Factors that affect the adoption of RFID in the Saudi logistics industry: an empirical investigation

Abstract

PurposeThe purpose of this study is to explore the factors that affect the adoption of radio frequency identification (RFID) technology in Saudi Arabia’s logistics services industry. The specific focus is the influence of key variables in multiple domains: technology (complexity and compatibility); organization (top management support, firm size, quality of human capital and integration of supply chain strategy); and environment (information intensity, competitive pressure, trading partner pressure and regulatory pressure).Design/methodology/approachData were obtained by distributing a survey instrument to a target sample of 459 Saudi logistics company employees whose positions meant they were well placed to explain the operations and technologies used in their organizations. In total, 459 useable responses were received, which also constituted the final sample for the analysis. The survey was validated using confirmatory factor analysis, and the study hypothesis was tested using binary logistic regression.FindingsOf the firms represented in the data collected, 70% had not adopted RFID technology. Cost issues, technical issues and lack of industry standards were identified as the main factors hindering the decision to adopt RFID. The results of the binary logistic regression show that top management support, quality of human capital, firm size and trading partner pressure are the variables that most influence whether or not a firm adopts RFID technology.Practical implicationsAccording to the analysis, it is imperative that the industry adopt RFID given that this technology can provide strategic and operational advantages. Based on the findings, small and medium enterprises in the logistics services industry require governmental support in terms of providing funding, training and a supportive regulatory environment. Support of this nature would encourage logistics services companies to adopt new technology and move toward applying the global standards developed in the industry to date. Finally, in order to execute a clear and complete strategy across the supply chain, companies must collaborate with trading partners in implementing RFID.Originality/valueThe body of research on emerging markets does not include any empirical studies focused on the adoption of new technologies and innovation in the supply chain. Although researchers discuss applications of technologies in operational and supply chain processes across multiple industries, most of the published research on RFID technology focuses on European and North American contexts. This study is, therefore, much needed for its fundamental contribution to identifying and understanding the factors that affect RFID adoption decisions in emerging markets.