OPERATIONS, TECHNOLOGY, AND INFORMATION MANAGEMENT


Value and Design of Traceability-Driven


Blockchains Manufacturing & Service Operations Management, 25, 3, May 2023 LINK TO PAPER


YAO CUI ASSISTANT PROFESSOR


Samuel Curtis Johnson Graduate School of Management


Cornell SC Johnson College of Business Cornell University


Co-authors • Yao Cui


Assistant Professor, Samuel Curtis Johnson Graduate School of Management, Cornell SC Johnson College of Business, Cornell University


• Ming Hu, Rotman School of Management, University of Toronto • Jingchen Liu, School of Business, Nanjing University


Summary Firms operating in different kinds of supply chains could face unique chal-


lenges when they adopt and design a traceability-driven blockchain. Tis paper provides a theoretical investigation into the value and design of trace- ability-driven blockchains under three different supply chain structures. Te authors use game theory to study the quality contracting equilibrium between one buyer and two suppliers and identify two fundamental functionalities of a traceability-driven blockchain.


In serial supply chains, any firm can initiate blockchain, whereas in parallel supply chains, it may be critical for the buyer to take the lead and properly compensate the suppliers. Second, in serial supply chains, a restricted data permission policy where each supplier shares their traceability data with the buyer but not with each other can improve supply chain profit, whereas in parallel supply chains, it is never optimal to restrict a firm’s access to the trace- ability data. Tird, the suppliers’ incentive to enhance the governance of data quality is more aligned with the supply chain optimum in serial supply chains compared to parallel supply chains, where the ability to trace the product or- igin enables flexible product recall, which can reduce product quality. In this case, traceability can benefit the buyer while hurting the suppliers, creating an incentive conflict.


TO IMPACT CONTENTS


RESEARCH WITH IMPACT: CORNELL SC JOHNSON COLLEGE OF BUSINESS • 2023 EDITION


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