Open innovation strategies in shaping technological progress: the case of RFID

Élisabeth Lefebvre1, Ygal Bendavid1, Louis André Lefebvre1

1 ePoly research Center, École Polytechnique de Montréal

Abstract

This paper focuses on the open innovation practices of organizations involved in the emergence and diffusion of Radio Frequency Identification (RFID) technologies by examining how inter-organizational forces play a salient role in shaping technological advances in RFID. Support to the open innovation paradigm is provided, at least to some extent. The RFID innovation process is indeed open among numerous partners but the relative importance of open innovation strategies may depend on the different phases in the cyclical model of technological change. These strategies seem most appropriate in an era of ferment where uncertainties and inefficiencies are highest and where the different dimensions of merit of the new technological regime are unclear or even contested. There is indeed no guarantee that the best, fittest or superior technology will dominate. This is certainly the case for RFID as technological progress and technology selection seem to be community-driven.

Key wordsOpen innovation, RFID, emerging technologies, technology cycle

1. IntroductionThis paper explores one aspect of the Open Innovation paradigm (Chesbrough, 2003) by analysing collaborative strategies between the numerous (often rival) entities involved in the recent technological advances and diffusion of emerging technologies. As stated by Chesbrough, « Open Innovation assumes that useful knowledge is widely distributed, and that even the most capable R&D organization must identify, connect to, and leverage external knowledge sources as a core process in innovation » (Chesbrough,2006, p.2). This crucial assumption is central to the management of technology since it may allow us to better understand the path of technological progress.

More specifically, this paper focuses on the open innovation practices of organizations involved in the emergence and diffusion of Radio Frequency Identification (RFID) technologies by examining how inter-organizational forces play a salient role in shaping technological advances in RFID. This line of enquiry seems rather relevant for several reasons. First, our common understanding of open innovation practices remains limited (West et al, 2006, p.294). Second, RFID emerges as a powerful, disrupting and major undertaking (Sheffi, 2004; Heinrich, 2005). In fact, it has been coined as the « key to automate every thing » (Want, 2004), as “one of the ten greatest contributory technologies of the 21st century” (Chao et al. 2007) and as “the next wave of the IT revolution” (Srivastava, 2004). Third, RFID represents far more than a technological hype and has deep implications for organizations, supply and industry sectors. Its speed of adoption is rapid and its diffusion global, spanning over industries in different continents. A bandwagon effect can de witnessed as more and more companies are planning to increase their

RFID spending in the next months (Aberdeen, 2008a, b). As a result, RFID annual growth rates are over 23% (ChainLink Research, 2007). Even the more sophisticated (and expensive) segment of RFID technologies, i.e. the active RFID segment, is growing from 12% of the market in 2008 to 28% in 2018 (IDtechex, 2008) with total spending reaching around 5 billions $US in 2008 and forecasted to double before 2012.

The paper is organized as follows. The first section will briefly RFID technologies, components and sub-systems while we will attempt to position RFID in the technology cycle in the second section. The third section will analyse the open innovation strategies pursued by key actors and examine how competitors, governmental agencies, universities, research institutes, actual and future users cooperate in RFID technological developments.

2. RFID as a complex systemRFID represents a three layer complex system composed of different technologies, components or sub-systems (Figure 1).

Figure 1: RFID Multi layer architecture

Layer 1 consists of RFID tags also named transponders which can be passive (powered by the reader RF), active (powered by a battery) or semi-passive (with embedded sensors powered by a battery). These tags containing integrated circuits and a antenna are embedded in or attached to any physical entity (object, product, item animal, etc.) and are used to record and store information and communicate with the readers using radio frequency signals.

Layer 3RFID Middleware

Enterprise system Information layer

Mobile RFIDreaders

Fixed RFIDreaders

Ancillarydevices

Barcodereaders

802.1x access points

Other Mobiledevices

Layer 1Other AIDC technologies Semi passive

tagsPassive tags

Active (Wi-Fi)tags

Barcode labels

Layer 2RFID devices

Layer 1RFID tags

ERP WMS DW LES

Layer 2Other AIDC devices & network infrastructure

Infra red

Ultra Sound

Layer 3Middleware

...

