Dealing with blame in digital ecosystems: The DAO failure in the Ethereum blockchain

Abstract

This study investigates an emblematic case of innovation failure in blockchains as to understand how turbulent episodes of innovation failure shape the socio-technical organization of digital ecosystems. The Decentralized Autonomous Organization (The DAO) was an alternative model of organizational governance based on the Ethereum blockchain which registered one of the biggest successes in crowdfunding history and fell victim to one of the biggest hacks of the crypto world. Our empirical qualitative study combines interviews, archival and social media data to develop a grounded theory on how innovation failure was framed and dealt with in the Ethereum ecosystem. Our findings highlight the key role of blaming processes following innovation failures in digital ecosystems. Building on blame theory, we theorize about the interplay between human and technological blaming, and document a process called multi-distributed blaming whereby actors circle between multiple blames to an ecosystem's human and technological components, with multi-level (i.e., organizational and technological) consequences for the ecosystem. By adopting a socio-technical perspective, our findings contribute to blame theories, to the literature on digital ecosystems and to the scant research on blockchain organization.