Entrepreneurial firms in the crypto era: adoption trajectories and innovation dynamics Open Access

Since the emergence of Bitcoin in 2009, cryptocurrency has significantly transformed business operations by offering decentralized and secure digital financial alternatives (El Chaarani et al., 2024; Urquhart and Yarovaya, 2023). Other popular cryptocurrencies such as Ethereum, Ripple, Litecoin, Neo and Tron have expanded the range of digital currencies, enabling businesses to make direct transfers without relying on traditional banking intermediaries (Conti et al., 2018). These innovations streamline financial processes, provide an alternative to conventional currencies and enhance payment methods, substantially benefiting businesses (Koroma et al., 2022).

Blockchain technology is at the core of cryptocurrency, a decentralized digital ledger secured through cryptographic techniques (Urquhart and Yarovaya, 2023). Transactions occur on cryptocurrency exchanges such as Binance, Coinbase and KuCoin, validated by a network of computers (nodes) using mining or other consensus mechanisms (Kumar and Rani, 2024). Cryptocurrencies like Bitcoin have a finite supply regulated by predetermined algorithms, stored in wallets secured by cryptographic keys, ensuring security, transparency and trust in peer-to-peer networks, thus contributing to a resilient global financial system (Udokwu et al., 2021).

Cryptocurrency adoption addresses traditional financial challenges by enhancing transparency, reducing transaction costs and enabling efficient cross-border transactions and smart contract automation (Saiedi et al., 2021). However, despite growing institutional interest, cryptocurrency adoption among entrepreneurial firms—especially small and medium—remains limited. This suggests that significant barriers prevent full-scale adoption despite its potential benefits (Al-Amri et al., 2019).

Entrepreneurial firms, characterized by their focus on innovation, risk-taking and adaptability, are uniquely positioned to adopt new technologies (Abaddi, 2024a; López-Muñoz et al., 2023; Sitaridis and Kitsios, 2022). However, regulatory uncertainty, perceived price volatility and technical complexities hinder widespread cryptocurrency adoption (Schaupp and Festa, 2018). In particular, entrepreneurs’ characteristics—such as risk tolerance, digital innovation and openness to new technologies like blockchain—are critical to determining adoption decisions (Abaddi, 2024a). In developing economies, digital literacy gaps, regulatory uncertainties and perceived risks present significant obstacles to adoption (Islam et al., 2023; Malik et al., 2024).

Cryptocurrency usage varies based on objectives: individuals typically focus on investment and decentralized financial services, facing challenges like volatility and security risks (Jegerson et al., 2023). In contrast, Bhimani et al. (2022) argued that entrepreneurial firms emphasize operational efficiency, particularly in cross-border payments, encountering issues such as integration costs, regulatory compliance, system integration and security protocols. Entrepreneurs in these firms also face challenges related to accessing digital transformation assets and fostering a culture of innovation (Islam et al., 2023). While entrepreneurial firms benefit from blockchain autonomy and digital infrastructure, entrepreneurs in developing countries rely on individual capabilities to address these challenges (Abaddi, 2024b). Despite these obstacles, entrepreneurial mindsets remain key to overcoming barriers and leveraging opportunities in the digital currency space.

Scholarly research extensively covers blockchain technology and cryptocurrency, often focusing on Western contexts (Arias-Oliva et al., 2019; Bhimani et al., 2022) and diverse backgrounds (Taherdoost, 2022; Udokwu et al., 2021). Studies frequently examine consumer behaviors and intentions toward adopting blockchain-based cryptocurrencies (Jegerson et al., 2023; Koroma et al., 2022). For instance, Chen et al. (2022) scrutinized individual engagement in cryptocurrency transactions, while Almajali et al. (2022) studied factors influencing consumer usage. Islam et al. (2023) explored determinants of cryptocurrency adoption, including consumer attitudes and awareness, and Al Reshaid et al. (2024) investigated intentions to adopt cryptocurrency for online shopping. However, these studies primarily focus on consumer behavior rather than adoption factors specific to businesses, industries and clientele.

Our study addresses this gap by examining the factors influencing cryptocurrency adoption within entrepreneurial firms and their customers’ perceptions, particularly in developing nations like Pakistan. In Pakistan, entrepreneurial firms are defined by characteristics such as an employee count of up to 250 and an annual turnover of up to PKR 800 million. These firms are vital to the country’s economy, contributing significantly to employment generation and industrial growth (Nazir et al., 2022). According to the Small and Medium Enterprise Development Authority SMEDA (2023), small firms typically employ up to 50 people with a yearly turnover of up to PKR 150 million, while medium firms employ 51 to 250 people with an annual turnover ranging from PKR 150 million to PKR 800 million. Despite their economic significance Nazir et al. (2024a) argued that these firms face challenges such as limited access to financing for technological advancements, regulatory hurdles and technological constraints.

The integration of cryptocurrency in Pakistan faces several barriers, particularly for younger, tech-savvy entrepreneurs seeking innovative financial solutions (Malik et al., 2024). Regulatory uncertainty and the absence of a clear legal framework hinder widespread adoption, while cultural and religious concerns further limit acceptance. However, opportunities exist in the form of increasing digital literacy and the potential for blockchain technology to enhance financial inclusion and facilitate cross-border transactions. This highlights the need for comprehensive research to explore how entrepreneurial firms in developing nations can adopt cryptocurrencies and navigate both internal and external challenges. Our study aims to answer the following research questions:

1. What factors impede entrepreneurial firms from adopting cryptocurrency innovation?

2. How do entrepreneurial characteristics influence cryptocurrency adoption in firms?

The study employs qualitative phenomenological research methods, using the extended Technology-Organization-Environment (TOE) framework (Tornatzky and Fleischer, 1990), supplemented by social cognitive theory (SCT) (Bandura, 1986), to explore these factors. The research provides valuable insights into the adoption barriers and strategies for overcoming challenges within Pakistan’s digital economy. By exploring the intersection of entrepreneurial traits, innovation dynamics and cryptocurrency adoption, this study contributes to both the entrepreneurship and innovation literature, offering actionable recommendations for different stakeholders to foster digital transformation.

This paper begins by introducing the research context, gaps and objectives. It then reviews relevant literature based on the extended TOE-I and SCT framework. The methods section outlines the research design, followed by a presentation of the findings and thematic analysis. Finally, the discussion leads to the conclusions, highlighting the study’s theoretical and practical contributions and offering recommendations for enhancing cryptocurrency adoption in entrepreneurial firms.

The adoption of cryptocurrency innovation has been a focal point of growing academic research, particularly as digital financial technologies continue to reshape business practices worldwide (Urquhart and Yarovaya, 2023). The role of entrepreneurial firms in adopting cryptocurrency is especially significant, as these firms are often early adopters of new technologies, offering a window into the challenges and opportunities presented by digital currencies (Al-Amri et al., 2019; Chen et al., 2022). This review synthesizes existing studies to examine the various factors and methodologies used to explore cryptocurrency adoption across global contexts (see Table 1). By comparing these studies, we identify common trends, regional discrepancies and evolving insights into the cryptocurrency adoption process within entrepreneurial firms.

Studies investigating cryptocurrency adoption span multiple markets with varying dynamics. In India, Kumar and Rani (2024) applied the Diffusion of Innovation theory and Partial Least Squares Structural Equation Modeling (PLS-SEM) to understand cryptocurrency adoption among retail consumer investors. The research highlights the critical role of regulatory frameworks, suggesting that clear regulations help mitigate the uncertainties and risks associated with adopting cryptocurrency. Similarly, in the UAE (United Arab Emirates), Jegerson et al. (2024) employed the Unified Theory of Acceptance and Use of Technology (UTAUT2) to explore internal factors influencing consumer adoption of cryptocurrencies, particularly for remittances. The study found that performance expectations and consumer innovativeness were key drivers of cryptocurrency adoption, particularly among tech-savvy populations.

In Australia, Sohaib et al. (2020) explored individual interest in cryptocurrencies using the Technology Readiness and Technology Acceptance Model (TRAM), identifying perceived ease of use and perceived usefulness as significant factors in consumer decision-making. On the African continent, a study by Koroma et al. (2022) focused on trust dynamics in adopting cryptocurrencies. They emphasized that building user trust is vital for fostering widespread adoption, especially in emerging markets. Similarly, in France, El Chaarani et al. (2024) noted that financial literacy and ease of use are significant in determining how consumers adopt and utilize cryptocurrency.