Layer 3RFID Middleware

Enterprise system Information layer

Mobile RFIDreaders

Fixed RFIDreaders

Ancillarydevices

Barcodereaders

802.1x access points

Other Mobiledevices

Layer 1Other AIDC technologies Semi passive

tagsPassive tags

Active (Wi-Fi)tags

Barcode labels

Layer 2RFID devices

Layer 1RFID tags

ERP WMS DW LES

Layer 2Other AIDC devices & network infrastructure

Infra red

Ultra Sound

Layer 3Middleware

...

Layer 2 represents the RFID devices that enable the communication with the tags without requiring the line of sight, namely readers and antennas and other ancillary devices (i.e. printers-encoders and feed back devices). These devices also transfer the information from the tags to the RFID middleware (layer 3).

Layer 3 is the software platform or middleware which acts as a bridge between hardware components (i.e. layers 1 and 2) and host applications (e.g. Enterprise Application Systems) by enabling backend system integration. In fact, the RFID middleware not only monitors RFID equipment but also ensures the essential data management functions such as collection, storage, smoothing, filtering and aggregation. Moreover, it is critical for the events and workflow management functions based on preconfigured business rules and for other more advanced features such as analytics, business intelligence, reports and notifications.

The three layer RFID system reaps its whole added-value when connected to EIS (Enterprise Information Systems) such as ERP ( Enterprise Resource Planning), WMS (Warehouse Management System) or LES (Logistic Execution Systems) since the data processed by the middleware allow automated transactions (e.g. update the inventory, invoice a client, refuse a shipment, etc.).

Each component or sub-system in any of the three layers displayed in Figure 1 can be composed of rather complex technologies. For instance, passive tags, typically used in supply chain management applications are composed of various elements including integrated circuits (composed of a power controller, a clock extractor, a modulator for the received signal, a logic unit for the communication protocol, a microchip memory to store the data), antennas with various polarizations and a substrate. Moreover, active tags more frequently used in asset tracking applications are more complex components of an RFID system. They can also have a power supply, a receiver and transmitter (transceiver) operating at various frequencies, and multiple monitoring sensors (e.g. temperature, humidity, vibration and shock). The existence of multiple interfaces between these sub-systems, layers and other systems such as ERP, WMS and MES raises the level of technological uncertainty. Furthermore, RFID devices belong to and compete with a broader portfolio of technologies including among others barcode readers, Infra-Red (IR), Ultra Sound, 802.1x access points for wireless local area networks (LANs), and other AIDC related technologies (left hand side of Figure 1).

3. Positioning RFID in the technology cycleIn a corner stone article published in Administrative Science Quarterly, Tushman, and Anderson (1986) offered an insightful perspective on the nature of technological evolution. Their cyclical model of technological change which has been expanded (see for instance, Tushman and Rosenkopf, 1992) and adapted (Roberts and Liu, 2001) seems particularly fitted to examine the evolution of RFID (Figure 2).

3.1 Variation (Phase 1)

The cyclical model of technological change starts with a new discovery whose potential departs significantly from existing technology. In the case of RFID, this first phase could be traced back to the landmark paper entitled “Communications by Means of Reflected Power” (Stockman, 1948) which represents one the earliest technical papers on RFID. During the Second World War, the British Air Force already used RFID to identify friendly aircraft. A few discreet RFID applications then appeared in the 70s for tracking animals and in the 80s for automatic toll

collections (Landt, 2001). In 2003, RFID became a true challenger to established and leading companies in bar coding systems and required competencies (i.e. integrated circuits, antennas) that were not detained by these companies: RFID thus acted as a competence destroying technology. However, competence enhancing occurred in other organizations such as the EAS providers which started to offer complementary services (e.g. SAP AII).

