The Impact of Blockchain-enabled Smart Contracts on Firms’ Operational Efficiency

Xiong, Yangchun, Ding, Li, Guo, Shu ORCID: 0000-0002-7513-9184, Choi, Tsan-Ming ORCID: 0000-0003-3865-7043 and Lam, Hugo KS ORCID: 0000-0002-4674-6145 (2025) The Impact of Blockchain-enabled Smart Contracts on Firms’ Operational Efficiency. Journal of Operations Management, 71 (7). pp. 939-963. ISSN 0272-6963, 1873-1317

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Abstract

Smart contracts, enabled by blockchain technology, are increasingly adopted by firms to automate the execution of agreements or contracts without the involvement of intermediaries. However, it is still unclear how smart contracts may affect firms’ operational efficiency. We answer this question empirically by conducting a quasi-natural experiment in the United States in which certain states have enacted relevant laws that increase in-state firms’ propensity to adopt and use smart contracts. Our difference-in-differences estimation suggests that compared with out-of-state control firms, in-state treatment firms’ operational efficiency increases significantly after the enactment of smart contract laws. Our post hoc analysis further suggests that state-level smart contract laws help increase in-state firms’ actual smart contract activities, which in turn lead to operational efficiency improvement. We also find that the operational efficiency improvement varies across firms with different supply chain complexities. While firms with a large number of supply chain partners (i.e., high horizontal complexity) gain more operational efficiency improvement, the improvement becomes less pronounced if firms’ supply chain partners are distributed across different countries (i.e., high spatial complexity). Overall, our research demonstrates smart contracts’ ability to improve operational efficiency but also reveals the critical role of supply chain complexity in affecting the operational efficiency improvement.

Item Type:	Article
Uncontrolled Keywords:	3509 Transportation, Logistics and Supply Chains, 35 Commerce, Management, Tourism and Services, 3507 Strategy, Management and Organisational Behaviour, 7 Affordable and Clean Energy
Divisions:	Faculty of Humanities & Social Sciences Faculty of Humanities & Social Sciences > School of Management
Depositing User:	Symplectic Admin
Date Deposited:	02 Jun 2025 10:37
Last Modified:	12 Oct 2025 14:54
DOI:	10.1002/joom.70006
Related Websites:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3193029