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Bitcoin and the rise of decentralized autonomous organizations

Author

Listed:
  • Ying-Ying Hsieh

    (Imperial College London)

  • Jean-Philippe Vergne

    (Western University)

  • Philip Anderson

    (INSEAD)

  • Karim Lakhani

    (Harvard Business School)

  • Markus Reitzig

    (University of Vienna)

Abstract

Bitcoin represents the first real-world implementation of a “decentralized autonomous organization” (DAO) and offers a new paradigm for organization design. Imagine working for a global business organization whose routine tasks are powered by a software protocol instead of being governed by managers and employees. Task assignments and rewards are randomized by the algorithm. Information is not channeled through a hierarchy but recorded transparently and securely on an immutable public ledger called “blockchain.” Further, the organization decides on design and strategy changes through a democratic voting process involving a previously unseen class of stakeholders called “miners.” Agreements need to be reached at the organizational level for any proposed protocol changes to be approved and activated. How do DAOs solve the universal problem of organizing with such novel solutions? What are the implications? We use Bitcoin as an example to shed light on how a DAO works in the cryptocurrency industry, where it provides a peer-to-peer, decentralized, and disintermediated payment system that can compete against traditional financial institutions. We also invited commentaries from renowned organization scholars to share their views on this intriguing phenomenon.

Suggested Citation

  • Ying-Ying Hsieh & Jean-Philippe Vergne & Philip Anderson & Karim Lakhani & Markus Reitzig, 2018. "Bitcoin and the rise of decentralized autonomous organizations," Journal of Organization Design, Springer;Organizational Design Community, vol. 7(1), pages 1-16, December.
    • Handle: RePEc:spr:jorgde:v:7:y:2018:i:1:d:10.1186_s41469-018-0038-1
    DOI: 10.1186/s41469-018-0038-1
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    References listed on IDEAS

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    Cited by:

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    4. Ying‐Ying Hsieh & Jean‐Philippe Vergne, 2023. "The future of the web? The coordination and early‐stage growth of decentralized platforms," Strategic Management Journal, Wiley Blackwell, vol. 44(3), pages 829-857, March.
    5. Naudts, Ellen, 2023. "The future of DAOs in finance - in need of legal status," Occasional Paper Series 331, European Central Bank.
    6. Matthew Quayson & Chunguang Bai & Lihua Sun & Joseph Sarkis, 2023. "Building blockchain‐driven dynamic capabilities for developing circular supply chain: Rethinking the role of sensing, seizing, and reconfiguring," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4821-4840, November.
    7. Nils Augustin & Andreas Eckhardt & Alexander Willem Jong, 2023. "Understanding decentralized autonomous organizations from the inside," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-14, December.
    8. Ali Sunyaev & Niclas Kannengießer & Roman Beck & Horst Treiblmaier & Mary Lacity & Johann Kranz & Gilbert Fridgen & Ulli Spankowski & André Luckow, 2021. "Token Economy," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 63(4), pages 457-478, August.
    9. Dmitry Sharapov & Paul Kattuman & Diego Rodriguez & F. Javier Velazquez, 2021. "Using the SHAPLEY value approach to variance decomposition in strategy research: Diversification, internationalization, and corporate group effects on affiliate profitability," Strategic Management Journal, Wiley Blackwell, vol. 42(3), pages 608-623, March.
    10. Santana, Carlos & Albareda, Laura, 2022. "Blockchain and the emergence of Decentralized Autonomous Organizations (DAOs): An integrative model and research agenda," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    11. Oliver Baumann & Brian Wu, 2023. "Managerial hierarchy in AI-driven organizations," Journal of Organization Design, Springer;Organizational Design Community, vol. 12(1), pages 1-5, June.
    12. Erica Pimentel & Emilio Boulianne, 2020. "Blockchain in Accounting Research and Practice: Current Trends and Future Opportunities," Accounting Perspectives, John Wiley & Sons, vol. 19(4), pages 325-361, December.
    13. Oliver Alexy, 2022. "How flat can it get? From better at flatter to the promise of the decentralized, boundaryless organization," Journal of Organization Design, Springer;Organizational Design Community, vol. 11(1), pages 31-36, March.
    14. Stephan Billinger & Maciej Workiewicz, 2019. "Fading hierarchies and the emergence of new forms of organization," Journal of Organization Design, Springer;Organizational Design Community, vol. 8(1), pages 1-6, December.
    15. Ipert, Chloé & Mauer, René, 2023. "Infrastructural or organizational decentralization? Developing a typology of blockchain ventures," Technological Forecasting and Social Change, Elsevier, vol. 197(C).
    16. Kyungmoo Heo & Sangyoon Yi, 2023. "(De)centralization in the governance of blockchain systems: cryptocurrency cases," Journal of Organization Design, Springer;Organizational Design Community, vol. 12(3), pages 59-82, September.
    17. Rahman, Abdurrahman Arum, 2022. "A Decentralized Central Bank Digital Currency," MPRA Paper 111361, University Library of Munich, Germany.
    18. Zhan, Yuanzhu & Xiong, Yu & Xing, Xinjie, 2023. "A conceptual model and case study of blockchain-enabled social media platform," Technovation, Elsevier, vol. 119(C).

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