Figure 2: RFID in the Technology Cycle

3.2 Era of ferment (Phase 2)

It is only very recently that RFID entered under « the winds of creative destruction » in an era of ferment that occurred between 2003 and 2007. An era of ferment is characterized by intense experimentation, rapid technological developments, strong turbulences, confrontation from pressure groups, high technological and non-technological uncertainties, and competing (sometimes incompatible) standards. In an era of ferment, fierce competition occurs between the old technological regime (see left hand side of figure 1) and the new one (right hand side) as the critical dimensions of merit between the two regimes remain unclear (Table 1).

When compared with the well established and very widely used bar codes systems (i.e. the old regime), RFID presents superior dimensions of merit that are not yet totally demonstrated (Table 1)

First, with respect to readability, RFID does not require a line of sight, has a much wider reading range (reading up to 15m. for passive UHF tags and 100m. for active tags), offers multiple readings at the same time (from more than 400 up to 1000 tags per second for EPC Gen 2 tags) and can operate in harsh environments. These readability related merits forced many organizations to seriously consider RFID as a potential substitution to other established AIDC technologies.

Technological discontinuity (since 2003)Competence enhancing for EIS providers

Competence destroying for many established technologydevelopers

Era of ferment (2003-2007).,Competition between the old end new technological regimes

and within the new technological regimeHigh uncertainties

Unclear dimensions of merit

Era of incremental change (from 2007)Constant improvements in term of components,

product-process and system performance (e.g. reading-writing distance, data capacity,

battery life cycle, etc.)

Dominant design (2005-2008)Dominant design for specific applicationsSome dominant standards (ISO, EPC)

Retention

Selection

Variation

Era of ferment

Technological discontinuity (since 2003)Competence enhancing for EIS providers

Competence destroying for many established technologydevelopers

Era of ferment (2003-2007).,Competition between the old end new technological regimes

and within the new technological regimeHigh uncertainties

Unclear dimensions of merit

Era of incremental change (from 2007)Constant improvements in term of components,

product-process and system performance (e.g. reading-writing distance, data capacity,

battery life cycle, etc.)

Dominant design (2005-2008)Dominant design for specific applicationsSome dominant standards (ISO, EPC)

Retention

Selection

Variation

Era of ferment

Table 1: RFID critical dimensions of merit

Dimensions of merit RFID technologies

Readability No line of sight required for reading and writing Operation harsh environment Multiple readings at the same time Much wider reading/writing range

Data storage Superior data capacity Unique ID at the item level Dynamic nature of the data with read and write functionality

Data security Protected data access with encryption at the tag and the network levels

Data accessibility and sharing

Multi-data access models Electronic business model: opportunity to leverage on the Internet

Cost Cost of RFID infrastructure, implementation & maintenance Benefits of real time monitoring

Enabling added intelligence

Intelligent products with Object to object (O2O) intelligent communication Intelligent processes with automated event notifications and action Management by exception Sensing the environment Ubiquitous computing Internet of things

However, RFID faces some technological challenges such as multi-tag collisions, potential interferences under certain conditions and reading rates reliability. For instance, the presence of metal, moisture, or liquids could generate noise to the electromagnetic field, making the transmission difficult or even disrupting (Gandino et al. 2007). Conversely in the last few years, the reading performance has increased significantly especially with the introduction of Generation 2 tags (Gen 2) in early 2007. Moreover, the very recent introduction of more efficient tags by industry leaders such as Alien Technology and Impinj addresses these community-driven required technical challenges. The two companies simultaneously released some tags where performance is not degraded by the presence of liquid, because the antenna designs of these tags exploit the magnetic and electromagnetic field coupling, enabling both near and far field reads in a single tag.

Second, in terms of the data storage capabilities, the dimension of merit is much clearer: RFID (up to 128 Kbytes) is superior to barcodes On the other hand, it is interesting to witness that bar code technology still evolves with recent bar codes such as “GS1 data bar” offering larger data storage capacity and smaller form factor being introduced in the market. Generally speaking 2D bar code such as data matrix also offer great possibilities of data storage with up to 3000+ characters; however, other bar codes limits still remain. Realistically, we will observe a co-evolution of RFID and bar code technologies for many years to come, especially since these technologies can act as complementary data carriers. The USDOD is using this tagging strategy for its IUID (Item Unique Identification), by using data matrix at the item level, passive RFID tags at the box and pallet level and active RFID tags at the container level.