Despite these valuable insights, significant gaps remain, particularly regarding cryptocurrency adoption in underdeveloped contexts like Pakistan. Much of the existing research on cryptocurrency adoption has focused on consumer behavior (Al Reshaid et al., 2024; Ali et al., 2020; Albayati et al., 2020) and in developed economies (Arias-Oliva et al., 2019; Huang, 2019; Jegerson et al., 2023), overlooking the unique socio-economic and regulatory challenges that developing countries face. According to the Global Innovation Index (2023) report, Pakistan ranks 116th in innovation inputs globally, highlighting the country’s struggle to adopt innovation effectively. Furthermore, there is a lack of research addressing entrepreneurs’ innovation traits and how internal and external factors impact cryptocurrency adoption, particularly in the context of entrepreneurial firms.

Our study aims to fill this gap by examining cryptocurrency adoption within entrepreneurial firms in Pakistan. Unlike previous studies, which primarily employ quantitative approaches, our research uses a phenomenological qualitative methodology. This approach allows us to uncover the nuanced experiences of entrepreneurial firm owners and managers, focusing on their motivations, barriers and decision-making processes regarding cryptocurrency adoption. We aim to explore how cryptocurrency adoption can contribute to financial inclusion and enhance business operations within Pakistan’s unique socioeconomic and regulatory environment.

Additionally, by integrating the TOE framework with SCT, our study links global insights with local realities. This theoretical integration provides a comprehensive lens to understand the dynamic factors influencing cryptocurrency adoption among entrepreneurial firms in Pakistan. Thus, our study contributes to a more holistic understanding of the interplay between entrepreneurial characteristics, internal and external factors, and the decision-making processes that shape cryptocurrency adoption.

Numerous researchers and industry experts have employed various theories, models and frameworks to delve into cryptocurrency-related topics. For example, Islam et al. (2023) applied the Technology Acceptance Model (TAM) to explore factors influencing cryptocurrency adoption in Bangladesh, while Almajali et al. (2022) utilized the extended Theory of Reasoned Action (TRA) model to study intentions to use cryptocurrency in Jordan. While these models provide valuable insights into individual acceptance of innovations, Chen et al. (2022) argued that they may oversimplify the complex decision-making processes within organizations regarding cryptocurrency adoption.

Organizational factors such as leadership support and digital resource availability, crucial in cryptocurrency adoption, often need to be adequately addressed by TAM and TRA models (Gunawan and Novendra, 2017). Furthermore, these models overlook external influences such as regulatory frameworks, cultural norms, and economic conditions, significantly impacting cryptocurrency adoption (Taherdoost, 2022). While TAM and TRA are insightful for understanding individual-level adoption (Islam et al., 2023), their application to entrepreneurial firms is limited by their focus on individual perceptions and insufficient consideration of organizational and external environmental factors (Al-Amri et al., 2019).

The TOE framework, introduced by Tornatzky and Fleischer (1990) for organizational technology adoption, offers a more comprehensive approach to studying cryptocurrency adoption in entrepreneurial firms by integrating internal and external perspectives. As further described by Awiagah et al. (2016) and Nguyen et al. (2022), it provides a robust theoretical foundation for examining innovation adoption across organizational and external levels, incorporating diverse viewpoints.

Existing literature on cryptocurrency adoption explores multiple dimensions impacting the integration of digital currencies in various contexts, emphasizing technological (Nadeem et al., 2021), organizational (Almajali et al., 2022) and environmental factors (Bhimani et al., 2022). Collectively, these dimensions contribute to a comprehensive understanding of the drivers of cryptocurrency adoption, offering valuable insights for businesses, policymakers and researchers.

To fully understand the factors influencing cryptocurrency adoption in entrepreneurial firms, it is essential to expand the TOE framework by incorporating the “innovation characteristics of entrepreneurs.” The decision to adopt cryptocurrencies in entrepreneurial firms is deeply influenced by personal attributes, such as risk tolerance, attitudes toward innovation, and entrepreneurial orientations of business owners and managers (Marcati et al., 2008). These individual-level factors align with SCT, which emphasizes the reciprocal interaction between personal, behavioral and environmental factors in shaping decision-making processes (Neumeyer et al., 2019; Zahra et al., 2023).

The integration of entrepreneurial characteristics into the TOE framework acknowledges that innovation adoption is influenced not only by organizational factors, such as infrastructure and resources (Tornatzky and Fleischer, 1990), but also by the individual’s cognitive traits and motivations (Nazir et el., 2022). Factors like openness to new technologies, digital savviness and willingness to take risks are crucial in how entrepreneurs embrace emerging technologies (Abaddi, 2024a). This interaction between individual (entrepreneurial) and organizational (TOE) factors offers a more comprehensive view of innovation adoption, highlighting the role of entrepreneurs as key decision-makers and change agents in the adoption process (Nguyen et al., 2022).

However, previous studies have not extensively explored the “innovation characteristics of entrepreneurs” in the context of cryptocurrency adoption, particularly within Pakistan. Therefore, our research proposes an extended theoretical framework, TOE-Innovation, which introduces a fourth dimension: the innovative characteristics of entrepreneurial firm entrepreneurs. This extension recognizes that owners and managers strongly influence management systems and greatly influence strategic innovation decisions (Taghizadeh et al., 2022), including cryptocurrency adoption to improve financial inclusion and operational efficiency (Sitaridis and Kitsios, 2022). To support this extension, we integrate SCT to align with the study’s research objectives and questions.

SCT, formulated by psychologist Albert Bandura, underscores the dynamic interplay between observation, self-efficacy and environmental factors in shaping human behavior (Bandura, 1986). Within organizational innovation adoption, SCT suggests that individuals, such as entrepreneurs, observe and learn from others within their social networks, including businesses that have successfully adopted innovations (Gemmell et al., 2012). They assess the benefits and challenges of these innovations and make adoption decisions based on these observations (Tri Harinie, 2017).

Self-efficacy—the belief in one’s capability to perform a specific behavior—is also essential in SCT (Bajaba et al., 2022). As per Santos et al. (2010) entrepreneurs with high self-efficacy are more likely to explore and adopt technologies like cryptocurrencies, confident in their skills to understand and implement them effectively within their organizations.

SCT also stresses social and environmental impacts on behavior (Tri Harinie, 2017). Liu and Xi (2022) found that entrepreneurs are influenced by their social networks, industry peers and external stakeholders when deciding on innovation adoption. External factors such as government regulations, market dynamics and technological advancements also play significant roles (Schaupp and Festa, 2018). Thus, SCT explains how entrepreneurs observe, evaluate their self-efficacy and analyze contextual factors affecting innovation adoption, including bitcoin adoption in entrepreneurial firms (Beliaeva et al., 2020; Ince et al., 2023).

Our study integrates the TOE framework with an extended focus on the “innovation characteristics of entrepreneurs” and SCT’s three dimensions: observation, self-efficacy, and social and environmental factors—to investigate cryptocurrency adoption in entrepreneurial firms. Focusing exclusively on the intersection of the extended TOE-I dimension and environmental factors with SCT, the study examines how individual entrepreneurial traits interact with environmental influences, emphasizing their critical role.

Entrepreneurs draw on their social networks to observe and assimilate insights into innovation adoption, aligning with the extended TOE-I dimension. Networking and collaboration within peer groups facilitate knowledge exchange and collective decision-making (Marcati et al., 2008), fostering an environment conducive to cryptocurrency adoption within entrepreneurial firms (Li, 2020).

High self-efficacy among entrepreneurs intersects with the extended TOE-I dimension, fostering openness to explore and integrate innovations like cryptocurrencies. Confident in their digital competencies (Liu and Xi, 2022), entrepreneurs are better positioned to adopt and implement such technologies effectively within their organizations (Taghizadeh et al., 2022).

Social and environmental factors, including social influences, industry dynamics and regulatory frameworks, influence entrepreneurs' decisions regarding innovation adoption (Balconi et al., 2023; Nguyen et al., 2022). These factors correspond to the environmental context of the TOE framework, collectively shaping cryptocurrency adoption within entrepreneurial firms, particularly in underdeveloped countries like Pakistan. By integrating the TOE-I framework with an extended focus on the “innovation characteristics of entrepreneurs,” environmental factors, and SCT’s three dimensions, our study provides a comprehensive understanding of the factors driving cryptocurrency adoption in entrepreneurial firms, as outlined in the conceptual framework (refer to Figure 1). This integrated approach considers both entrepreneurs' environmental context and individual characteristics, offering insights into the complex dynamics of innovation adoption within entrepreneurial firms.

