Radio Frequency Identification Technology Adoption

116 Pages·2013·1.44 MB·English

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Radio Frequency Identification Technology Adoption:
South African Retailers’ Perspective

Bernard Oppong Sarpong
0213222T

A research report submitted to the School of Economic and Business Sciences
Faculty of Commerce, Law and Management
University of the Witwatersrand

For the degree of Masters of Commerce (by coursework)
Submitted in 50% fulfillment of the Degree

Supervisor: Professor Judy Backhouse
28 February 2013
Declaration
I declare that this research report is my own unaided work, except to the extent indicated in the text,
acknowledgements and reference matter. It is being submitted for the 50% research component of a
Masters in Information Systems (by Research and Coursework) degree.

This research has not been submitted before for any other degree or examination in this or any other
institution.

……………………………
Bernard Oppong Sarpong
28 February 2013
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Dedication
This research report is dedicated to my son, Afriyie Boateng Sarpong, who is the joy of my life.

iii
Acknowledgements
I am thankful for the encouragement, support and guidance of my supervisor, Professor Judy
Backhouse, who has continuously provided me with constructive and insightful feedback on my work
throughout this project. Without you this research would not have been possible.
I wish to give all praises and thanks to the almighty God for his abundant blessings and for bringing me
this far. Thank you for your amazing love Daddy.
Special thanks also go to the following people:
 My wife, Lufuno and my son, Afriyie for their unflinching support until the end.
 To my parents, Kofi Sarpong and Elizabeth Sarpong for sacrificing so much to put me where I am
today.
 All the participants and friends who contributed to this research.

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Abstract
In recent years, Radio Frequency Identification (RFID) Technology has transformed from being unknown
to mainstream applications that help facilitate the managing of manufactured goods and materials. Its
information storage capacity as well as its ability to transfer information through contactless means
without line-of-sight translates to significant advantages to deliver various benefits for retailers and
their clients in the retail settings. However, up until now RFID technology has gained very little
momentum and the status of adoption particularly of retail organisations in South Africa is unknown. To
fill this research gap, an exploratory study that draws on the Technology-Organisation-Environment
(TOE) framework was employed to provide a deeper understanding of South African retailers’
perceptions of RFID adoption. Five interviewees representing their respective organisations participated
in the study. The findings suggested that the adoption level is very low and only one organisation from
the sample used had done a pilot project. The results also indicated that cost, standardisation and
government support influenced the adoption of the technology. Complexity and technology
competence were not considered to have any influence in the adoption of the technology. Competitive
pressure was not deemed influential if the technology was not embedded in the whole supply chain, a
somewhat surprising result. There were no anticipated impacts on the employees if this technology was
implemented. Methodological and practical implications are also discussed.

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Table of Contents

Chapter 1 - Introduction .................................................................................................................................... 1
1.2. What is RFID? ............................................................................................................................ 3
1.3. Why RFID Research? ................................................................................................................. 5
1.4. Problem Statement ................................................................................................................... 6
1.5. Research Questions................................................................................................................... 7
1.5.1 Research Question One ............................................................................................................ 7
1.5.2 Research Question Two ............................................................................................................ 8
1.5.3 Research Question Three ......................................................................................................... 9
1.5.4 Research Question Four ......................................................................................................... 10
1.5.5 Research Question Five .......................................................................................................... 11
1.6. Importance of the Study ......................................................................................................... 12
1.7. Objectives of the Study ........................................................................................................... 12
1.8. Research Approach ................................................................................................................. 13
1.9. Structure of the Research Study ............................................................................................. 13
1.10. Conclusion ............................................................................................................................... 15
Chapter 2 – Literature Review ......................................................................................................................... 16
2.1. Introduction ............................................................................................................................ 16
2.2. Theoretical Framework ........................................................................................................... 16
2.2.1 Rationale to Technology Organisation Environment (TOE) Framework ................................ 16
2.2.2 The Origins of the TOE Framework ........................................................................................ 19
2.2.3 Limitations of the TOE Framework ......................................................................................... 20
2.3 Literature on RFID Technology ................................................................................................ 20
2.3.1 Benefits of RFID Technology to the Retail Sector ................................................................... 21
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2.3.2 RFID Challenges ...................................................................................................................... 22
2.3.3 Adoption ................................................................................................................................. 23
2.4 Conclusion ............................................................................................................................... 29
Chapter 3: Research Methodology .................................................................................................................. 30
3.1. Introduction ............................................................................................................................ 30
3.2. Research Questions................................................................................................................. 30
3.3. Research Methodology ........................................................................................................... 31
3.4. Sampling .................................................................................................................................. 32
3.5 Methodological Approach....................................................................................................... 33
3.5.1 Source and Method of Data Collection .................................................................................. 33
3.5.2 Interview Schedule ................................................................................................................. 37
3.6 Data Analysis Method ............................................................................................................. 37
3.7 Validity and Reliability ............................................................................................................. 43
3.8 Ethical considerations ............................................................................................................. 44
3.9 Conclusion ............................................................................................................................... 44
Chapter 4: Presentation and Discussion of Results ......................................................................................... 45
4.1. Introduction ............................................................................................................................ 45
4.2. Discussion of Results and Findings .......................................................................................... 45
4.2.1 Research Question One: RFID Adoption Level ....................................................................... 45
4.2.2 Research Question Two A: Cost ............................................................................................. 46
4.2.3 Research Question Two ‘B’: Complexity ................................................................................ 50
4.2.4 Research Question Two ‘C’: Technology Competence ........................................................... 51
4.2.5 Research Question Three: Impact on Employees .................................................................. 53
4.2.6 Research Question Four: Competitive Pressure..................................................................... 54
4.2.7 Research Question Five: Government Support ...................................................................... 56
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4.2.8 Other Findings ........................................................................................................................ 57
4.3. Conclusion ............................................................................................................................... 58
Chapter 5: Conclusion ...................................................................................................................................... 59
5.1. Introduction ............................................................................................................................ 59
5.2. Main Findings .......................................................................................................................... 59
5.3. Additional Contributions of the Study .................................................................................... 62
5.3.1 Methodological and Theoretical Implications ........................................................................ 62
5.3.2 Practical implications .............................................................................................................. 63
5.4. Limitations of the Research .................................................................................................... 64
5.5. Future Research ...................................................................................................................... 64
5.6. Conclusion ............................................................................................................................... 66
6.0 References .............................................................................................................................. 68
Appendix A: Interview Questions..................................................................................................................... 78
Appendix B: Information sheet ........................................................................................................................ 81
Appendix C: Interview Data ............................................................................................................................. 83

