![]() As the internet shifts hierarchies toward electronic markets, lack of trust between peers inhibits exchanges. Smart contracts improve the execution time of transactions significantly and increase transaction volume rapidly. Our study proposes that blockchain technology brings two more benefits, trust and transparency, to the existing Internet-based business services, and helps improve corporate governance. To understand the effectiveness of economic activities by blockchain intervention and facilitate strategic alignment, we use transaction cost and agency cost as theoretical lenses to explore the impacts of blockchain, discuss the transformation of those costs, and support our arguments using a case study. ![]() Costs in every economic exchange with partners are associated with two metrics: transaction costs due to market imperfections and agency costs due to conflict of interest and information asymmetry in an organization. This variance has created complex and diverse blockchain products. However, there are no unifying criteria for blockchain architecture across the organizations and business models.
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