Success and Failure in Blockchain-Based Interorganizational Ecosystems: A Governance Perspective

Interorganizational ecosystems require governance arrangements that can align diverse and often competing organizations around a shared value proposition. Although blockchain, as a form of digital governance, promises to facilitate large-scale collaboration by codifying and enforcing rules, decentralizing control, and ensuring verifiable data exchange, many blockchain-based interorganizational ecosystems nevertheless fail. Leveraging 155 interviews and detailed internal records from a large technology provider covering 81 interorganizational blockchain projects across 25 industries, supplemented by archival evidence on the trajectories of 196 projects and 70 podcast interviews, we develop a grounded theory explaining how governance misalignments trigger collaboration breakdowns. Specifically, we identify three underlying governance tradeoffs that expose tensions between blockchain’s network-centric rules and actor-centric needs: consistency versus flexibility in coordination, system reliance versus actor reliance in trust and control, and ecosystem utility versus member utility in incentives. These tradeoffs are amplified or attenuated by corresponding boundary conditions related to scale and cohesion (for coordination), co-opetition (for trust and control), and value logics (for incentives). Our study advances governance theory by explaining how blockchain interacts with traditional governance, shapes critical tradeoffs, and influences ecosystem success and failure. We also offer design principles to help managers navigate the inherent governance tradeoffs in ecosystem collaboration.