Overcoming MSME Challenges With Blockchain

Overcoming MSME Challenges With Blockchain

DOI: 10.4018/978-1-6684-5747-4.ch004
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Abstract

Emerging technologies are distinct in that they stimulate the creation of automated and intelligent businesses at a quick pace. Business processes are being reimagined and reinvented by these companies. When blockchain was initially introduced to the world in 2008, it was touted as the next great digital revolution. This chapter seeks to offer an overview of blockchain technology by defining it and explaining how it works. However, because blockchain technology is still in its infancy, nothing is known about how this new technology may be used to practical applications. As a result, the chapter highlights its distinct characteristics that set it apart from other technologies. Despite government intervention and an environment that promotes entrepreneurship, MSMEs, which have long been the backbone of any economy, continue to face the same difficulties that small businesses face. This chapter demonstrates how blockchain may assist in resolving these challenges in the hopes of spurring greater research and development in the field of blockchain, particularly in the context of MSMEs.
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Introduction

When the prototype known as the Internet was finished in 1983, it was the first time the world had ever seen the concept of free knowledge being exchanged between everyone across the world, regardless of origin or background, on a scale previously considered impossible. This was amplified when computer scientist Tim Berners-Lee coined the term “World Wide Web” in 1989, giving the Internet a more familiar tone (Tim Berners-Lee Respini, 2018). The Internet has essentially permitted technical comforts that give numerous new chances for everyone, owing to the availability of useful information, throughout this digital era paradigm. Individuals may use this knowledge to tackle a variety of problems ranging from basic social and health concerns like obesity, smoking, and hunger to business difficulties and economic issues including business applications, poverty, and injustice (Lanham, 2006). While the Internet isn't flawless and won't be able to entirely address these difficulties, it has shown to be capable of mitigating negative issues or at the very least reducing the negative repercussions of these issues.

That is especially true for would-be and aspiring entrepreneurs who are prepared to take risks by starting their own firm from the ground up (Millman, Li, Matlay & Wong, 2010). Small businesses now have quick access to any new product ideas, advancements, and technical breakthroughs, as well as a vast quantity of information that may help them better their goods and compete with larger companies, thanks to the Internet. Despite its tremendous advantages, the Internet is not without its drawbacks. The availability of information also means that the corporate environment is more competitive and dynamic than it has ever been, necessitating continual innovation and change in order for organizations to adapt. As a result, in order to survive today's fierce competition and stay ahead of the pack, one must make use of developing technology (Day, Schoemaker & Gunther, 2000). Emerging technologies are viewed as the next step for organizations everywhere since they are frequently considered disruptive technologies, to the point where they may establish a whole new niche market through a process known as cybermediation. According to the book Fundamentals of Businesses (Barney & Hesterly, 2010), in order to get a competitive edge over competitors, one must differentiate oneself in terms of products or services in order to generate value for customers. The use of emerging technologies is one way to help realize and achieve potential competitive advantage, though the nature of emerging technologies means that their practical developments and applications are still unrealized and in their infancy, and thus they have only recently gained prominence and become a topic of discussion (Adner & Levinthal, 2002). This infancy, on the other hand, has an evident value, as it demonstrates that most firms are still unable to or unwilling to use such technology, thus allowing early movers in any field to gain a competitive advantage. Educational technology, information technology, nanotechnology, biotechnology, cognitive science, psychotechnology, robotics, and artificial intelligence are all examples of developing technologies.

Emerging technologies, of course, provide the foundation for firms that want to stay one step ahead of their competition in any field. Businesses, on the other hand, are frequently bemused and charmed by the technological wizardry and unknown complexity of developing technologies as a result of fast technological progress. Due to the huge number of dangers, even experienced investors would not go into the growth of technology. However, blockchain technology is one of the most important new technologies that may be used to great success by organizations and is now trending in both academic research and practical implementations (Underwood, 2016). Indeed, for some bigger businesses, it is already one of the most significant new technologies that they have integrated as part of their business process in today's day (Risius & Spohrer, 2017).

Key Terms in this Chapter

Emerging Technology: A branch of technology with yet-to-be-realized practical applications They differ from other types of technology in that they are capable of upsetting the status quo.

Proof-of-Work: A consensus method for confirming transactions that is also responsible for the production of new blocks whenever a blockchain is updated.

Micro, Small, and Medium-Sized Enterprises: Numbers below a specific threshold characterize businesses, notably the number of employees and sales turnover. MSMEs, for example, are defined as businesses with less than 250 workers and annual revenues of less than 50 million euros, according to the European Commission (2019) .

Peer-to-peer Network: A network that lets a group of nodes, such as computer systems, to join without the need for an administrator, assuring data quality and privilege equality.

Smart Contract: An agreement with sophisticated protocols that enables process automation and eliminates the need for middlemen or third parties.

Blockchain: A chain of blocks represents a database that is shared across a network of computers. It is extremely difficult to alter a record after it has been put to the chain.

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