Influence of blockchain technology in sme

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L’influenza della tecnologia Blockchain sull’internazionalizzazione delle PMI indiane.

The Influence of Blockchain Technology On the Internationalization of Indian SMEs.

Candidato/a Relatore A.A. 2023/2024 Giuseppe Basile Prof. Diego Matricano Matr. A07006160 A te...29.

Technovation 115 (2022) 102518

Contents lists available at ScienceDirect Technovation journal homepage: www.elsevier.com/locate/technovation.

Influence of blockchain technology in SME internationalization: Evidence from high-tech SMEs in India

Sandip Rakshit, Nazrul Islam, Sandeep Mondal, Tripti Paul.

Indian Institute of Technology, Dhanbad, India.

Department of Science, Innovation, Technology and Entrepreneurship, University of Exeter Business School, UK.

Article info e abstract

Keywords: Blockchain technology; SMEs; Global operations; High-tech firms; 3S Triangle model; Amazon; Structural equation modeling.

This study examines the impact of blockchain technology (BCT) on small and medium-sized enterprises’ (SMEs) internationalization. Further, it examines how Amazon as a platform reframes the global partnership environment via the BCT network that enables Indian SMEs to operate globally. Data were collected from 291 employees at 43 high-tech SMEs in India. They revealed untapped interest in how Indian SMEs will use Amazon for global operations. Several factors, such as processes to strategize, synergize, and standardize, are described as needing to be addressed before SMEs can boost integrated business efficiency, especially with regards to marketing capacity, scale, scope, and financial performance. The study represents a critical theoretical contribution to Amazon-based global operations by developing the 3S Triangle Model, which could provide a basis for future business practice. Furthermore, the study defines and addresses the evolution of BCT that Amazon has used—and continues to use—as a global operations platform. At the convergence of BCT, Amazon, and global retail activities, we propose and advance an integrated model of BCT-driven global operations among SMEs that provides a holistic view of state-of-the-art practices and exciting avenues for future study.

1. Introduction

Small and medium-sized enterprises (SMEs) play a significant role in economic development for most Asia-Pacific countries, particularly India (Weaven et al., 2021). SMEs’ traditional approach is inadequate to sustain existing global business operations (de Villiers et al., 2020). Studies have identified several reasons why operations of SMEs are lacking: First, SMEs’ transactions are frequently maintained in conjunction with a centralized system backed by third-party software vendors (Woods et al., 2019). Second, there is a substantial amount of scattered information throughout the dispersed lifespan, such as an updated bill, assessments of real-time efficiency, and varying maintenance requirements (Rakshit et al., 2021a,b). Third, standard information frameworks do not have an efficient mechanism for exchanging expertise and resources (Rakshit et al., 2021a,b). To compete with multinational competitors, SMEs must establish innovative market models focused on performance, sustainability, and higher product/service quality (O’Dwyer and Gilmore, 2018). The adoption of blockchain technology (BCT) could be a first step in addressing these challenges. BCT is a groundbreaking technology in the financial world that benefits from high confidentiality, irreversibility, delivery, transparency, and precision (Ahluwalia et al., 2020a). Despite this promising opportunity for SMEs to globalize their businesses by adopting BCT (Jin and Hurd, 2018), existing research often neglects the effect of BCT on global-market-entry strategy.

A BCT-based framework for SMEs’ global operations through Amazon is proposed to address the above challenges (Wong et al., 2020). This strategy combines BCT, smart contracts, and other related developments in global business operations (Ilbiz and Durst, 2019). BCT has the potential to solve problems inherent in SME global operations by addressing issues of visibility and traceability; yet in order for the technology to evolve and support SMEs, its implementation would be a slow process and would require cooperation between various internal functional departments and different players. Prior research has investigated the theoretical underpinnings and internationalizing global operations of SMEs (Merugula et al., 2021; Islam et al., 2021). While these studies are significant, gaps exist in the relationship between processes to strategize, synergize, and standardize and in the integrated business performance of SMEs (Paul, 2020). Additionally, these studies have highlighted a knowledge gap in applying BCT. As such, additional academic research is proposed to overcome it and improve BCT-driven Amazon’s global market operations. However, none of the studies have assessed BCT-based theoretical underpinnings of SME internationalization and Amazon’s global operations. This study’s theoretical framework is founded on the SCOPE framework and 5S Pentagon Model (Paul, 2020). Studying the influence of integrated business performance in the global market via the lens of BCT-based marketing capabilities may shed light on the elements that contribute to enhancing the international operations of SMEs.

