BLOCKCHAIN TECHNOLOGY AND PERFORMANCE OF SMART CONTRACTS IN PROCUREMENT OPERATIONS: A CASE STUDY OF EXPORT PROCESSING ZONES AUTHORITY IN KENYA

Abstract

Blockchain technology has emerged as a transformative innovation with diverse global applications beyond decentralized monetary transactions, extending into finance, governance, healthcare, and supply chain management. Despite its potential, the adoption of blockchain-based smart contracts continues to face challenges, including regulatory uncertainty, security vulnerabilities, and integration difficulties within established business models. This study examined the effect of blockchain technology on the performance of smart contracts in procurement operations at the Export Processing Zones Authority (EPZA) in Kenya, focusing on corporate transparency and decentralization. Grounded in the Technology Acceptance Model (TAM), Transaction Cost Theory (TCT), the Resource-Based View (RBV), and the Diffusion of Innovation (DOI) Theory, the research utilized structured digital questionnaires administered via Google Forms to a target population of 210 officers, including procurement, IT, finance, and compliance staff across EPZA’s Athi River, Mombasa, and Kisumu branches. Multiple regression analysis using SPSS v28 was conducted to determine the relationship between blockchain technology and smart contract performance. The findings revealed that decentralization positively influences procurement performance by reducing dependence on intermediaries and minimizing manipulation in contract approvals. The results further support the view that blockchain-driven smart contracts enhance procurement efficiency, lower operational costs, and improve process integrity. However, the study also identified persistent challenges such as limited technical expertise, inadequate digital infrastructure, and weak legal frameworks that hinder full-scale adoption across African contexts. It concludes that blockchain technology possesses significant transformative potential for procurement operations through enhanced automation, security, and transparency and recommends that policymakers, practitioners, and scholars collaborate to strengthen regulatory frameworks, build institutional capacity, and invest in digital infrastructure to unlock the full benefits of blockchain-based smart contracts in procurement and other sectors.