Theanalysisof Rfid System Implementationby Diffusionof Innovationtheory

THEANALYSISOF RFID SYSTEM IMPLEMENTATIONBY DIFFUSIONOF INNOVATIONTHEORY

Iuan-Yuan Lu 1, Che-Hung Lin2,Hou-Hung Wei3, Ming-Chih Chang4

1 Vice Chairperson of Asia Network for Quality
Professor, Institute of Business Administration,NationalSunYat-SenUniversity

No.70, Lien-Hai Road, Kaohsiung 804, Taiwan, R.O.C

2 Assiciate Professor, Department of Information Management,ChengShiuUniversity

No.840, Chengcing Road,NiaosongTownship, KaohsiungCounty,833, Taiwan, R.O.C

3 Ph D, Student, Institute of Business Administration, NationalSunYat-SenUniversity

No.70, Lien-Hai Road, Kaohsiung 804, Taiwan, R.O.C

4 MBA, Student, Institute of Business Administration, NationalSunYat-SenUniversity

No.70, Lien-Hai Road, Kaohsiung 804, Taiwan, R.O.C

ABSTRACT

In recently years, RFID system has been developed rapidly and it is one of the ten most important technologies in this century. Our government (Taiwan) and the manufacture industries both are actively and positively promoting RFID system to enhance immediate reactions of corporate distribution & logistic system, and further improving the corporate operation efficiency and corporate competitive competences. In this study, we use Everett M. Rogers’s (1962) Diffusion of Innovation (DOI) Theory as our framework, with individualized case study such as torpedo car system of steel plant discussing RFID system’s five stages of its implementation process. The five stages are agenda setting, matching, redefining/restructuring, clarifying and routinization. These are the consideration items and evaluation standards when implement RFID system. We research RFID system on its impact in organizational structure and culture, and further compare the impact of adoptive RFID system enterprises and existing resources. We summarized our research findings as following 1.Large-scale and solid financial enterprises usually take the initiative to collect information and understanding the innovative technologies such as the RFID system. If the technology can be widely applied in the company and bring greater benefits, the employees within the company will propose recommended plans. Therefore, usually early adopters of such technology are big firm companies. 2. Enterprises whom are considering implementing this innovative technology like RFID system, the first focus is its future benefit, followed by the costs and the other factors; if the assessments revealed that can significantly enhance corporate performance, even in the absence of precedent for reference, the enterprises will still try to implement and use this technology. 3. Because the use of innovative technology companies usually lack of precedent and experience for reference, therefore before they adopted, they will survey related examples and will compare the current operation status to improve the efficiency of the forecast evaluation. In the initial stage of introduce innovative technology for a company, increasing corporate performance brought by technology usually remains in forecast period and hard to specify prediction.

Key words: Diffusion of Innovation, RFID, Steel plant, Torpedo car

INTRODUCTION

RFID incorporates inventory, shipping, receiving and picking capabilities into one system. It enables queries, reports and bar code labeling, along with scalable database applications and batched orders management among other features. According to ABI research of 1st quarterly publication in 2007, the global market for RFID are 3.812 billion dollars in 2006, in which Asia Pacific Zone is the biggest market place, the scale is reach 1.407 billion dollars. The forecasts of global market scale will increase to 5.1 and 6.388 billion dollars in 2007 and 2008 and furthermore than 11.5 billion dollars in 2011. It is a highly growth market. In Taiwan, the sharing of output value of Tag in RFID is the biggest as 39% in 2007 from MIC research; Second is Reader, the sharing rate is about 31%, and service is about 21%. MIC forecasts the output value of RFID tags are still the main growing indicators in RFID market and the sharing rate would be 46% in 2010.

Facing the trend of development and innovational application of global RFID technology, the Ministry of Economic Affairs and Science and Technology Advisory Group(STAG) of Executive Yuan, R.O.C in Taiwan promote the “RFID application of public field and promoting office” and issue the plans of leading application in living and safety of public,safety of trading way, travel and transportation of air-flight, circulation safety of food, and healthy and medical applications in 27th-Feb 2006. Therefore RFID becomes a sensation around the fields and industries and the reasons to be a star of tomorrow is not only a characteristic of non-contacting identification, but also the widely applications of this new technology and supported by adopters and users in different fields.

However the key points of adopting new technology are whether the applications suitable for reach missions or targets in corporation. The different fitting levels between the technology and missions are most causes of the different attributions of industrial models (Goodhue & Thompson, 1995). In order to evaluate the adoption of system owners and end users from perceived usefulness,perceived ease of use and continue to use by understanding the application status of RFID and which served customers after analyzed the fitting level of RFID between technology and corporation. Rely on the implementation process and the needs resources of RFID system from corporation to understand what kinds of industrial attributions are suitable for implementation and how to implement efficiently to user in adopting and reach the optimal synergy of corporation and advantageous for long term integration and master plan of country.

