Blockchain-enabled traceability and visibility: Financing for a capital-constrained recycler in closed-loop supply chain

• Benchmark & individual models are built to distinguish the difference of BC selection under different financial conditions. • Clarify the effects on BC and find that the members have inconsistent attitudes about the acceptance toward BC. • Extend the bankruptcy risk and analyse BC adoption within a recycling-oriented CLSC. • Experimental tests address the measurement of economic, environmental and social performance among strategies. Capital-constrained recyclers have long been plagued by financial problems. Recyclers, especially for those in small or medium size enterprises (SMEs), are struggling to secure financing to launch recycling initiatives due to credit issues. Despite the critical importance of recycling for the circular economy, the specific financing challenges faced by SMEs in the recycling sector have received little scholarly attention in the literature and still deserved further exploration. To propel the issue forward, this study incorporates the blockchain (BC) service, which makes it accessible for recyclers to obtain guarantee credit finance (GCF). Considering blockchain-enabled traceability and visibility, we develop a closed-loop supply chain (CLSC) with a manufacturer, a retailer and a recycler. Based on game theory, the in-depth exploration is conducted to analyze the combined effects of financing and BC application. The results show that the capital-constrained recycler has a broader application for blockchain, compared the recycler with sufficient capital. This is because blockchain-enabled credit penetration offers a better financing option, and the blockchain-enabled market expansion directly benefits the recycler. However, the integration of BC is not necessarily beneficial for the recycler or the CLSC. This study also indicates that even if a lower financing rate is available, adopting BC may still decrease the recycler’s recycling rate if the cost associated with BC is expensive. Interestingly, the threshold for the recycler to adopt BC has become higher under the manufacturer-dominated recycling. However, the manufacturer-dominated recycling offers greater potential for BC applications and benefits the entire CLSC when bankruptcy risk is considered. Enterprises are encouraged to adopt BC for its cost efficiency and significant market expansion potential. Under such circumstances, the selection of BC enhances both economic and social effects, creating a win–win situation that benefits all the involved parties.