend that firms experiment with blockchain in smaller, manageable projects or with specific partners to understand its implications better and integrate it effectively into their global strategies. This strategic approach ensures that while firms can leverage blockchain’s benefits, they also mitigate potential risks associated with its broader deployment in their business models.

More information: Tuuli Hakkarainen et al, A perspective on three trade-offs of blockchain technology for the global strategy of the MNC, Global Strategy Journal. DOI: 10.1002/gsj.1509

Journal information: Global Strategy Journal Provided by Strategic Management Society