The Internal and External Governance of Blockchain-Based Organizations: Evidence from Cryptocurrencies

Forthcoming (2018) in Campbell-Verduyn M (ed.), Bitcoin and Beyond: Blockchains and Global Governance. RIPE/Routledge Series in Global Political Economy, Forthcoming

26 Pages Posted: 15 May 2017

See all articles by Ying-Ying Hsieh

Ying-Ying Hsieh

Imperial College Business School

Jean-Philippe Vergne

University College London - School of Management

Sha Wang

University of Western Ontario, Department of Economics

Date Written: May 11, 2017

Abstract

We theorize about the governance of blockchain organizations and empirically explore the phenomenon using panel data on cryptocurrencies. Our findings point to interesting effects of governance on returns (i.e. cryptocurrency price increases or decreases). Internally, while centralized governance design choices at the blockchain level decrease returns, centralized governance design choices at the protocol and the organizational levels appear to be more beneficial for returns. The results correspond to the idea that, on the one hand, investors value cryptocurrencies’ core value proposition, rooted in decentralization; but on the other hand, are suspicious of decentralized governance at higher levels in the organization because they could slow down strategic decision-making (e.g., regarding the introduction of new innovations) or create information asymmetries between investors and technologists.

Keywords: bitcoin, governance, blockchain, cryptocurrency, decentralization

JEL Classification: G3, E42

Suggested Citation

Hsieh, Ying-Ying and Vergne, Jean-Philippe and Wang, Sha, The Internal and External Governance of Blockchain-Based Organizations: Evidence from Cryptocurrencies (May 11, 2017). Forthcoming (2018) in Campbell-Verduyn M (ed.), Bitcoin and Beyond: Blockchains and Global Governance. RIPE/Routledge Series in Global Political Economy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2966973

Ying-Ying Hsieh

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Jean-Philippe Vergne (Contact Author)

University College London - School of Management ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Sha Wang

University of Western Ontario, Department of Economics ( email )

1151 Richmond Street
Suite 2
London, Ontario N6A 5B8
Canada

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