Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/33066
Title: The impact of rfid adoption on the market value of firms : an empirical analysis
Authors: Bose, I
Lui, AKH
Ngai, EWT 
Keywords: Abnormal reaction
Adoption of RFID
Disruptive technology
Event study
Financial market
Market reaction
Stock price
Issue Date: 2011
Publisher: Lawrence Erlbaum Associates
Source: Journal of organizational computing and electronic commerce, 2011, v. 21, no. 4, p. 268-294 How to cite?
Journal: Journal of organizational computing and electronic commerce 
Abstract: Extant research praises the benefits of radio frequency identification (RFID) on the basis of case studies and experience reports. However, empirical studies that access the strategic impact of RFID on organizations are rare, and the financial impact of RFID adoption on the firms remains unclear. This article provides empirical evidence related to the effect of RFID adoption on market value of firms by examining short-term market reaction toward RFID adoption. Based on 108 publicly traded firms that adopt RFID, we find that RFID adoption has a statistically significant negative impact on a firm's market value. The stock price of the firm decreases by at least 0.29% on the day of the announcement, indicating that the investors perceive RFID adoption announcements to be bad news for most firms. Moreover, the subsampling analysis indicates that US-based firms, late adopters, nonmanufacturing firms, less diversified firms, financially unhealthy firms, and low growth potential firms suffer more negative impact when they announce the news of RFID adoption. Overall, this article adds to the accumulating evidence about the risks that accompany a disruptive IT like RFID and provides a note of caution to firms that are interested to invest in RFID.
URI: http://hdl.handle.net/10397/33066
ISSN: 1091-9392
EISSN: 1532-7744
DOI: 10.1080/10919392.2011.614184
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