Nicholas M. Garcia, an information systems PhD candidate at NYU Stern, studies the management and governance of novel technologies such as blockchain and data science. He focuses on how technological features co-evolve with organizational politics and cultural behaviors.
My research shows that blockchain-mediated governance is hindered by high transaction costs of monitoring and evaluating member’s activities. Attempts to place a “price” on pre-specified work essentially brings a market-style system within organizations that previously incentivized contributions via formal roles or informal social capital.
The degree of real decentralization is limited by the “Iron law of oligarchy”: key members responding to ad hoc challenges require a wide degree of latitude, which is difficult to encode, specify, and “price” ahead of time. Thus, blockchain systems may be most useful for standardized or codifiable tasks, especially where there is low trust among parties or a fear of government censorship.
When looking at the developers of blockchain initiatives, we find the presence of strong cultural worldviews that strongly influence the development process. The dominant stances among blockchain practitioners include: libertarian, egalitarian, engineering-technical, and financial-trader. We find that rather than “talking past” each other as prior research would predict, blockchain practitioners with different stances spend lots of time considering alternate points of view and trying to find win-win solutions. I find that the lack of a more practical or human-centered worldview contributes to products that may work technically and ideologically, but are not adopted by users. In some cases, lawyers in the blockchain space were able to provide this humanistic view, especially when considering inter-organizational realities.
Finally, we find that as developers realize they must implement a “stealth” re-centralization of power due to the Iron law of Oligarchy, they first attempt to solve it theoretically using game-theoretic mechanism design, but as deadlines loom or funds run out, they opt for an “agile” mentality, and release the product to users, hoping to debug and balance out unanticipated problems as they emerge.