The adoption of cryptocurrency by entrepreneurial firms is influenced by technological, organizational and environmental factors, as outlined in the TOE framework (Tornatzky and Fleischer, 1990).

Three key technological factors impact entrepreneurial firms: security protocols (Nadeem et al., 2021), digital technology infrastructure (Sohaib et al., 2020) and system integration (Nguyen et al., 2022). Security, defined as protecting data and systems from threats, is crucial. For instance, research in China highlights the need for stringent security measures to protect businesses and users from potential losses due to cyberattacks (Nadeem et al., 2021). This concern is especially pertinent for entrepreneurial firms, which may need more robust cybersecurity measures. In Australia, adopting cryptocurrency requires up-to-date digital infrastructure, including compatible point-of-sale (POS) systems and payment gateways (Sohaib et al., 2020). Similarly, research from Vietnam shows that integrating cryptocurrency transactions demands significant technological modifications to ensure compatibility with existing systems like accounting and inventory management (Nguyen et al., 2022).

The adoption of cryptocurrency is significantly influenced by organizational factors, including the availability of resources (Al Hadwer et al., 2021). In the UAE, access to digital transformation resources was cited as crucial (Jegerson et al., 2023), while in India, financial resources were mentioned as a pre-requisite for investing in cryptocurrency infrastructure and training (Kumar and Rani, 2024). In Pakistan, skilled personnel were essential for effectively adopting new technologies (Nazir et al., 2024a).

Organizational structure also matters; flexible structures facilitate quicker decision-making and the implementation of cryptocurrency integration (Saiedi et al., 2021). Effective communication within the organization departments ensures all stakeholders are informed about adoption plans (Malik et al., 2024). Additionally, in Jordan, Almajali et al. (2022) found that a culture prioritizing innovation and risk-taking fosters an environment conducive to adopting new technologies such as cryptocurrencies.

Environmental factors include the regulatory environment, government digital strategies and industry characteristics. Bhimani et al. (2022) found that clear digital regulations and supportive legal frameworks encourage cryptocurrency adoption by providing security and compliance. The innovation economy in Bangladesh received a significant boost from government programs aimed at digital strategy (Islam et al., 2023). Policies promoting bitcoin adoption, as seen in Indonesia, created a favorable environment for businesses to innovate (Gunawan and Novendra, 2017). The intersection of TOE external factors and SCT suggests that entrepreneurs are more likely to adopt innovations if regulatory and governmental support exists. In Africa, industrial factors profoundly influenced the adoption of Bitcoin, suggesting that industries embracing technology breakthroughs provide a favorable climate for innovation (Koroma et al., 2022).

This study investigates how external factors enable individual Pakistani entrepreneurs to adopt cryptocurrency within their entrepreneurial firms. Cutting-edge technology, internal organizational challenges and external environmental factors influence cryptocurrency adoption.

The study extends the TOE framework for several reasons:

1. Many entrepreneurial businesses in Pakistan are managed by individual entrepreneurs with the authority to adopt innovations like cryptocurrency, facing unique operational and environmental challenges (Marcati et al., 2008).

2. In sole proprietorships or small teams, Li (2020) argued that the decisions of individual entrepreneurs substantially impact the business’s adoption of technology, including cryptocurrency.

3. Entrepreneurs must approve financial investments in technology, like acquiring equipment for cryptocurrency (Taherdoost, 2022), identify opportunities for integration (Abaddi, 2024a) and establish the necessary infrastructure (Saiedi et al., 2021).

4. Young Pakistani entrepreneurs in entrepreneurial businesses need more financial resources, less access to information and expertise, and a smaller customer base (Nazir et al., 2024a, b). Understanding how they navigate these challenges in cryptocurrency adoption provides valuable insights.

Investigating the “innovation characteristics of entrepreneurs” as an additional element while considering the TOE-I and SCT frameworks’ overlapping viewpoints is essential. By leveraging innovation and entrepreneurship, entrepreneurial firms in Pakistan can navigate the complexities of cryptocurrency adoption, capitalizing on its potential financial advantages for their operations and customer base.

Entrepreneurs’ digital literacy, adaptability and flexibility, and networking and collaboration are critical for technology adoption. For instance, proficiency in blockchain technology is crucial for enhancing financial performance among Malaysian small business owners (Jalil et al., 2022). In France, entrepreneurial adaptability and flexibility impact technology adoption significantly (Alegre et al., 2013). Entrepreneurs who adapt their business models to integrate new technologies are more inclined to adopt state-of-the-art technologies (Akpan et al., 2022). Networking and collaboration provide insights into peers’ experiences with blockchain technology and cryptocurrency adoption (López-Muñoz et al., 2023).

The intersection of the TOE-I and SCT frameworks suggests that entrepreneurs with digital literacy are better positioned to adopt cryptocurrency innovations (Bajaba et al., 2022). Within the TOE-I framework, technological readiness, including infrastructure and security measures, directly impacts adoption, while organizational factors, such as skilled personnel and financial investment, shape firms' capacity to integrate cryptocurrency (Nazir et al., 2022). From an SCT perspective, networking and peer influence enhance social learning, increasing the likelihood of adoption (Li, 2020). Entrepreneurial firms are motivated by cost-effective transactions, operational efficiency and access to decentralized finance (Islam et al., 2023; Nguyen et al., 2022). However, technological barriers, such as inadequate infrastructure and security concerns (Nadeem et al., 2021; Sohaib et al., 2020), organizational constraints, and regulatory uncertainty (Bhimani et al., 2022) hinder adoption. Additionally, innovation traits like adaptability and digital literacy influence adoption, aligning with SCT’s emphasis on self-efficacy and environmental factors (Alegre et al., 2013).

The literature indicates that entrepreneurial firms need to consider technological, organizational and environmental factors and entrepreneurs’ innovation characteristics when contemplating cryptocurrency adoption. This research highlights the importance of understanding these factors using the TOE-I and SCT frameworks. This will enable Pakistani entrepreneurial firms to make informed decisions and align with internal objectives and the broader financial landscape.

This study employed an interpretive qualitative phenomenological approach to explore Pakistani entrepreneurs’ perspectives and experiences regarding cryptocurrency adoption in entrepreneurial firms, as suggested by Alase (2017) and Emiliussen et al. (2021). As advocated by Frechette et al. (2020), the phenomenological methodology is particularly suited for understanding and analyzing individuals’ experiences, perceptions and motivations related to cryptocurrency adoption. Semi-structured interviews were conducted with entrepreneurs familiar with technology adoption, utilizing purposive (Campbell et al., 2020) and snowball sampling methods (Creswell and Creswell, 2018). The aim was to achieve a nuanced understanding of factors influencing cryptocurrency adoption, alongside entrepreneurial traits, through in-depth interviews and observations involving entrepreneurs and stakeholders within selected entrepreneurial firms aligned with the research objectives and framework.

To align with the study’s objectives and questions, purposive sampling was used to select entrepreneurial firms in Pakistan that have adopted digital innovations or are considering adopting cryptocurrency for financial inclusion. This method was chosen for the reasons provided by Clarke and Braun (2016), as it allows for the intentional selection of participants with relevant experience or insights into the topic. Therefore, we ensured that the sample was directly related to the study’s focus on entrepreneurial traits and influencing factors.

Additionally, snowball sampling was employed to identify further participants through referrals from initial participants. This method, advocated by Maharjan et al. (2024), helped expand the sample by leveraging the networks of those already involved in cryptocurrency adoption, ensuring a broader representation of perspectives. By using both methods, we could reach a sample that was not only relevant but also diverse, thus enhancing the depth and credibility of the study’s findings (Creswell and Creswell, 2018) (refer to Table 2).

The following criteria were used to target entrepreneurs for data collection and interviews (refer to Table 2):

1. Entrepreneurial firms in Pakistan that are either embracing innovations, including cryptocurrency or considering doing so were selected. As explained earlier in the introduction, the criteria for defining these enterprises were established based on guidelines from government organizations and industry associations such as the Small and Medium Enterprise Development Authority (SMEDA) and the Local and Regional Chambers of Commerce (RCC).