The primary goal of this research is to identify how scale, scope, and financial performance interrelate following adoption of BCT in global operations among SMEs. Indeed, global operations represent an important growth path, as SMEs stand to gain from engaging in cross-border activities. Thus, by investing in and implementing BCT, SMEs can take advantage of new technologies designed to improve business activities. Furthermore, BCT entails enhancements that reduce both processing errors and costs (in time and overhead) associated with purchasing. These improvements are likely to boost organizational performance. The study examines how BCT influences the entrance of Indian SMEs into the global market through the Amazon platform (Orji et al., 2020). Specifically, it answers two key research questions: (1) How do BCT systems influence the entrance of Indian SMEs into the global market? and (2) How does BCT impact integrated business performance for SMEs in light of global market operations?

This study responds to these research questions in the following ways: First, it explains how SMEs can interact with BCT and integrate technologies to take advantage of emerging opportunities in developed markets and create new markets in the global context (Wang et al., 2020). Second, it illustrates the frameworks for collaboration between SMEs, other organizations, and stakeholders, all of whom may have various priorities but can find common ground through blockchain networks (Chowdhury, 2018). Third, it clarifies BCT’s role in improving SMEs’ monitoring of and interaction with sustainability (Ilbiz and Durst, 2019). Thus, this study advances a BCT-based 3S Triangle Model, which was modified from the SCOPE framework and 5S Pentagon Model (Paul, 2020). The SCOPE framework is based on the 5S Pentagon Model, which provides a holistic view of adoption drivers and challenges for businesses of all sizes and industries. This paper discusses how SMEs can use BCT to change corporate activities and generate ‘win-win’ results in the foreign market. We outline how SMEs’ lack of current capacity can be improved at the corporate level, augmenting credibility and faith in sustainability efforts in the global industry. While this study focuses on Indian SMEs, its applicability is broader. Indeed, two aspects of the methodological analysis may be replicable: First, this model may be extended to SMEs in other developed economies to discern if similar conclusions apply. Second, the results could guide other emerging economies in evaluating BCT-related problems that SMEs face in an era of globalization and industry convergence.

The findings suggest that Indian SMEs may expand their operations internationally by adapting BCT and collaborating with Amazon. This new theoretical structure combines issues of marketing capabilities and the influence of integrated business performance (Wang et al., 2019). This study is novel in its addition of a construct focusing on Amazon’s global operations to the theoretical framework. Additionally, the findings indicate the rising role of networking and BCT in SME marketing behavior and identify a study vacuum in specific SME marketing practices (Ilbiz and Durst, 2019). As a result of this vacuum, understanding of how marketing competence is perceived and implemented in SMEs remains unclear, and it continues to be a source of discussion among academics and practitioners (Dutta and Saini, 2021). Integrating SMEs’ performance in the worldwide market is required for internationalization, independent of the marketing method or theme. Furthermore, an in-depth examination of the role, organization, and management of marketing capabilities in SMEs was conducted, using a widely recognized framework in the marketing literature that encompasses both strategic and operational marketing processes and unique global market approach. The findings provide valuable information about evolving marketing behaviors and practices among SMEs, which help them successfully navigate difficulties of the current global market.

The paper is structured as follows: research is situated in a specific context, which is discussed in Section 2 by first providing an overview of SMEs’ Indian SMEs and their global operations. Then, the justification for SMEs using the Amazon platform for international expansion (drawing on BCT) is discussed. With its description of research frameworks, methods, and tools, Section 3 describes the methodological procedure. Section 4 describes the findings and interpretation of blockchain domain dynamics. The final section presents the paper’s conclusions, summarizes important observations across industries, and provides a series of lessons learned alongside their potential impacts.

