RFID adoption in the supply chain: the rational expectations hypothesis alternative view

Abstract

The author uses Au and Kauffman's interpretation of the Rational Expectations Hypothesis (REH) and the accompanying adaptive learning concepts to answer the key research question: 'Do the REH and the adaptive learning theories explain the early adoption behaviours and actions of organisations affected by mandates to deploy Radio Frequency Identification (RFID) within their supply chains?' Both theories are used in clarifying the deployment of RFID by early-adopter firms in the pharmaceutical industry. Using content analysis of secondary data, evidence is presented and answers the research question in the affirmative. In terms of the four conditions of the evaluative framework, the following were confirmed: (1) network externalities characterise RFID adoption in the pharmaceutical industry supply chain; (2) the diverse interests of the multiple participants in the pharmaceutical industry directly affected by RFID adoption mandates needed to be reconciled; (3) firms in the pharmaceutical industry conduct pilot projects to deal with the uncertainties surrounding RFID technology and (4) supply chain participants in the pharmaceutical industry optimise the use of limited information available to them to be able to respond to mandate for RFID deployment by the US Food and Drug Administration in connection with the drug electronic pedigree tracking initiative. All five propositions were also positively confirmed.