2. The study focuses on entrepreneurs, managers exhibiting characteristics and traits expected to influence their attitudes and decisions regarding cryptocurrency innovation adoption. These traits were integral to the participant selection criteria, as outlined by Nazir et al. (2024b).

3. Participants needed a certain level of familiarity with innovation, adoption, and technology related to cryptocurrency. This familiarity, either through using it for business purposes within Pakistan or internationally or recognizing its potential impact on their firms, provides valuable perspectives on factors facilitating or hindering cryptocurrency innovation adoption (Koroma et al., 2022).

4. The adoption of digital innovations, including cryptocurrency, among entrepreneurial firms in Pakistan is still in its early stages, but there is a growing interest, particularly in sectors such as IT and e-commerce. While exact adoption rates still need clarification, studies suggest that many firms are considering or exploring digital technologies to enhance financial inclusion and improve operational efficiency (Nazir et al., 2022, 2024a). Younger entrepreneurs, in particular, are more inclined to adopt fintech solutions, signaling a shift toward embracing blockchain and cryptocurrencies (Malik et al., 2024). According to (PIAIC) Presidential Initiative for Artificial Intelligence and Computing (2024), the President of Pakistan has launched an initiative to help promote education, research, and business opportunities in Artificial Intelligence, Blockchain and Cloud-based computing. An increase in blockchain trading suggests that interest in financial inclusion through digital technologies is rising; therefore,

5. The sample for this study included entrepreneurial firms from diverse industries, such as manufacturing, services, technology and finance, to ensure a comprehensive range of perspectives. These sectors are crucial to Pakistan’s economy, trade and tax revenues (Nazir et al., 2022). A total of 50 entrepreneurial firms were selected, 30 of which had already adopted digital innovations, and 20 were considering cryptocurrency for financial inclusion. The selection process was conducted in phases: initially, entrepreneurial firms were identified through government bodies like SMEDA and industry associations–RCC. After screening, firms that met digital innovation and cryptocurrency adoption criteria were included.

6. The sample of entrepreneurial firms in Pakistan was distributed across four key cities—Karachi, Lahore, Islamabad, and Rawalpindi—to ensure a balanced representation from different regions. In Karachi, entrepreneurial firms were selected, comprising three small firms and three medium firms. Lahore contributed six entrepreneurial firms, four small and two medium firms. In Islamabad, five entrepreneurial firms were included, consisting of four small firms and one medium firm. Rawalpindi had three entrepreneurial firms, one small and two medium firms. This distribution ensures the research captures various perspectives on digital innovation and cryptocurrency adoption across diverse business sizes and locations.

7. For effective data analysis, participants communicated in English and/or Urdu (for transcription). Interviews were held in quiet, distraction-free settings and lasted 45 min to an hour. Nonverbal cues like body language and facial expressions were noted to gauge participants’ comfort levels and emotions, particularly regarding sensitive topics like cryptocurrency adoption and financial inclusion.

Researchers initiated outreach to entrepreneurial firms in four economic cities of Pakistan based on specified sampling criteria. The data collection comprised the following steps (see Table 3):

Data collection spanned seven months, with an additional five months allocated for data analysis and report preparation. A qualitative phenomenological approach was employed, utilizing a narrative method to analyze the data and gain insight into participants’ lived experiences (Emiliussen et al., 2021; Grossoehme, 2014). Initially, the research team planned to use NVivo (version 14) for data analysis. However, we opted for manual analysis due to the volume of qualitative data and the coding challenges. This approach provided greater flexibility and control in theme identification, aligning better with the study’s needs and framework (Maharjan et al., 2024). While NVivo is sound, its graphical limitations do not capture the depth required for this study. Thus, manual coding was more appropriate leading to thematic analysis. Thematic analysis (refer to Table 4) guided the analytical process and was conducted in several stages as described by Clarke and Braun (2016) and Nowell et al. (2017).

1. Familiarization with Data: This involved reviewing interview transcripts and immersing researchers in the data to comprehend participants’ experiences and perspectives.

2. Identifying Patterns and Themes: Researchers identified patterns and themes in the interview coding transcripts to emphasize essential phrases, similarities, differences, words and concepts related to entrepreneurial characteristics and influential factors affecting cryptocurrency adoption in entrepreneurial firms in Pakistan.

3. Generating Themes: Potential codes from interview phrases were combined to create themes, guided by the coding process and framework to ensure pertinent themes were captured.

4. Refining Themes and Sub-Themes: Themes were examined, and additional sub-themes arose from patterns such as narratives, expressions, and documented participant stories, as well as researchers’ observations, identified through engaged reading and abstractions (Hammersley, 2015).

5. Naming and Defining Themes: Final themes and sub-themes were defined and named, ensuring four pertinent themes (Technological, Organizational, Environmental and Innovation characteristics of entrepreneurs) were captured, along with relevant and emerging new sub-themes.

6. Organizing Data into Thematic Clusters: Data was sorted into thematic clusters (thematic matrix) after identifying essential patterns and themes. This involved creating tables to organize data using themes, sub-themes and codes based on the framework, specific entrepreneurial traits and influential factors affecting cryptocurrency adoption in entrepreneurial firms in Pakistan (refer to Table 4).

7. Developing Descriptions and Interpretations: Detailed descriptions and interpretations of the findings were developed, integrating quotes and examples from interviews to illustrate study objectives and questions (Saunders et al., 2018).

8. Validation: The findings were validated by presenting the analysis to experts in entrepreneurship and innovation in Pakistan, Saudi Arabia and the UK This ensured accurate interpretations and meaningful insights (Nazir et al., 2024b).

Ethical treatment of participants was paramount, encompassing informed consent, confidentiality and safeguarding well-being and dignity (Nowell et al., 2017). Addressing power dynamics and ensuring a comfortable environment for sharing were critical. Transparency regarding researchers’ intentions and potential biases upheld study integrity (Nazir et al., 2024b). Trustworthiness was enhanced through member checking and trustworthiness criteria, ensuring credible, transferable, dependable and confirmable findings (Ozuem et al., 2022).

The narrative phenomenological analysis offers deep insights into individual experiences, which is crucial for understanding cryptocurrency adoption in Pakistan’s entrepreneurial firms.

The study’s findings are organized around four main themes: technological, organizational, environmental and innovation characteristics of entrepreneurs, each with corresponding sub-themes. These themes, derived from narrative data analysis, highlight the challenges and enablers of cryptocurrency adoption among entrepreneurial firms in Pakistan.

Technological factors significantly influence the adoption of cryptocurrency by entrepreneurial firms in Pakistan, particularly regarding safety and security protocols, digital technology infrastructure and system integration.

One key concern entrepreneurs raise is the safety of cryptocurrency transactions, especially with Know Your Customer (KYC) protocols. Entrepreneurs emphasized the need for robust KYC processes to prevent data breaches and fraud. They highlighted that while KYC verification ensures security, it raises concerns about privacy and handling sensitive customer data. As an IT entrepreneur noted:

Entrepreneurs also pointed out the role of the Pakistani government in improving digital infrastructure and integrating KYC technology to protect customer data. However, they acknowledged the risks of implementing KYC while emphasizing its necessity. As respondents explained:

A major challenge identified was the disparity in digital infrastructure between urban and rural areas. Despite some improvements in government services, the infrastructure still needs to be improved to support blockchain technology fully. Entrepreneurs noted that while blockchain could lower transaction fees and increase speed, current systems limit cryptocurrency adoption, particularly for domestic transactions. Both respondents stated:

In addition to infrastructure issues, entrepreneurs highlighted fraud prevention and regulatory compliance concerns. They noted that inadequate systems increase vulnerabilities to data breaches and legal penalties. A business owner emphasized these risks:

The integration of cryptocurrency into existing systems remains complex, requiring advances in technology and regulation. Entrepreneurs stressed the need for stable financial apps and digital wallets. However, despite technological progress, the infrastructure still needs to improve, hindering blockchain adoption. One entrepreneur in the financial sector observed:

Trust in the financial system is another key issue for cryptocurrency adoption. Unlike traditional financial methods, which use intermediaries like Letters of Credit (LC), cryptocurrency transactions rely on decentralized blockchain technology. This creates risks, particularly in peer-to-peer transactions. As one entrepreneur put it:

Internal organizational factors, such as access to digital transformation assets, organizational frameworks and a culture of innovation, also significantly impact cryptocurrency adoption.