2. Literature review

2.1. Indian SMEs’ global operations

The SME sector’s relevance to and impact on India’s overall economic growth is well known (Gherghina et al.,2020). SMEs seek to pursue a foreign market by finding new business fields (such as new business exploration, new product development, partnership, licensing, and so on). For most countries in the Asia-Pacific region, like India, SMEs play a crucial role in economic development. SMEs usually suffer from resource shortages in domestic and international markets relative to major organizations. Since 1991, the Indian Government has eased import controls, facilitating trade development to boost India’s economic status within the global system (Todd and Javalgi, 2007). Recognizing SMEs’ role in the global and national economies, India’s governments and development organizations have been keenly involved in creating SMEs (Sahi et al., 2020). BCT in the global network economy is becoming a crucial export driver in this context. SME e-commerce systems dramatically minimize corporate acquisition costs and improve organizational operations productivity (Adomako et al., 2021). Cost savings, convenience, and many custom choices continue to be the driving factors for business-to-business and business-to-consumer e-commerce development for SMEs (see Table 1).

With the exponential growth of SMEs, individual SMEs may experience dramatic changes such as increases in turnover or income, resulting in decreased earnings and profits. Growth contributes to the challenge of SME management (Alaassar et al., 2021). Expanding an SME does not just mean coping with the same challenges on a bigger scale; establishing and enhancing best processes are also often a core element of an SME’s growth. Indeed, a small company experiencing a powerful burst of growth will see its activities changed in many ways. SMEs in India need to transform their business models to include BCT so that they ensure consistent success and long-term sustainability. Systems based on BCT will minimize costs and offer a convenient and straightforward way to connect and transmit data globally (Upadhyay, 2020).

2.2. SCOPE framework

Even though several models—such as the Uppsala model and RBV—have been widely employed in research, perspectives on them vary. Practitioners and researchers argue that robust models are still required. The “SCOPE” model framework (Paul, 2020) is proposed to assist SME growth, conduct industry analyses for informed decisions, and develop strategies to compete in the global market. According to this framework, SMEs should conduct an effective study before expanding their global business operations. The SCOPE model postulates tactics for SMEs to export, participate, and thrive in the world market. The SCOPE model enables individuals to critically consider SMEs’ growth and to better analyze their industries. This framework can be generalized to other contexts, no matter the industry or country of origin, in both emerging and developed countries.

2 Technovation 115 (2022) 102518 S. Rakshit et al.

Table 1. Blockchain Technology (BCT) and global operations of SMEs in the business research context

2.3. Blockchain in SMEs

BCT has reduced lead time; reinforced transparency, reliability, and effectiveness in all market aspects; and has made international business more cost-effective and efficient (see Table 1). First implemented in 2008, it is a public ledger maintained de-centrally as a single data record in blocks on network nodes (Wang, 2021; Zhang et al., 2021). Further, BCT is a distributed ledger system that uses a cryptographic architecture to decentralize transaction record control (Javaid et al., 2021). Cryptographic components are used to communicate between nodes in a peer-to-peer network that is geographically dispersed throughout the world (Qiao et al., 2022). Several distinct users who do not know each other run a blockchain-based network without a need for a central authority (Javaid et al., 2021). Furthermore, BCT’s digital signature function suggests that to secure the validity and legitimacy of data transfers or transactions, a blockchain framework depends on public–private key encryption (Wang et al., 2022).

2.4. Digital online platforms for SMEs

Digital online platforms, such as Amazon, deliver several e-commerce variants, including business-to-business (B2B), business-to-consumer (B2C), and even consumer-to-consumer (C2C) (Po´lvora et al., 2020b). Hundreds of thousands of SMEs, startups, and partners use Amazon Web Services to launch and scale up their companies. Such funding