The Adoption Of RFID And Its Long Term Impact On Firm Performance

In the era of things of Internet, Radio Frequency Identification (RFID) is gradually replacing the traditional barcode technology and has become an important means of improving operation efficiency. However, due to its durable implementation period and huge initial cost, previous short term investigation can’t truly reflect the value of RFID. Moreover, the method used in prior research is usually simple and single, there is a lack of a comprehensive and multiple method. Based on108RFID announcements from74public traded companies ranging from1997to2009, our study attempts to have a deep understanding of the relationship between RFID adoption and its long term impact on firm value. After the review of relevant studies, we set up the framework of IT’s effect on firm performance from two prospective, one is the resource-based view and the other is the IT capability view. Altogether we undertook three different methods, namely the Calendar Portfolio Analysis, ROA and Tobin’s q to observe RFID’s impact on both the accounting and the market measures. The findings revealed several implications. First of all, RFID adoption is significantly positively related to long term abnormal return but significantly negative related to Tobin’s q. In terms of ROA, no significant relationship was found. Secondly, we observed that the country, industry type, adoption time, diversification and growth potential are all effective moderating factors. First movers and the non-US adopters can attain more benefits, but this positive effect can only last for the first two years. In conclusion, RFID is a complex technology but shows great potential, managers should consider more factors when adopting this technology.