Entrepreneurs emphasized the need for experienced human resources and financial backing to ease the integration of cryptocurrencies into their businesses. Many business owners expressed concerns over a lack of these critical assets, which hindered the adoption process. A financial industry entrepreneur stated:

In addition to financial resources, a shortage of skilled personnel in blockchain, cryptocurrency trading and regulatory compliance emerged as a significant challenge. Entrepreneurs emphasized the need for blockchain developers, cybersecurity experts and legal advisors. Many advocated for national surveys to identify talented individuals (freelancers) who are underutilized due to government restrictions. One entrepreneur shared:

This sub-theme also plays a critical role in the adoption of cryptocurrency. Entrepreneurs emphasized the need for well-defined structures, particularly in IT support and decision-making. The lack of clear roles and responsibilities often hinders progress. Both entrepreneurs highlighted:

Entrepreneurs also argued that a strong organizational framework is necessary for efficient cryptocurrency transactions across various sectors. However, inefficiencies in internal structures and external banking systems often hinder adoption. As entrepreneurs noted:

Entrepreneurs in the finance sector also pointed out:

Entrepreneurs also noted that a culture of innovation is essential for cryptocurrency adoption. However, many firms resist change, preferring traditional cash transactions and simple ledgers. This reluctance to adopt new technologies impedes growth. One entrepreneur remarked:

Financial innovation is seen as a key factor in driving cryptocurrency adoption. Entrepreneurs emphasized the importance of a research-focused approach and collaboration to assess and implement blockchain projects. A lack of competitive compensation also limits the ability to attract top talent. As IT entrepreneurs explained:

This statement underscores the importance of strategic evaluation of blockchain projects and the need for competitive compensation to attract talent, which is essential for fostering creativity and resilience in a rapidly changing industry.

Digital regulatory frameworks, the role of national and local government institutions, industry transition, and cultural and religious barriers, including social stigma and traditions, significantly influence cryptocurrency adoption among entrepreneurial firms in Pakistan. These emerging factors shape firms’ willingness to adopt cryptocurrency technologies.

Pakistan’s regulatory frameworks and government policies are crucial in facilitating or hindering cryptocurrency adoption. Entrepreneurs often express concerns about the ambiguous regulatory environment and the lack of explicit government policies on cryptocurrency, which poses challenges for potential investments. One participant mentioned:

Entrepreneurs across industries assert reservations. For instance, mining tokens, which consume significant electricity, are impacted by regulatory environments. An IT firm owner noted:

National and local governmental institutions play crucial roles. Centralized financial oversight, primarily under the SBP, oversees external remittances, currency dealings, and financial transactions. The Ministry of Finance also plays a role. An entrepreneur from the financial sector illustrated how this oversight affects cryptocurrency adoption:

Another entrepreneur from the manufacturing sector emphasized procedural complexities and regulatory scrutiny involved in international cryptocurrency transactions:

Transitioning to the cryptocurrency industry presents challenges for firms in Pakistan due to the industry’s unique characteristics. There’s skepticism about Pakistani industries’ readiness to adopt cryptocurrency, particularly as a payment method. The lack of proper government backing and regulatory frameworks contributes to the general public’s and businesses’ mistrust in digital currencies. Many entrepreneurs perceive digital currency as “artificial” money lacking tangible value unless physically possessed. The prevailing preference for cash transactions reflects uncertainty about regulatory frameworks. Even if cryptocurrencies were widely implemented, convincing industry stakeholders of their practical value as a payment method remains challenging. Effective digital regulations could potentially bridge this gap, as mentioned by entrepreneurs:

An entrepreneur from the finance industry argued that cryptocurrency markets are highly volatile, with prices subject to rapid fluctuations. This volatility risks businesses accepting or holding cryptocurrencies as assets, impacting revenue and financial stability. He cited his client in Dubai:

Our study also identifies the impact of cultural and religious beliefs on cryptocurrency perceptions in Pakistan. Certain stakeholders view cryptocurrency as misaligned with local values or religious beliefs, which may impede adoption. Entrepreneurs emphasized the importance of addressing these external factors to foster cryptocurrency adoption. Religious beliefs significantly shape views on the legality and legitimacy of cryptocurrency, as some refer to religious rulings (fatwas) that deem cryptocurrencies such as Bitcoin forbidden (haram), creating an obstacle to widespread adoption:

Another IT entrepreneur discussed how religious considerations posed a significant challenge to cryptocurrency adoption in Pakistani culture, deeply influenced by Islamic principles:

This sub-theme further hinders technology awareness and cryptocurrency understanding among firms in Pakistan. Entrepreneurs cited entrenched resistance to change and unfamiliarity with digital transformations as significant obstacles. The everyday use of cash transactions highlights a reluctance to embrace cryptocurrency technologies, as many individuals favor traditional monetary practices:

Reflecting on these challenges, IT entrepreneurs stressed the need for increased awareness and regulatory clarity to facilitate cryptocurrency adoption in Pakistan:

SCT underscores the impact of social influences, industry dynamics and governmental regulations on motivating entrepreneurs to adopt innovations. Our study illustrates that external factors, such as traditional social stigma, religious-cultural barriers, industry transitions and regulatory environments, significantly shape cryptocurrency adoption. In the context of Pakistani society, these external elements create substantial obstacles, impeding individual entrepreneurs from embracing blockchain innovations and hindering their transition to more advanced technological solutions.

Various entrepreneurial innovation characteristics heavily influence cryptocurrency adoption among entrepreneurial firms in Pakistan. These include entrepreneurs’ digital literacy, strategic networking and collaboration, adaptability and flexibility, and education and training for senior managers on innovative tools. These factors are crucial for firms’ readiness to embrace cryptocurrency.

Digital literacy refers to the proficiency of entrepreneurial managers in using digital technologies, such as operating computers and smartphones, navigating online platforms, and understanding digital tools related to cryptocurrency.

One entrepreneur from the hospitality industry narrated:

Another finance sector entrepreneur echoed this sentiment:

Entrepreneurs across different sectors indicated that most possess sufficient digital literacy to grasp cryptocurrency, mainly if legally established and backed by regulatory frameworks. They highlighted their familiarity with FinTech technologies, indicating readiness to adapt to new digital innovations. One entrepreneur compared digital FinTech literacy to using platforms like JazzCash and EasyPaisa in her firm:

Strategic networking and collaboration boost engagement with industries lacking digital literacy and leverage emerging technologies like blockchain. These efforts include connecting with blockchain startup entrepreneurs, attending industry events and sharing knowledge to tackle innovation challenges. Active networking offers significant advantages for Pakistani entrepreneurs, particularly the youth, in grasping cryptocurrency trends, exchanging experiences and pursuing partnerships for crypto initiatives.

An IT entrepreneur illustrated how networking played a crucial role in launching a freelancing FinTech startup and venturing into crypto technology:

A technology entrepreneur shared his experience attending a blockchain conference in Karachi:

A manufacturing sector entrepreneur highlighted how knowledge sharing and collaboration enhanced understanding of new technologies and proved vital for business innovation:

Entrepreneurs in Pakistan have gained insights into blockchain and fintech through collaboration and networking. However, they hesitate to embrace cryptocurrency due to concerns about volatility and risks, complicating their adaptability and flexibility. This highlights the importance of their willingness and ability to adopt new technologies to enhance their businesses. For example, a business owner in the service industry, recognizing cryptocurrency’s potential to reduce transaction costs, demonstrates adaptability by integrating it into their payment systems. However, entrepreneurs from other firms within the same industry showed limited interest in blockchain technology due to perceived business risks. One stated:

Another entrepreneur echoed:

Education and training support for senior managers are vital for transitioning to blockchain technologies. Data indicate senior managers play crucial roles in decision-making and strategy. Many seasoned managers and employees hesitate to embrace cryptocurrency, showing outdated education and a lack of understanding of blockchain technologies, making them more risk-averse. As one manager shared:

Another manager from the service industry stated:

Senior managers generally show less willingness to take risks with new technologies like cryptocurrency. One illustrated:

Business owners acknowledge these challenges, another narrated:

Another entrepreneur added:

Entrepreneurs’ self-efficacy and digital skills drive innovation within the TOE-I framework. In Pakistan, cryptocurrency adoption hinges on entrepreneurs’ confidence and ability to learn via digital platforms. Those with high self-efficacy leverage social media to adopt and implement new technologies, fostering cryptocurrency acceptance. Strategic networking and collaboration at events facilitate idea exchange, aiding young entrepreneurs’ transition to FinTech and cryptocurrencies. However, due to outdated education and fear of job loss, senior managers' resistance to technology obstructs cryptocurrency innovation in entrepreneurial firms in Pakistan.

