Demystifying Digital Governance: Exploring the Mechanisms and Trade-offs of Blockchains for Organizations
Abstract
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Amid digital transformation, organizations are adopting innovative governance forms to complement or automate existing structures. This dissertation highlights the role of digital governance in facilitating digital exchange relationships within and among organizations. First, a typology of digital governance is introduced, comprising analog, augmented, and automated governance forms, each with distinct control, coordination, incentive, and trust mechanisms. Second, the dissertation explores blockchain technology as a key opportunity to implement digital governance within and among organizations, allowing trustless exchanges between actors, independence from costly intermediaries, and rule-based automation to reach consensus.
Within organizations, blockchains create direct information channels between principals and agents, impacting organizational structures in two ways. Vertical disintermediation streamlines structures, resulting in increased cognitive load due to growing information. By contrast, lateral reintermediation introduces new monitoring and incentive mechanisms but sacrifices flexibility for strict lateral sequencing.
Among organizations, founders face three pertinent blockchain governance trade-offs: (1) selecting the ideal combination of analog and automated governance mechanisms; (2) maintaining the delicate balance between exerting tight control versus driving network adoption, and; (3) weighing the inherent trade-off between rigidity and dynamism that can arise from deeply engrained founder imprints.
Overall, this research contributes to governance literature by defining digital governance as a distinct form, elucidating key mechanisms and trade-offs related to blockchains, and adding valuable insights for both academics and practitioners grappling with digital governance complexities. More broadly, this dissertation contributes to the discussion about digital transformation by shifting the focus from organizational processes and business models to digital governance.
