Mapping the benefits and costs associated with process innovation: The case of RFID adoption

The successful implementation of any innovation requires an understanding of its benefits and costs. This study examines the changes in the magnitude of costs and benefits associated with technology process innovation adoption as the innovation diffuses across different industries. Using RFID as an exemplar technology, the study shows that the magnitude of benefits and costs associated with technological process innovation adoption within different industries varies as technology diffuses beyond early adopters to the early majority. During the early stages of technology evolution, the development cost, the cost of capital, ethical costs and simple direct implementation costs (in the form of the cost of tags) predominate. As a dominant design emerges the profile of costs changes with the emphasis on initiation costs, more holistic direct implementation costs and indirect implementation costs. A similar change in the emphasis of benefits is observed, with a shift from direct to indirect benefits being noticeable as the technology moves from early adopters to early majority adopters. Our findings help to explain the difficulties in consistently measuring innovation outcomes observed in the innovation implementation literature, and emphasize the need to take into consideration the stage of technology development as a significant factor that influences the realised outcomes from innovation implementation.

► We examine the magnitude of benefits and costs of innovation during diffusion across sectors.
► For early adopters, cost of capital, development, ethical and simple direct implementation costs predominate.
► For early majority, the emphasis is on initiation costs, direct and indirect implementation costs.
► As technology diffuses from early adopters to early majority the focus shifts from direct to indirect benefits.