Community Empowerment in Decentralized Autonomous Organizations: A Configurational Approach to Decentralization

Abstract

While digital platforms make up a significant share of all enterprises in today's market, they are criticized for eliciting platform dominance and monopolistic behavior. Decentralized autonomous organizations (DAOs) use blockchain technology to coordinate platforms that enable users to participate in governance through decentralized, collective decision-making. Although DAOs are designed to drive member participation in governance, some DAOs do not achieve full decentralization and non-hierarchical decision-making. To understand why this occurs, we use empowerment theory to propose that decentralization is contingent upon three empowering practices: autonomy, transparency, and communication openness. Based on fuzzy-set qualitative comparative analysis (fsQCA) of 20 DAO cases, we introduce "deliberative empowerment" as a configuration of organizational practices associated with high levels of community participation in DAO governance. Our findings indicate that although autonomy is a precondition for successful decentralization, equally important is the active utilization of deliberative spaces that encourage communication and discussion among DAO members.