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List of Figures
Figure 1: Fundamental functioning of RFID
Figure 2: Frequency Ranges for RFID.
Figure 3: Overall Structure of the Research Study
Figure 4: Technology, Organisation and Environment Framework (Tornatzky and Fleischer, 1990)

Figure 5: Refined Technology, Organisation and Environment Framework
Figure 6: Data Analysis Strategy

List of Tables
Table 1: Some studies based on TOE Framework
Table 2: Adoption factors considered in the current study
Table 3: Descriptions of organisations used in the study
Table 4: Resultant themes

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Chapter 1 - Introduction
The importance of innovation as a competitive driver for organisations is one of the key research areas
in the Information Systems (IS) field (Battezzati, Miragliotta and Perego, 2006). Technological innovation
is widely acknowledged to be an influential catalyst of business transformation and economic growth
(Keating, Coltman, Fosso-Wamba and Baker, 2010). The evolution and continuous development of
Information Technologies (IT) in business processes have created opportunities to augment the
effectiveness, speed and accuracy in which data can be captured, retrieved and consumed (Curtin,
Kauffman and Riggins, 2007). Business organisations are currently faced with the challenges of global
competition as well as more diversifying requirements from their customers and consequently
prompting changes to business environments (Bhattacherjee, 1998). As a result, many organisations are
increasingly turning to emerging IT such as Radio Frequency Identification (RFID) as a means of coping
with such rapid changes sweeping their environment.
“ ...... RFID is going to change our lives, but if I think of the efficiencies and the productivity that can be
gained out of this thing, knowledge that can be gained out of it, not only from a business perspective,
but from a consumer perspective as well, I think it's going to be nothing short.... (sic) but absolutely
awesome, absolutely awesome but the responsibility rests fair and square on our shoulders as to how we
take this technology forward and how we embrace it .... ”
Keynote address by Sean Summers, Former CEO Pick 'n Pay as attributed to him at the Smart Card
Society of Southern Africa Conference, 2003.
A number of large manufacturing, retailing, health care, and other organizations have some ongoing
project(s) related to RFID systems. For instance the development of RFID service in facilitating superior
efficiency in aircraft operations between Boeing and Fujitsu from the first quarter of 2012 and
Walmart’s implementation of item-level apparel tagging in 2010 (Zhou and Piramuthu, 2011). Further
developments include CHEP’s (a pallet and container pooling services company) implementation of RFID
at its facilities across Europe to track returnable goods for the automotive industry in 2008 (Wessel,
2008) and Mark and Spencer’s partnership with Avery Dennison to expand their use of the technology to
track and control all clothing and home wares commencing in 2013 and ending in 2014 (RFID
Journal,2013). The above mentioned indicate a strong thrust from some of the major organisations
making use of RFID technologies in their day to day operations (Zhou and Piramuthu, 2011). Recent
forecasts on the overall market value of RFID indicate a positive trend for the immediate anticipated
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