How blockchain technology can enhance trust in social business
ONGOING RESEARCH: Applied technology
Social Business is defined by the Nobel Laureate Professor Muhammad Yunus as a business created and designed to address a social problem. Returns from investments are used for socio-economic developmental causes of the underprivileged communities.
Social businesses have been successfully adopted by many Non-Governmental Organizations (NGOs) in countries like India, Bangladesh and other developing countries.
As an example, such countries receive substantial financial aid from foreign countries and international agencies to build climate change resilience. Currently, Bangladesh is expecting 30% of its development budget from foreign countries and international agencies.
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A significant portion of these funds is spent through NGOs who occupy the central role in the development ecosystem. The growth of NGOs has been exponential, and the active NGO sector can be attributed to impressive development outcomes in Bangladesh.
However, the quality of the governance is very varied in the NGO sector. International actors have identified several governance challenges, such as lack of transparency, accountability, community participation and conflict of interests in the climate funds utilization.
It is also identified a corruption risk as one of the main challenges of this management due to the non-availability of information and lack of openness of information to all stakeholders.
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Blockchain technology for Social Business
We are pursuing a project to explore and investigate the usage of blockchain technology for Social Business in enhancing the trust, transparency, and auditability of non-governmental (NGO) and non-profit organizations, especially focusing on developing countries.
In previous research, we have investigated how new technology can aid developing countries to gain competitive advantage and deploy innovative solutions, and how it can be used to add value to existing web technologies. Trust, technology maturity and adoption were highlighted as important factors for success.
During recent years, blockchain technology has attracted significant attention from both academics and industries. Due to its disruptive nature, it has led to the evolution of many decentralized applications in multiple domains such as finance, healthcare, supply chains and others.
Key aspects of blockchain technology
A blockchain can be described as a database, with the sequences of blocks containing a complete list of data/transactions. Led by crypto currency the utilisation of blockchain for commercial purposes is hiding in the mist of technology evangelists and early adopters.
Blockchain technology consists of five key aspects:
- Immutability (data cannot be changed or deleted),
- Decentralization (no single entity can achieve control over the network),
- Transparency (data available to all),
- Pseudonymity (security of participant’s identity) and
- Chronology (time-stamped and traceable).
Transparency relates to completeness and accuracy of information, whereas accountability in case of NGOs reflects in terms of auditability and verifiability of their operations. For NGOs transparency and accountability are vital factors for building trust towards them.
Blockchains could provide several advantages to NGOs. Building on previous results on autonomous services, a permissioned blockchain with public visibility can register all the operations/transactions of NGOs and the public visibility aspect allows anyone to connect to the network to verify public information.
Simultaneously, pseudonymity and cryptographic aspects of blockchain help securing non-public information from the public visibility and this information can only be verified by the authorized users such as auditors and regulatory authorities.
While immutability aspect of blockchain ensures that nobody can modify the records, the decentralised aspect makes sure that no single entity can control the whole network.
Auditors, regulatory authorities, donors (international agencies) and other stakeholders can participate in the underlying blockchain activities voluntarily. And in that case, auditing and monitoring of activities can be performed on a continuous basis rather than periodically, which helps in reducing the political influence and corruption in development projects and to achieve compliance with regulations.
Being able to audit and verify the operations since the beginning, provides an opportunity to verify whether there is any discrimination, partiality or conflict of interest in the NGOs’ operations.
Enabling trust through innovative technology
Thus, the application of blockchain technology confers the above advantages and help NGOs to enhance transparency and accountability in their operations and thereby leads to enhanced trust.
The project use blockchain technology to establish trust between stakeholders in various types of Social Business including mobileHealth using scenarios.
In addition, the project plans to build an open source framework and platform for developing the blockchain-based applications, especially for NGOs located in developing countries and focussed on implementing socio-economic development projects for the upliftment of the underprivileged communities.
By this, we enable trust, transparency, and accountability through innovative use of disruptive technology.
- Woldmariam, M.F., Ghinea, G., Atnafu, S. and Groenli, T.M., 2016. Monetary practices of traditional rural communities in Ethiopia: implications for new financial technology design. Human–Computer Interaction, 31(6), pp.473-517.
- Lizarralde, I., Mateos, C., Zunino, A., Majchrzak, T.A. and Grønli, T.M., 2020. Discovering web services in social web service repositories using deep variational autoencoders. Information Processing & Management, 57(4), p.102231.
- Mikkelsen, Anders, Tor-Morten Grønli, Damian A. Tamburri, and Rick Kazman. "Architectural principles for autonomous microservices." (2020).
This article is first published in the Innovation Issue of Kunnskap Kristiania (link to E-Magazine), released on 19th of August 2021.
Text: Professor Tor-Morten Grønli, School of Economics, Innovation and Technology, Kristiania University College. Grønli is head of Mobile Technology Lab (MOTEL).
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