Strategic value of RFID for inter-firm supply chain networks

Abstract

Despite the huge potential benefits of radio frequency identification (RFID) in collaborative use with transaction partners, many companies are reluctant to implement RFID with their partners and skeptical of its strategic value in inter-firm, supply chain networks. However, existing research is concentrated on the internal adoption and benefit measurement of RFID system, without careful consideration of the strategic value in an inter-organizational context at implementation stage. Hence, this study empirically identifies the reciprocal strategic value of RFID implementation in inter-firm, supply chain networks based on the resource-based theory and social capital theory. Additionally, mutual quality constructs of RFID system from an inter-organizational context are investigated as determinants of the strategic value. Empirical results have shown that supply chain visibility and agility are improved through high-level, shared information quality and inter-organizational system quality of RFID. Inter-organizational trust is enhanced by high-level, inter-organizational service quality and supply chain agility. Moreover, all strategic values of RFID (visibility, agility, and trust), when enhanced by RFID, have positive impacts on supply chain performance. This study expands the discussion scope of RFID to the implementation stage at the inter-firm level beyond the internal adoption level, improving the delay of RFID diffusion among transaction partners. Furthermore, the study describes strategic points that can be used to maximize the RFID value in supply chain networks.