The rise of Artificial Intelligence (AI) and the Fourth Industrial Revolution has prompted a critical re-evaluation of traditional governance mechanisms for managing complex interfirm relationships. In this context, digital governance, encompassing AI-driven tools and blockchain technology, has emerged as a promising solution to address the intricate interdependencies inherent in supply chain networks. This study investigates blockchain's role as a governance mechanism in driving value creation—conceptualized as common benefits, private benefits from cooperation, and private benefits from competition—within vertical coopetition, with a particular emphasis on small firms. Using data from 236 Swedish small technology manufacturing firms, the findings reveal that blockchain significantly enhances value creation by overcoming key challenges: facilitating partner selection independent of prior trust or relationships, ensuring transparent and tamper-proof agreements during negotiations, and automating agreement enforcement during execution. The results demonstrate that blockchain governance partially mediates the relationship between vertical coopetition and value creation. By integrating digital governance into the coopetition discourse, this study offers theoretical advancements and practical insights, highlighting how small firms can leverage blockchain governance to achieve superior value in vertical coopetition alliances.
