IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v210y2019icp84-96.html
   My bibliography  Save this article

Does mandated RFID affect firm risk? The moderating role of top management team heterogeneity

Author

Listed:
  • Lui, Ariel K.H.
  • Lo, Chris K.Y.
  • Ngai, Eric W.T.

Abstract

The adoption of radio-frequency identification (RFID) can improve the efficiency of firms. However, RFID may also affect the risk and uncertainty in the operations of a firm. Although several studies have examined the effects of RFID on firm performance, the effects of mandated RFID on firm risk and the influence of top management team (TMT) characteristics on such effects remain largely unexplored. By examining mandated RFID in manufacturing industries, this study reveals that mandated RFID reduced firm risk in the long term. We further examined TMT heterogeneity to capture the influence of TMT cognitions and behaviors on mandated RFID related to firm risk. The results show that manufacturers with higher levels of demographic heterogeneity and higher levels of pay dispersion from incentive compensation experienced a greater reduction in firm risk following mandated RFID. However, pay dispersion of base salary compensation had no moderating effect on the relationship between mandated RFID and firm risk. The findings of this research provide important insights that an appropriate match between mandated RFID and certain TMT characteristics can lower firm risk associated with mandated RFID. The present study also contributes to information technology and operations management literature by providing the first empirical evidence showing the effect of mandated RFID on long-term firm risk and the influence of TMT heterogeneity on that effect.

