The costs of adoption of RFID technologies in supply networks

Abstract

Purpose

The purpose of this paper is to identify the different types of adoption costs faced by organizations involved in the adoption of radio frequency identification (RFID) within supply networks, and to understand how these potential costs affect the likelihood of RFID adoption.

Design/methodology/approach

The paper applies an existing generic theoretical framework of costs associated with process innovation adoption to the case of RFID technology. Data are collected by interviewing participants in the RFID adoption process in supply network settings, and by examining a range of publicly available information on RFID development. The data are used to test and expand the theoretical framework.

Findings

Of the six main categories of generic process innovation costs, four are identified as applicable in the case of RFID adoption by early adopters: development, switching, cost of capital and implementation. No evidence is found for initiation and relational costs. In addition, a seventh category of costs is identified as applicable to the adoption of RFID in supply networks: ethical costs associated with privacy and health issues.

Research limitations/implications

Further empirical work is required to test the generalisability of the findings. Because RFID technology is still in the early phases of development, the research has been able to consider only early adopters: further work is required as the technology matures to assess the impact of costs throughout the technology development lifecycle.

Practical implications

The work demonstrates that when considering the adoption of RFID managers need to look at a range of potential costs in making the investment decision. Policy makers also need to consider how organizations consider a range of costs that may not be explicitly specified when making adoption decisions.

Originality/value

The paper tests and extends the generic framework of costs associated with process innovations in supply networks. The study also clarifies the various costs involved in the adoption of RFID technologies by early adopters, and their influence on the decision to adopt.

Citation

Smart, A.U., Bunduchi, R. and Gerst, M. (2010), "The costs of adoption of RFID technologies in supply networks", International Journal of Operations & Production Management, Vol. 30 No. 4, pp. 423-447. https://doi.org/10.1108/01443571011029994