This study, grounded in an intersectional framework, identifies critical barriers to cryptocurrency adoption among entrepreneurial firms in Pakistan. The findings highlight several key challenges within four primary themes reflecting broader issues. A new proposed framework (see Figure 2) further explores these challenges.

Technological factors were identified as a significant obstacle, particularly regarding safety and security protocols, digital technology infrastructure and system integration challenges. Entrepreneurs expressed concerns about the security of cryptocurrency transactions, particularly the vulnerabilities associated with KYC protocols and cybersecurity risks, consistent with concerns raised by Nadeem et al. (2021) and Albayati et al. (2020). To mitigate these challenges, entrepreneurial firms must invest in robust digital security systems. However, the lack of a supportive regulatory framework for cryptocurrencies, including the absence of cryptocurrency Nostro accounts and integration with the State Bank’s systems, severely limits the ability of firms to adopt digital currencies effectively.

Moreover, integrating digital technologies like cryptocurrencies into existing business frameworks remains a significant barrier. Prior studies have emphasized the need for seamless integration of new technologies with traditional systems (Sohaib et al., 2020; Ali et al., 2020). Our findings corroborate this, showing that technologies such as digital wallets and efficient payment gateways are necessary but often lacking. Despite the widespread use of platforms like JazzCash and EasyPaisa for mobile transactions, these are currently unable and trustworthy to support cryptocurrency transactions, highlighting a significant infrastructure gap. Similarly, while ATMs remain the most common method for cash transactions, they are not designed to handle cryptocurrency exchanges or facilitate international transfers, further limiting access to crypto-related services. Addressing these technological barriers through investment in infrastructure and the development of regulatory frameworks is critical to fostering the adoption of cryptocurrency (Bhimani et al., 2022; Nguyen et al., 2022; Taherdoost, 2022) and supporting innovation in Pakistan’s entrepreneurial sector.

The adoption or rejection of cryptocurrencies in Pakistani entrepreneurial firms is deeply shaped by organizational factors, which present significant internal challenges. This study identifies three crucial sub-themes: the availability and accessibility of digital transformation assets, organizational frameworks and the culture of innovation.

First, the need for sufficient financial resources, as highlighted in the Indian context (Kumar and Rani, 2024), is also crucial for Pakistani entrepreneurs. Entrepreneurs face significant expenses related to regulatory compliance, cybersecurity and the development of technological infrastructure necessary for cryptocurrency adoption. These costs reflect the broader challenge of securing adequate financial backing to invest in the resources required for effective innovation (Al Hadwer et al., 2021; Jegerson et al., 2023).

The availability of skilled human resources for innovation adoption is another critical factor. As demonstrated by Al Reshaid et al. (2024) in Turkey and El Chaarani et al. (2024) in France, having access to trained personnel is vital for integrating emerging technologies like blockchain into business operations. In Pakistan, the use of freelancers to address staffing gaps in cryptocurrency-related ventures highlights the importance of specialized knowledge and training programs to support technology integration.

Furthermore, access to educational resources and workshops is essential for enhancing entrepreneurs’ understanding of cryptocurrency markets, technology and regulatory frameworks. Our findings underscore the need for educational initiatives to improve operational knowledge and compliance with cryptocurrency regulations.

Pakistani entrepreneurial firms, especially smaller ones, encounter considerable obstacles in adopting cryptocurrencies. Insufficient IT budgets and the lack of skilled IT professionals hinder their capability to manage digital currency transactions. Moreover, the dependence on traditional banking systems with centralized IT structures leads to operational delays during technical issues, underscoring systemic barriers to cryptocurrency integration. Adopting decentralized and agile systems, as exemplified by countries like China (Huang, 2019) and the Australia (Sohaib et al., 2020), could address these challenges and enable smoother adoption of crypto-related technologies.

The absence of an organizational culture of innovation significantly hinders cryptocurrency adoption in Pakistan. In contrast to businesses in more progressive cultures, such as Jordan (Almajali et al., 2022) and Spain (Arias-Oliva et al., 2019), Pakistani entrepreneurial firms tend to adopt a risk-averse mindset, favoring traditional cash transactions over digital currencies. This conservative approach, combined with the reliance on manual, paper-based ledgers and basic cash-based accounting systems, slows digital transformation and creates challenges in adopting sophisticated, automated financial systems necessary for cryptocurrency integration. Overcoming this resistance requires substantial investment in technology and targeted compensation strategies to motivate staff to transition from traditional to digital financial innovations, fostering a culture conducive to blockchain adoption.

The adoption of cryptocurrency among entrepreneurial firms in Pakistan is influenced by a range of external environmental factors, including digital regulatory frameworks, national and local government institutions, industry transitions, cultural and religious beliefs, and social stigma and local traditions. These factors either facilitate or hinder the widespread use of cryptocurrency technologies among Pakistani entrepreneurs.

A major barrier to cryptocurrency adoption in Pakistan is the underdeveloped regulatory framework. Entrepreneurs frequently express concerns about the lack of clear legal guidelines and the ambiguity surrounding the status of cryptocurrencies. This uncertainty discourages potential investors and stifles innovation. Without a well-defined legal framework, many businesses hesitate to engage with cryptocurrencies, limiting their adoption. The absence of a regulatory body dedicated to digital assets exacerbates this problem. In contrast, countries like the Indonesia and UAE have government-backed initiatives that support the growth of the digital economy (Gunawan and Novendra, 2017; Jegerson et al., 2024), while Pakistan’s regulatory environment remains inadequate. Clear and consistent regulations are essential to building trust and fostering investment, as seen in multiple markets (Albayati et al., 2020; Bhimani et al., 2022).

Pakistan’s regulatory framework primarily emphasizes traditional financial systems, such as monitoring remittances and currency exchanges through institutions like the SBP and the Ministry of Finance. This focus has led to a regulatory gap, hindering the development of industries such as cryptocurrency mining, which could leverage Pakistan’s natural resources. Entrepreneurs have noted that the government’s prioritization of physical assets exacerbates challenges in accommodating the cryptocurrency sector’s needs. Adopting a more inclusive regulatory approach could foster the growth of cryptocurrency-related industries, as observed in similar studies conducted in Bangladesh (Islam et al., 2023) and in Malaysia (Chen et al., 2022).

National and local government institutions significantly influence the cryptocurrency ecosystem. Centralized financial oversight by the SBP and the Ministry of Finance, while crucial for maintaining financial stability, imposes procedural complexities that hinder cryptocurrency adoption. The rigid control inherent in traditional financial systems clashes with the decentralized nature of cryptocurrencies, creating barriers for cross-border transactions. Additionally, stringent anti-money laundering (AML) checks, reporting requirements and financial regulatory scrutiny place an undue burden on entrepreneurs, especially those engaging with international clients. This financial monopoly over regulatory frameworks not only restricts innovation but also limits the flexibility required to adapt to emerging technologies. To foster growth, studies by Koroma et al. (2022), Li (2020), and Nguyen et al. (2022) insisted that a more adaptable and inclusive regulatory approach is essential for digital technology adoption.

Industry transition characteristics play a crucial role in cryptocurrency adoption. Sectors such as IT and e-commerce, which frequently interact with international clients, are more accustomed to using digital currencies. In contrast, other industries remain hesitant, largely due to the absence of government support and a persistent reliance on traditional cash transactions. Concerns about cryptocurrency market volatility and perceptions of digital currencies as “artificial money” further deter adoption. As highlighted by Arias-Oliva et al. (2019), Huang (2019) and Nazir et al. (2024a), industry readiness is pivotal for widespread adoption. To advance, Pakistan’s industries must address these doubts and foster a more open attitude toward digital financial tools.