Suggested Citation

  • Lui, Ariel K.H. & Lo, Chris K.Y. & Ngai, Eric W.T., 2019. "Does mandated RFID affect firm risk? The moderating role of top management team heterogeneity," International Journal of Production Economics, Elsevier, vol. 210(C), pages 84-96.
    • Handle: RePEc:eee:proeco:v:210:y:2019:i:c:p:84-96
    DOI: 10.1016/j.ijpe.2019.01.015
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527319300155
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2019.01.015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James W. Fredrickson & Alison Davis‐Blake & WM. Gerard Sanders, 2010. "Sharing the wealth: social comparisons and pay dispersion in the CEO's top team," Strategic Management Journal, Wiley Blackwell, vol. 31(10), pages 1031-1053, October.
    2. Tridas Mukhopadhyay & Sunder Kekre, 2002. "Strategic and Operational Benefits of Electronic Integration in B2B Procurement Processes," Management Science, INFORMS, vol. 48(10), pages 1301-1313, October.
    3. Ngai, Eric W.T. & Cheung, Bernard K.S. & Lam, S.S. & Ng, C.T., 2014. "RFID value in aircraft parts supply chains: A case study," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 330-339.
    4. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
    5. Sanjeev Dewan & Charles Shi & Vijay Gurbaxani, 2007. "Investigating the Risk-Return Relationship of Information Technology Investment: Firm-Level Empirical Analysis," Management Science, INFORMS, vol. 53(12), pages 1829-1842, December.
    6. Guo, Z.X. & Ngai, E.W.T. & Yang, Can & Liang, Xuedong, 2015. "An RFID-based intelligent decision support system architecture for production monitoring and scheduling in a distributed manufacturing environment," International Journal of Production Economics, Elsevier, vol. 159(C), pages 16-28.
    7. Phyllis A. Siegel & Donald C. Hambrick, 2005. "Pay Disparities Within Top Management Groups: Evidence of Harmful Effects on Performance of High-Technology Firms," Organization Science, INFORMS, vol. 16(3), pages 259-274, June.
    8. Lin, Winston T. & Chiang, Chung-Yean, 2011. "The impacts of country characteristics upon the value of information technology as measured by productive efficiency," International Journal of Production Economics, Elsevier, vol. 132(1), pages 13-33, July.
    9. Nativi, Juan Jose & Lee, Seokcheon, 2012. "Impact of RFID information-sharing strategies on a decentralized supply chain with reverse logistics operations," International Journal of Production Economics, Elsevier, vol. 136(2), pages 366-377.
    10. Sanjeev Dewan & Fei Ren, 2011. "Information Technology and Firm Boundaries: Impact on Firm Risk and Return Performance," Information Systems Research, INFORMS, vol. 22(2), pages 369-388, June.
    11. Reyes, Pedro M. & Li, Suhong & Visich, John K., 2016. "Determinants of RFID adoption stage and perceived benefits," European Journal of Operational Research, Elsevier, vol. 254(3), pages 801-812.
    12. Main, Brian G M & O'Reilly, Charles A, III & Wade, James, 1993. "Top Executive Pay: Tournament or Teamwork?," Journal of Labor Economics, University of Chicago Press, vol. 11(4), pages 606-628, October.
    13. Barber, Brad M. & Lyon, John D., 1996. "Detecting abnormal operating performance: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, vol. 41(3), pages 359-399, July.
    14. Alexander S. Alexiev & Justin J. P. Jansen & Frans A. J. Van den Bosch & Henk W. Volberda, 2010. "Top Management Team Advice Seeking and Exploratory Innovation: The Moderating Role of TMT Heterogeneity," Journal of Management Studies, Wiley Blackwell, vol. 47(7), pages 1343-1364, November.
    15. Bottani, Eleonora & Rizzi, Antonio, 2008. "Economical assessment of the impact of RFID technology and EPC system on the fast-moving consumer goods supply chain," International Journal of Production Economics, Elsevier, vol. 112(2), pages 548-569, April.
    16. Jay R. Galbraith, 1974. "Organization Design: An Information Processing View," Interfaces, INFORMS, vol. 4(3), pages 28-36, May.
    17. Lee, In & Lee, Byoung-Chan, 2010. "An investment evaluation of supply chain RFID technologies: A normative modeling approach," International Journal of Production Economics, Elsevier, vol. 125(2), pages 313-323, June.
    18. Sanjeev Dewan & Fei Ren, 2007. "Risk and Return of Information Technology Initiatives: Evidence from Electronic Commerce Announcements," Information Systems Research, INFORMS, vol. 18(4), pages 370-394, December.
    19. Francesca Gino & Gary Pisano, 2008. "Toward a Theory of Behavioral Operations," Manufacturing & Service Operations Management, INFORMS, vol. 10(4), pages 676-691, March.
    20. Peter W. Roberts & Raphael Amit, 2003. "The Dynamics of Innovative Activity and Competitive Advantage: The Case of Australian Retail Banking, 1981 to 1995," Organization Science, INFORMS, vol. 14(2), pages 107-122, April.
    21. Peter Wright & Mark Kroll & Jeffrey A. Krug & Michael Pettus, 2007. "Influences of top management team incentives on firm risk taking," Strategic Management Journal, Wiley Blackwell, vol. 28(1), pages 81-89, January.
    22. Sarac, Aysegul & Absi, Nabil & Dauzère-Pérès, Stéphane, 2010. "A literature review on the impact of RFID technologies on supply chain management," International Journal of Production Economics, Elsevier, vol. 128(1), pages 77-95, November.
    23. Perryman, Alexa A. & Fernando, Guy D. & Tripathy, Arindam, 2016. "Do gender differences persist? An examination of gender diversity on firm performance, risk, and executive compensation," Journal of Business Research, Elsevier, vol. 69(2), pages 579-586.
    24. Cynthia E. Devers & Gerry McNamara & Robert M. Wiseman & Mathias Arrfelt, 2008. "Moving Closer to the Action: Examining Compensation Design Effects on Firm Risk," Organization Science, INFORMS, vol. 19(4), pages 548-566, August.
    25. Gunasekaran, A. & Ngai, E.W.T. & McGaughey, R.E., 2006. "Information technology and systems justification: A review for research and applications," European Journal of Operational Research, Elsevier, vol. 173(3), pages 957-983, September.