These are the consideration items and evaluation standards when implement RFID system. We research RFID system on its impact in organizational structure and culture, and further compare the impacts of adoptive RFID system enterprises and existing resources. On one hand, summarize the Diffusion of Innovation（DOI）theory and construct the framework for study, and the other hand we use case study to research what kinds of basic resources to be ready for implement RFID system in industry from interaction of human, organization and technology to understand the process of practice for long term operation and development. Furthermore, construct the setting technology diffusion process of RFID system from implement to acceptation for reference in academic and industrial practices.

LITERATURE REVIEW

RFID System and Application

RFID provides a non-contact, non-line-of-sight ability to gather real-time data and can penetrate most non-materials. The basic elements of RFID include three components, Antenna, Transponder (ID tag) and Interrogator. At the basic level, a RFID tag contains a tiny transponder and antenna that have a unique number or alphanumeric sequence; the tag responds to signals received from an interrogator’s antenna and transmits its number back to the interrogator. While the tags themselves are relatively simple, they allow the development tracking software that can maintain much better inventory information than just relying on human entry of identification information as Figure 1 showed.

RFID tags come in three general varieties: passive, active, or semi-passive (also known as battery-assisted). Passive tags require no internal power source, thus being pure passive devices (they are only active when a reader is nearby to power them), whereas semi-passive and active tags require a power source, usually a small battery. Passive RFID tags have no internal power supply and have shorter transmission distance (<3 meters). The minute electrical current induced in the antenna by the incoming radio frequency signal provides just enough power for the CMOS integrated circuit in the tag to power up and transmit a response. Most passive tags signal by backscattering the carrier wave from the reader and could have reduced tag costs dramatically. Unlike passive RFID tags, active RFID tags have their own internal power source, which is used to power the integrated circuit and to broadcast the response signal to the reader. Communications from active tags to readers are typically much more reliable (i.e. fewer errors) than from passive tags due to the ability for active tags to conduct a “session” with a reader and longer transmission distance (>100 meters).

In applications, RFID systems have different choices of reading and/or writing tags combine with using different requests and risk/secret levels. Read-only tags are preset to a specific number and retained that information throughout their life, whereas read/write tags can actually be written to by an appropriate read/write device. Writeable tags are particularly useful when information about an item needs to be easily associated with another item, particularly if there might be a problem with access to the database that would associate a read-only number with an item’s information. Writeable tags are also useful in creating information redundancy within an inventory system, maintaining information about an asset that is physically separate from the main database.

Innovation

For corporation, new meanings objects related with company continue to be improved in the corner of the world. Innovation is a process of operation and to have a least new object implemented into a linkage of PMTO. Therefore, innovation is a concept, a policy and an object of hardware or software that never seen or newer than current. Innovation is also a construction, a process, and real objects or invisible services. If we think that is an activity that includes the creation, media and acceptation of new objects. Rogers (1962) indicated innovation is someone or some unit that adopted a new interval technology or real objects.

Aiken & Hage(1966) said innovation is a concept was first adopted in internal company. Rogers(1995) proposed DOI theory and identified innovation are an idea, practices, or objects that is perceived as knew by an individual or other unit of adoption. Hoyer(1997) thought innovation is relative new product, service, concept or contribution from market. It is a wholly new product or an existing product is improved the value by new methods and also a relative new process and policy from adopters. Innovation broadly means all the new finding or inventions of technological and productivity that never existed before (Damanpour & Gopalakrishnan,1998；Damanpour & Gopalakrishnan, 2000). Bradford(2001) proposed innovation is a new concept successfully implemented into internal organization and recognized the concept is new by the specific area or social organization. Therefore, for related acceptable units, the innovation is knowledgeable by individual or units if the object is a new idea, practice or technology.

Diffusion of Innovation in Organization

Diffusion means transmit to social members by a specific way during a period of time (Rogers, 1995). In accordance with DOI theory, there are five basic elements affect the diffusion process of innovational objects as (1) Innovational product characteristics include relative advantage, compatibility, complexity, divisibility and communicability. It is important to note that these five characteristics are not the only ones that affect the rate of adoption; (2) Communication channels the meaning is the messages get from one individual to another; (3) Social system is a set of interrelated units that are engaged in joint problem solving to accomplish a common goal; (4) Time of decision process includes agenda setting, matching, redefining/restructuring, clarify and routinization; (5) Adopter categories include the five segments as innovators, early adopters, early majority, late majority, and laggards.

Organization attends and responses the change and transition of outside environment immediately for life (Subramanian ＆ Nilakanta,1996). Facing the rapidly changed environment, organization must to increase efficiently and competence itself to acceptance (Gopalakrishnan ＆ Damanpour,2000), and adopt the innovational objects to increasing the efficiency (Nystorm, Ramamurthy & Wilson, 2002; Mcafee, 2002; Porter, 1996; Rogers, 1995). Therefore, the driving force of accepting innovational objects in organization is for life and for business operation. Porter (1985) thought the innovation could excite the efficiency and effectives of organization. Dewan(1998) researched the companies which revenue growth rate are higher than the average growth rate of total corporations of U.S which have implemented innovative equipments on U.S market. The internal characteristics of organizations and the effects of environment effect the efficiency and effectives of organization (Gopalakrishnan ＆ Damanpour,2000). Therefore, the decision of acceptance innovation is closed to relate with the characteristics of organizations and the facing status of environment of organization.

