Developing dynamic digital capabilities in micro-multinationals through platform ecosystems: Assessing the role of trust in algorithmic smart contracts

This paper develops new insights into the important role trust plays in inter-firm relationships and smart contracts in digital platform ecosystems, specifically in the context of international entrepreneurial ventures of micro-multinationals. It takes a phenomena-based research approach to assess how digital platform ecosystems provide significant advantages over traditional networked business models, and, specifically, how micro-multinationals, characterized by their limited resources, develop dynamic digital capabilities and utilize these platforms as effective vehicles for expanding businesses globally. Triangulating literature on inter-firm networks, platform ecosystems, international business, and trust, the paper demonstrates how algorithmic relationships, embedded in smart contracts, offer opportunities as well as pose challenges to participants in digital platform ecosystems. We observe that smart contracts and the evolving algorithmic relationships do introduce process efficiency, but at the same time, the question of trust and trustworthiness affects the overall effectiveness of the ecosystems. This limits the micro-multinationals from taking full advantage of technology, considering the limited resources available to them for overseas deployment. The opportunity space for smart contracts is decided by trust level and synergy in resources and processes among platform participants. This opportunity space is further moderated by the following: (a) a lack of supporting legal frameworks, (b) adaptive learning processes, (c) complexity and time-criticality of inter-organizational processes, and (d) perceived risks in inter-organizational processes. The propositions and the emergent trust framework, developed from this synthesis, provide valuable insights into how factors associated with trust and trustworthiness contribute to the adoption of smart contracts in platform ecosystems and, specifically, how these factors enable micro-multinationals to pursue internationalization opportunities.