The volatility of cryptocurrency markets further hampers adoption. Entrepreneurs, especially those in small industries, rely on stable cash flows and are hesitant to adopt cryptocurrencies due to their price instability. This volatility, combined with the lack of regulatory oversight, makes cryptocurrencies a risky business option. To address these concerns, Pakistan needs to implement clear digital regulations that tackle issues of volatility, payment stability and security. Such regulations would help shift the perception of cryptocurrencies from speculative assets to reliable business tools. Drawing from countries like Malaysia, which have promoted digital innovation through proactive regulatory frameworks (Al-Amri et al., 2019), Pakistan could create a more conducive environment for cryptocurrency adoption.

Cultural and religious beliefs also influence cryptocurrency adoption. Religious scholars in Pakistan have issued fatwas declaring cryptocurrencies like Bitcoin as “haram” (forbidden), creating resistance among conservative segments. This stems from concerns over cryptocurrencies’ compatibility with Islamic principles, such as “Riba” (interest) and their perceived lack of tangible value. These religious rulings have led to misconceptions about cryptocurrencies. Entrepreneurs report that many people, especially in conservative communities, view cryptocurrencies as risky investments. However, as seen in countries like El Salvador, where cryptocurrency has been embraced to address economic challenges, a shift in perception is possible through more informed discussions.

Social stigma is another barrier to cryptocurrency adoption. Many people, particularly from lower-income backgrounds, are unfamiliar with digital financial tools and prefer traditional cash transactions. This preference for physical money reflects a broader reluctance to embrace technological change. According to SCT, cultural norms and social influences shape entrepreneurial decisions to adopt new technologies (Liu and Xi, 2022; Tri Harinie, 2017). In Pakistan, these social influences are largely negative, with a strong attachment to cash-based systems. Increasing public awareness and financial literacy about cryptocurrencies is essential to reducing stigma and encouraging broader adoption, as seen as an implication in other economies too (Balconi et al., 2023; Nguyen et al., 2022).

Our study’s extended theme focuses on the innovative characteristics of entrepreneurs and how they influence cryptocurrency adoption among entrepreneurial firms in Pakistan. Key factors include entrepreneurs’ digital literacy, strategic networking and collaboration, adaptability and flexibility, and the need for education and training of senior (older) employees, emerging as sub-themes. These elements are examined within the TOE-I framework and SCT, offering insights into how entrepreneurs’ readiness to embrace digital innovations like cryptocurrency is shaped.

A significant factor identified is digital literacy. Many entrepreneurs, particularly in IT, e-commerce and fintech, do not view digital literacy as a barrier. Their familiarity with digital tools makes it easier to adopt new technologies like cryptocurrency. Entrepreneurs across industries noted using accessible online resources, through social media platforms like YouTube, to learn about cryptocurrency. This supports existing research that emphasizes entrepreneurial self-efficacy as a key driver in technology adoption (Bajaba et al., 2022; Liu and Xi, 2022; Taghizadeh et al., 2022). Digital literacy aligns with the TOE framework, which stresses that organizational readiness to adopt new technologies is influenced by the technological expertise of management and staff (Awiagah et al., 2016; Nazir at el., 2024a).

The role of regulatory trust also emerged as crucial. Entrepreneurs highlighted that clear legal endorsement of digital currencies, similar to digital payment platforms like JazzCash and EasyPaisa, would boost their confidence in adopting cryptocurrencies. This suggests that a well-defined regulatory framework could play a pivotal role in encouraging cryptocurrency adoption, mirroring the relationship between regulatory trust and innovation adoption observed in high-income countries (Balconi et al., 2023; López-Muñoz et al., 2023).

Strategic networking and collaboration also influence adoption. Entrepreneurs, particularly in fintech and IT, participate in both local and national networking events and conferences to stay informed about emerging technologies like fintech, blockchain and cryptocurrency. Many attend industry events, collaborate with blockchain startups, and join knowledge-sharing groups to bridge gaps in understanding and foster technology adoption. This is especially critical in a developing market like Pakistan, where access to information of new technologies can be limited. Networking helps young entrepreneurs overcome resistance to new technologies, as seen in many emerging firms across various industries. From an SCT perspective, entrepreneurs learn by observing their peers, reinforcing the social nature of technology adoption (Li, 2020; Marcati et al., 2008). In Pakistan, this is particularly relevant for young entrepreneurs.

Adaptability and flexibility are also key traits for adopting cryptocurrency. However, the volatility of cryptocurrency markets poses a challenge, particularly for small entrepreneurial firms reliant on stable cash flows. Entrepreneurs expressed caution about the risks, with many preferring traditional methods like cash or bank drafts due to concerns over fluctuating prices. For example, a travel and tourism entrepreneur acknowledged cryptocurrency’s potential to reduce transaction costs but was deterred by its volatility. Similarly, a logistics entrepreneur preferred conventional payment methods for their perceived stability. This aligns with literature studies, which note that risk aversion is a significant barrier to technology adoption, particularly in unstable markets (Huang, 2019; Janssen et al., 2020; Koroma et al., 2022).

Digital literacy, strategic networking and adaptability are crucial factors in facilitating cryptocurrency adoption. However, challenges such as market volatility and a lack of clear regulatory frameworks pose significant barriers to broader acceptance. Entrepreneurs' inherent risk aversion highlights the need for well-defined and supportive regulations to build confidence and stability, thereby addressing these obstacles in Pakistan’s entrepreneurial sector. This perspective aligns with the findings of Alegre et al. (2013), Jalil et al. (2022), and Nadeem et al. (2021), which emphasize the importance of digital skills, flexibility and collaboration in driving technology adoption.

Finally, our study highlights the crucial role of education and training for senior managers (older employees) in adopting cryptocurrency technologies. Many senior managers resist new technologies, especially those who joined their firms in earlier decades with basic business education. This resistance is often due to a need for more understanding of blockchain and cryptocurrency, making them more risk-averse and less willing to invest in digital innovations (Abaddi, 2024a). For example, a manager from the advertising sector noted difficulty in understanding blockchain and stressed the importance of ongoing training. Similarly, senior real estate and service sector managers were reluctant to adopt cryptocurrencies, fearing job displacement. These findings are consistent with literature suggesting firm management with outdated skills are more likely to resist technological changes (Nazir et al., 2022, 2024a). This study challenges SCT’s self-efficacy theory by showing that senior managers’ lack of digital skills and fear of job loss impede technology adoption, highlighting the need for targeted training to foster innovation.

This study explores the factors influencing blockchain-enabled cryptocurrency adoption among entrepreneurial firms in Pakistan. Aligned with the Finance Minister’s initiative for fintech leadership, our research identifies key trajectories affecting cryptocurrency adoption, focusing on the intersection of technology, organization, environment and innovation characteristics of entrepreneurs. This study uses phenomenological qualitative methods to connect the TOE-I framework with SCT to deepen our understanding of the dynamics in various industries in Pakistan.

In conclusion, both internal resistance within entrepreneurial firms due to a lack of entrepreneurial culture and external challenges—such as regulatory, social, cultural and religious uncertainties—pose significant obstacles to cryptocurrency adoption. These barriers highlight the urgent need for a comprehensive and transparent regulatory framework from national and local government authorities to foster innovation, increase market engagement and facilitate the widespread adoption of cryptocurrency among entrepreneurial firms in Pakistan. Without supportive regulations, broader cryptocurrency integration remains constrained.

Our study makes significant theoretical contributions to the literature on cryptocurrency adoption among entrepreneurial firms by integrating the TOE framework and SCT. Previous studies have typically applied these frameworks individually to understand technology adoption (Gemmell et al., 2012; Nguyen et al., 2022; Tri Harinie, 2017). However, our research combines these frameworks for a nuanced understanding of the challenges and opportunities in the adoption process.

Adding the “innovation characteristics of entrepreneurs” to the TOE framework (Tornatzky and Fleischer, 1990), highlights that personal traits like digital literacy are crucial in adopting new technologies, including cryptocurrencies. This shift acknowledges the entrepreneur as a key driver of technology adoption (Balconi et al., 2023; Marcati et al., 2008; Zahra et al., 2023).

Our findings show that digital literacy and self-efficacy (confidence)—necessary in the TOE-I framework and SCT—are vital in decision-making. Entrepreneurs with higher digital literacy and self-confidence are more likely to adopt technologies like cryptocurrency. Many build this confidence through social media platforms like YouTube. In contrast, older managers with less digital literacy often resist these technologies due to outdated education and job loss fears, challenging SCT’s assertion that self-efficacy alone drives adoption (Beliaeva et al., 2020; Taghizadeh et al., 2022).

