Potentials Of Rfid - A Conjoint Based Preference Analysis Regarding Buying Groups

Potentials of RFID:

A Conjoint-Based Preference Analysis Regarding Buying Groups

by

Christoph SchrÐ"¶der

Bernhard Swoboda

Frank HÐ"¤lsig

Trier University, Germany

Universitaetsring 15, D-54286 Trier

T: +49 651 201 2647

e-mail:b.swoboda@uni-trier.de (corresponding author)

Keywords: Buying Groups, RFID, Technology, Adoption, Conjoint Analysis

Track: Innovation in retailing

Potentials of RFID:

A Conjoint-Based Preference Analysis Regarding Buying Groups

ABSTRACT

Radio Frequency Identification (RFID) has not yet been analyzed in buying groups. In general, the preferences for RFID systems as well as the willingness to adopt them in retailing firms has not been investigated. These issues are examined in a first study by combining the "Theory of Reasoned Action" and the "Technology Acceptance Model" to obtain a specific theoretical framework and using conjoint measurement in order to measure trade-off decisions based on a relatively small sample. Considerable willingness to adopt, but low diffusion and a structure of preferences with respect to RFID features is shown throughout buying groups. Furthermore, differences are shown between buying groups in their preferences for RFID system features and clusters with different preferences regarding RFID systems are implied.

INTRODUCTION

In today's competitive retailing environment, promptitude, reliability and flexibility play a decisive role in achieving economic success. In order to manage the flow of information effectively and efficiently, computer-assisted systems are used to handle these challenges and the resulting demand for information (Flyzik, 2006). In business processes, the predominant form of exchanging information is still the means triggered by individuals. Thus, the results are mostly delayed, partly faulty, and contain incomplete assignment of information. This means that the operations scheduling database used has greater financial improvement potential improvement potential or even has a negative effect on the firm's economic success.

RFID, Radio Frequency Identification, also called transponder technology, a method which can be used for the identification and allocation of goods, objects and individuals, accommodates this development (LogicaCMG, 2005). Over the past few years, great progress was made in further development of RFID (Garfinkel and Rosenberg, 2006). Consisting of one reader and a data logger attached to the object to be identified, RFID opens up enormous use potentials (Backhouse, Ward and van Kranenburg, 2006). Currently, the logistic process is supported primarily by identification technology based on electromagnetic waves. The improved transparency of processes, the minimization of error sources, the time-saving potential, and the rise in the level of automation and reliability by the decentralized data management system at the transponder are the essential improvements in RFID (McFarlane and Sheffi, 2003). Although application of this new technology has numerous advantages, some significant disadvantages still cannot be excluded at the moment (Hadfield, 2006).

The problems consist primarily in the protection of data privacy and a potential technological "lock-in" situation provoked by substantial investments in non-standardized systems (Del Nibletto, 2004). Furthermore, the enormous use potentials of the technology have not been able to realize a positive return on investment so far in all areas of application due to the relatively high transponder costs (Margulius, 2004). The commercial enterprise Metro AG is an influential driving force for and protagonist of RFID technology in Germany. The group has already committed twenty of its most important suppliers to use RFID for pallets and cardboard boxes in order to synchronize transportation processes.

Although RFID is often discussed, it still holds substantial examination potential in retailing. Buying groups, also called voluntary, allied or symbol groups (Mc Goldrick, 2002; Zentes and Swoboda 2000) make up a large share of the retailing and wholesaling markets in some European countries, such as Germany, the Netherlands, and Denmark. In their particular retailing sector they are among the leading firms, but are in fact a form of collaboration between smaller, independent retailers and are not listed on the stock exchange. They differ from the franchising systems known in the Anglo-American sector in that they have a horizontal cooperation structure that often accords individual retailers equal status in the decision-making process. Decision-making in buying groups is much more decentralised and less formal. We assume in the following that, due to the special features, adoption of an RFID system in buying groups is subject to a different preference structure to that applicable in chain store retailing groups, however we do not make any comparisons between the two in the present paper.

The main aim of this article is to give an insight into the key barriers the authors see in connection with RFID and, above all, to analyze what preferences buying groups have in their choice of RFID systems. This appears to be an interesting focus because no specific analysis of buying groups with respect to RFID has yet been conducted. A classic framework-based procedure is used for the analysis.

CONCEPTUAL FRAMEWORK AND CONSTRUCTS

In order to analyze decision-making behaviour, the Theory of Reasoned Action and the Technology Acceptance Model were used because no decision to use RFID has yet been taken in most buying groups and the behaviour of decision-makers is to be analyzed.

Theory of Reasoned Action

The central intention of the Theory of Reasoned Action is to explain human behaviour, especially concrete actions. The determinant of behaviour is the intention to act in a certain way (Davis, Bagozzi and Warshaw, 1989) and human behaviour is explained by the understanding of two factors that influence the intention to act: personal attitudes and subjective norms (Ajzen, 1985).

Attitudes are derived from convictions. In turn, convictions are formed by information gained, which

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