Innovational product characteristics

Rogers(1962) proposed the explained variance of characteristics of innovational products are 49% to 87% of all the factors of effecting innovation that include relative advantage, compatibility, complexity, divisibility and communicability. The characteristic of relative advantage expresses extent the new product is better than the one that is replacing. If the relative advantages of innovative products higher than currents, the probabilities of adoption and the speed of development will be higher (Premkumar ＆Roberts, 1999; Batz,Janssen ＆Peters, 1999; Lederer etal., 2000; Tang, 2000; Slkye, Lou & Day, 2002; Mehrtens, Cragg & Milla 2001; Min,2003). McDade,Oliva& Pirsch (2002) said if the relative advantages or promotion of innovative products were stronger than original and know for consumers, the effectiveness of diffusion will be high.

Compatibility is the level of which an innovation fits into the specific society. The smoother the innovation fits into the culture, the faster the rate of adoption. The diffusion of certain types of birth control pills in certain areas is unattainable due to religious beliefs and cultural values just like the attitude for new technological objectives was affected experience and application degrees of adopting the related technologies. If application degree of related technology is higher in organization, the adoption of new technology will be higher (Williams, Magee ＆ Suzuki, 1998). Teng, Grover ＆ Guttler(2002). They found the compatibility was more often the significant effectiveness and established power for innovative objects compiled statistics in the past of DOI research.

Complexity of innovation is extent of how difficult it is for an adopter to understand and use an innovation. Jackson (1998) thought if the complexity of innovative object is higher, the time of on-job-training will be longer and cause of higher cost. High complexity products are usually hard to use and difficult to bring the real effects and performance, even more the risk rate will be over It is very logical to think that the harder the innovation is used, or at least perceived to use, the less likely that an adopter would be to consume it.

Divisibility refers to the ability of the consumer to give the innovation a test run before deciding whether to adopt it or not. Dunphy (1995) thought divisibility is very important for adopting innovative objects of organization. The being able to try out a product before purchase helps increase the rate of adoption drastically.

Communicability is simply stated as the idea that when an innovations benefit does not directly or immediately solve or fix a consumers problem or need, it will not diffuse through a society as quickly compared to an innovation that is more of solution to a problem. It is easier diffused in social institution if communicability of innovative object was higher than original (Dunphy,1995；Slkye, Lou & Day,2002).

Communication channels

The diffusion of innovations was related with communication processes. Rogers had compared with the media channels and personal influence. The finding of results from the mass media channels to the individual with little or no interaction between the individuals but powerful change the personal perception. The personal influence was easier to change the personal attitudes and behaviors.

It was first thought that the communication process the diffusion of innovations was only a one-step process, from the mass media channels to the individual with little or no interaction between the individuals. This obviously is not the case. Not only do individuals communicate with each other, some individuals pass along their influence as well as their knowledge to other individuals. Opinion leaders are individuals in a social system that others come to for information and guidance. With the understanding of opinion leaders in society it is clear to see that the original one-step process invalid. Now the process takes us through mass media channels to opinion leaders then to the individuals. This two-step flow of communication is probably not complete, but the important idea to arrive is that no matter how many steps are involved there will always be a two-step exchange of knowledge/influence at any given step during the diffusion process.

With the addition of steps to the communication process, the idea of personal influence comes into play, which refers to any communication between two individuals where one individual creates a change in consumer behavior and the other. A more practical way of stating personal influence is peer pressure.

Social system

Social systems are referring to the group or groups of people that an innovation diffuses through. Earlier, it was mentioned that people can determine how they will adopt innovations. Rogers(1995) proposed four-type models of decision making from different characteristics of organization and the constructs of decision making are optional, collective, authority and contingent. The optional type means the implementations of new object were adopted or rejected by specific person in organization. The collective means the implementations were decided by all members of organization. The authority is during option and collective types that mean the implementations were decided by some members who have more highly power or specialists. The contingent type cares the responses from middle-lower units after the new object was adopted by higher units in organization.

Time

Rogers’ innovation process in organizations, a five-stage process for how organizations adopt and implement an innovation as Agenda Setting where organizations determine needs, Matching where those needs are connected with innovations, Redefining/restructuring where the innovation is redefined to fit the organization, the organization is restructured to fit the innovation, or a combination of both, Clarifying where the new innovation is further refined and finally Routinization when the innovation becomes another part of the organization. In the third edition (1983) Rogers stated that an organization could not progress to the next stage until it had completed the current stage. An organization therefore, could not skip a stage. After further research, Rogers stated in the fourth edition (1995) that this still holds true when an organization adopts an innovation from outside the organization, but when the organization adopts an innovation developed within the organization, the innovation may progress through the stages irrespective order.