    26. Hagendorff, Jens & Vallascas, Francesco, 2011. "CEO pay incentives and risk-taking: Evidence from bank acquisitions," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1078-1095, September.
    27. Talke, Katrin & Salomo, Sören & Rost, Katja, 2010. "How top management team diversity affects innovativeness and performance via the strategic choice to focus on innovation fields," Research Policy, Elsevier, vol. 39(7), pages 907-918, September.
    28. Dimakopoulou, Andriana G. & Pramatari, Katerina C. & Tsekrekos, Andrianos E., 2014. "Applying real options to IT investment evaluation: The case of radio frequency identification (RFID) technology in the supply chain," International Journal of Production Economics, Elsevier, vol. 156(C), pages 191-207.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lui, Ariel K.H. & Lo, Chris K.Y. & Ngai, Eric W.T. & Yeung, Andy C.L., 2021. "Forced to be green? The performance impact of energy-efficient systems under institutional pressures," International Journal of Production Economics, Elsevier, vol. 239(C).
    2. Huiming Liu & Su Wu & Chongwen Zhong & Ying Liu, 2020. "The Sustainable Effect of Operational Performance on Financial Benefits: Evidence from Chinese Quality Awards Winners," Sustainability, MDPI, vol. 12(5), pages 1-23, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lui, Ariel K.H. & Lo, Chris K.Y. & Ngai, Eric W.T. & Yeung, Andy C.L., 2023. "A tough pill to swallow? The lessons learned from mandatory RFID adoption," International Journal of Production Economics, Elsevier, vol. 258(C).
    2. Ahmed Musa & Al-Amin Abba Dabo, 2016. "A Review of RFID in Supply Chain Management: 2000–2015," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 17(2), pages 189-228, June.
    3. Lim, Elizabeth, 2018. "Social pay reference point, external environment, and risk taking: An integrated behavioral and social psychological view," Journal of Business Research, Elsevier, vol. 82(C), pages 68-78.
    4. Hailiang Zou & Yunfeng Lu & Guoyou Qi, 2023. "Does Pay Disparity within Top Management Teams Lead to Bribery Activity? The Moderation of Demographic Diversity," Sustainability, MDPI, vol. 15(4), pages 1-23, February.
    5. Ali, Irfan, 2016. "The impact of ERP implementation on the financial performance of the firm : An empirical study," Other publications TiSEM 876506f5-1aed-4421-aa2c-0, Tilburg University, School of Economics and Management.
    6. Gunasekaran, Angappa & Subramanian, Nachiappan & Papadopoulos, Thanos, 2017. "Information technology for competitive advantage within logistics and supply chains: A review," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 99(C), pages 14-33.
    7. Zhong, Ray Y. & Huang, George Q. & Lan, Shulin & Dai, Q.Y. & Chen, Xu & Zhang, T., 2015. "A big data approach for logistics trajectory discovery from RFID-enabled production data," International Journal of Production Economics, Elsevier, vol. 165(C), pages 260-272.
    8. Tao, Feng & Wang, Liang & Fan, Tijun & Yu, Hao, 2022. "RFID adoption strategy in a retailer-dominant supply chain with competing suppliers," European Journal of Operational Research, Elsevier, vol. 302(1), pages 117-129.
    9. Niklas Kreilkamp & Sascha Matanovic & Maximilian Schmidt & Arnt Wöhrmann, 2023. "How executive incentive design affects risk-taking: a literature review," Review of Managerial Science, Springer, vol. 17(7), pages 2349-2374, October.
    10. Maria Rouziou, 2019. "The contingent value of pay inequalities in sales organizations: integrating literatures in economics, management, and psychology," AMS Review, Springer;Academy of Marketing Science, vol. 9(3), pages 184-204, December.
    11. Leon Zolotoy & Don O’Sullivan & Geoffrey P. Martin, 2022. "Behavioural Agency and Firm Productivity: Revisiting the Incentive Alignment Qualities of Stock Options," Journal of Management Studies, Wiley Blackwell, vol. 59(7), pages 1756-1787, November.
    12. Svetlana Nikolicic & Milorad Kilibarda & Marinko Maslaric & Dejan Mircetic & Sanja Bojic, 2021. "Reducing Food Waste in the Retail Supply Chains by Improving Efficiency of Logistics Operations," Sustainability, MDPI, vol. 13(12), pages 1-24, June.
    13. Min-Seok Pang, 2017. "Politics and Information Technology Investments in the U.S. Federal Government in 2003–2016," Information Systems Research, INFORMS, vol. 28(1), pages 33-45, March.
    14. Jorien L. Pruijssers & Pursey P. M. A. R. Heugens & J. Oosterhout, 2020. "Winning at a Losing Game? Side-Effects of Perceived Tournament Promotion Incentives in Audit Firms," Journal of Business Ethics, Springer, vol. 162(1), pages 149-167, February.
    15. Ling Xue & Gautam Ray & Xia Zhao, 2017. "Managerial Incentives and IT Strategic Posture," Information Systems Research, INFORMS, vol. 28(1), pages 180-198, March.
    16. Lan Guo & Theresa Libby & Xiaotao (Kelvin) Liu & Yu Tian, 2020. "Vertical Pay Dispersion, Peer Observability, and Misreporting in a Participative Budgeting Setting," Contemporary Accounting Research, John Wiley & Sons, vol. 37(1), pages 575-602, March.
    17. Cui, Victor & Ding, Waverly W. & Yanadori, Yoshio, 2019. "Exploration versus exploitation in technology firms: The role of compensation structure for R&D workforce," Research Policy, Elsevier, vol. 48(6), pages 1534-1549.
    18. Jaroenjitrkam, Anutchanat & Mihaylov, George & Yu, Chia‐Feng (Jeffrey) & Zurbruegg, Ralf, 2023. "Pulling together by paying together: The effect of product market competition on TMT incentive dispersion," Journal of Business Research, Elsevier, vol. 165(C).
    19. Baixauli-Soler, J. Samuel & Belda-Ruiz, Maria & Sanchez-Marin, Gregorio, 2015. "Executive stock options, gender diversity in the top management team, and firm risk taking," Journal of Business Research, Elsevier, vol. 68(2), pages 451-463.
    20. Dimakopoulou, Andriana G. & Pramatari, Katerina C. & Tsekrekos, Andrianos E., 2014. "Applying real options to IT investment evaluation: The case of radio frequency identification (RFID) technology in the supply chain," International Journal of Production Economics, Elsevier, vol. 156(C), pages 191-207.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:210:y:2019:i:c:p:84-96. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.