Young entrepreneurs in our study adopt new technologies by observing peers at networking events and knowledge-sharing conferences. These dimensions suggest that SCT factors—self-efficacy (via social media) and observational learning (networking and collaboration)—intersect with the TOE-I framework’s focus on digital literacy and networking, which might be less accessible for older employees.

The last dimension of SCT suggests that social and environmental factors, such as social influences, industry dynamics and regulatory frameworks, affect entrepreneurs’ decisions regarding innovation adoption (Alegre et al., 2013; Balconi et al., 2023). However, our examination of environmental factors within the TOE-I framework reveals that Pakistani society’s traditional social, cultural, and religious barriers hinder entrepreneurs from adopting blockchain innovations. Our TOE-I findings challenge SCT’s assertions (Bandura, 1986; Liu and Xi, 2022; Tri Harinie, 2017) and confirm that Pakistan’s digital regulatory landscape lacks governmental support, creating uncertainty for firms adopting cryptocurrency. Navigating innovation in these industries remains a significant challenge.

Our study further contributes to the blockchain-enabled cryptocurrency literature by identifying internal and external theoretical factors related to entrepreneurs’ technological, organizational, environmental and innovation characteristics.

1. This study emphasizes the critical role of digital technology infrastructure, including Nostro accounts and crypto-transaction tools, in facilitating technology adoption. To ensure secure adoption, entrepreneurial firms should implement robust KYC protocols to safeguard customer data and mitigate cybersecurity risks. Additionally, improving the trustworthiness and functionality of existing digital platforms, such as JazzCash and EasyPaisa, is essential. Overcoming these technological barriers can pave the way for a more supportive ecosystem for digital innovation.

2. This study highlights the significance of organizational needs, particularly the importance of digital transformation assets such as financial resources and skilled personnel, including freelancers. It is essential to create an innovation-driven culture through a decentralized, agile structure/departments and embrace digital transaction tools over traditional ledgers. These objectives can be achieved by providing competitive compensation packages to attract and retain top talent.

3. This study contributes by highlighting the need for a comprehensive digital regulatory framework for cryptocurrency mining, which hinders its adoption. It emphasizes the need to promote digital inclusion by reducing risks through clear regulations, adaptable policies and simplified procedures. Furthermore, the study stresses the importance of fostering cultural and social acceptance of digital tools in a cash-dependent society. It also underscores the critical role of national and local government institutions in facilitating integration and minimizing financial monopolies, which can support the growth of cryptocurrency adoption in entrepreneurial firms.

4. This study contributes by highlighting the importance of digital literacy, facilitated through social media, networking and participation in events, in promoting cryptocurrency adoption. It identifies key barriers, including market volatility, unclear regulations, traditional cash-based mindsets and resistance from senior managers due to limited education and fear of job loss. The study emphasizes that establishing clear regulations and offering targeted training for senior managers are critical steps in overcoming these challenges and fostering greater cryptocurrency adoption in entrepreneurial firms.

A key contribution of this study is its identification of cultural and religious barriers to cryptocurrency adoption in the context of Islamic finance entrepreneurship. In Pakistan, a Muslim-majority country that adheres to Islamic Sharia law, the concepts of halal and haram significantly influence perceptions of cryptocurrency. Islamic scholars have issued fatwas declaring cryptocurrencies as haram, which, coupled with the government’s inability to control the technology backend, reinforces the societal preference for traditional cash-based transactions. Concerns about speculation, uncertainty and interest-based transactions further contribute to these barriers. The study underscores the need to develop Shariah-compliant cryptocurrency frameworks to facilitate broader adoption while respecting religious values.

A significant contribution of our study is its investigation into cryptocurrency adoption among entrepreneurial firms in Pakistan, addressing a gap in existing research that has primarily focused on individual behavior in developed markets (El Chaarani et al., 2024; Huang, 2019; Jegerson et al., 2023, 2024; Sohaib et al., 2020). This paper provides valuable insights into firms' unique challenges in Pakistan’s emerging market, highlighting how social, cultural, legal and religious factors differ from those in developed economies. By integrating technological, organizational, environmental and innovation perspectives, our study advances entrepreneurship and innovation research, illustrating the key factors that influence adoption decisions (Balconi et al., 2023; Ince et al., 2023; Liu and Xi, 2022). Furthermore, our emphasis on entrepreneurs’ digital literacy and networking differentiates our work from consumer-focused research (Al Reshaid et al., 2024; Arias-Oliva et al., 2019; Chen et al., 2022). Through a phenomenological qualitative approach, we deepen our understanding of blockchain adoption, enhancing the body of knowledge on these critical issues.

The study provides valuable insights for entrepreneurial firms, entrepreneurs, government agencies, academics and the broader cultural context, offering a novel framework for understanding cryptocurrency adoption. By expanding the TOE-I framework and the SCT, we demonstrate their application to new technologies, specifically cryptocurrency. The TOE-I framework is extended by emphasizing the role of technological readiness and organizational factors such as digital literacy and the need for innovation in developing economies. The SCT is applied by highlighting how peer influence, self-efficacy and social learning shape the adoption process, particularly through networking and exposure to successful use cases. These theoretical expansions advance both theoretical and practical approaches to digital financial innovations, particularly in developing economies like Pakistan.

To foster broader adoption, developing Shariah-compliant frameworks that align with Islamic principles is crucial, as well as engaging religious scholars to address fatwa concerns. This can reduce resistance, shift perceptions and promote cryptocurrency adoption while respecting religious values. By expanding the SCT, we recognize how cultural beliefs influence perceptions of legitimacy and the need to integrate these into the adoption process.

Practically, the study highlights the need to bridge financial literacy gaps and address cultural barriers to reduce the stigma surrounding digital currencies. Educating stakeholders and promoting clear, well-defined regulations can enhance business operations and financial practices, allowing entrepreneurial firms to participate more effectively in the digital economy. Leveraging the TOE-I framework, entrepreneurial firms can use organizational resources like skilled personnel and digital infrastructure to adopt cryptocurrencies effectively.

Entrepreneurial firms can leverage these findings to navigate challenges and seize opportunities related to cryptocurrency adoption, such as investing in compliance measures, enhancing security protocols and adopting relevant technologies. The study also emphasizes the importance of digital literacy, especially among older employees, to foster innovation and adaptability within organizations, building on the TOE-I’s emphasis on organizational readiness.

Government agencies are encouraged to establish transparent digital regulations to build investor confidence and stimulate technological innovation. Institutions like SMEDA and the State Bank of Pakistan should focus on creating clear regulatory frameworks, implementing targeted educational programs and fostering international collaborations to facilitate digital financial growth, in line with the TOE-I framework’s environmental factors.

The study suggests incorporating blockchain and cryptocurrency topics into academic curricula to equip students with essential skills and encourage collaborations with local and national bodies to develop accredited programs. These initiatives will prepare the next generation for active participation in the evolving digital financial landscape, reinforcing the importance of education and social learning, key elements of the SCT.

The qualitative nature of this study, centered on entrepreneurial firms in Pakistan’s urban financial hubs, presents limitations in generalizability. While the extended TOE-I and SCT frameworks offer valuable insights, they may not fully account for the rapidly evolving dynamics of cryptocurrency adoption. Future studies should consider refining these frameworks or integrating additional models to provide a more comprehensive understanding of the associated challenges and opportunities.

Exploring the interplay between SCT factors and the TOE-I framework, particularly in technological and organizational dimensions, could lead to developing a more holistic model. Longitudinal studies are also recommended to evaluate the long-term effects of cryptocurrency adoption on entrepreneurial firms' performance, growth and sustainability.

Broadening the scope of research to include comparative studies across diverse industries, geographic regions and rural areas would enhance the findings' generalizability and provide a more inclusive perspective on cryptocurrency adoption.

Addressing these areas in future research will contribute to a deeper, more nuanced understanding of cryptocurrency adoption among entrepreneurial firms. This, in turn, can inform strategies and policies to support their digital transformation and drive innovation in the broader economic landscape.

All authors would like to thank the editor, associate editor and two anonymous reviewers for their comments that significantly improved the final version. We would also like to extend our gratitude to all entrepreneurs from the firms, consultants, freelancers and government officials who shared their views for the data collection. Additionally, without the financial support from the University of Greenwich, UK, this research would not have been published and accessed freely.