Third, with respect to data security, RFID offers unique features such as enhanced security level (O’connor, 2008) with data encryption on tags and at the network level. For instance the availability of more complex chips answer persistent security issue preoccupations (e.g. Heydt-Benjamin et al. 2007) and permit traditionally secure industry driven organizations to use RFID

tags in operations (i.e. gaming, anti-counterfeiting). When the information is available on the network, redundant security levels are possible (i.e. at the tags and network levels).

Fourth, in terms of data accessibility and sharing, various electronic business models are possible with RFID technologies. Indeed, data access can be performed with network access i.e. data-on-network concept (separation of object and data), but can also be performed without depending on network capabilities, i.e. data-on-tag concept (integration of data with the object).

Fifth, with respect to relative costs, the justification of RFID remains problematic although the price will drop with more widespread use. Passive tags prices are expected to drop below 1 cent but bar codes only cost a small fraction of a cent; especially when they are printed on the items. Presently, even if costs have fallen steadily over the past few years, each RFID label still costs about 15 cents and up with variable costs based on the total volume and the economies of scale associated with large quantities. Moreover, companies investing in RFID technologies will be required to procure printer/encoders, readers, middleware, and professional consulting services to integrate these components into their environment. While the cost of RFID may appear prohibitive for adoption, looking at the benefits could justify the investments (e.g. increasing operational efficiency by reducing operating costs, increasing capital efficiency by reducing working capital, increasing revenues).

Much of the hype with RFID concerns the potentially most important RFID dimension of merit, namely enabling added intelligence into products and business processes (Table 1, sixth dimension). Intelligent RFID-enabled objects are able to sense, explore, analyze and control their environment, communicate with other smart objects, and interact with humans: RFID thus offers an intelligent sixth “digital sense” Sheffi (2004). Objects when equipped with RFID technology have a unique identity, store data, display pertinent information such as their features, history, etc. and, more importantly, make decisions about their own destiny (Lampe and Strassner, 2006). They can therefore trigger intelligent business processes (Lefebvre et al., 2005; Fosso Wamba et al 2007) such as (i) self-replenishing a shelf (when a product will be out of stock) (ii) a container asking to be removed from the sun (when tags are combined with sensors) or (iii) notification of an illicit act (e.g. automatic asset theft prevention, automatic anti counterfeiting action). Again all these automated real time transactions are only possible because RFID technology is integrated in a broader technology ecosystem. For example, while all the logical business rules triggering the processes are configured in the middleware, it is its integration with Enterprise Information Systems applications that allows the transactions.

Moreover, RFID holds much promise to close the gap between the physical world and the virtual world, facilitating coordination between product flow and information flow, since information travels seamlessly with the RFID-enabled product (Leimeister et al, 2007). For instance, the GPS (Global Positioning System) technology or mobile telephony LBS (Location Based Systems) can enable the real time localization functions of an RFID system that can be interconnected to networks and Internet, implying that objects can be instantaneously identified anywhere in the world, thus allowing the transition towards what is known today as “the Internet of things” (OECD, 2007). This is where EPC Global, is proposing its EPCIS (Electronic Product Code Information System) where specific information about any registered tagged product is available over the internet.

3.3 Selection and dominant design (Phase 3)

When looking at specific applications, dominant designs rise de facto. For instance, in supply chain management applications, the dominant design is clearly toward passive UHF smart labels (i.e., UHF 915-MHz class 1 Gen. 2). Correspondingly, the use of hand held readers (vs. mounted on shelves) is being established as the norm in RFID retail management for locating misplaced items, help shoppers find items in the right size and colors, conduct in store inventory management etc. Similarly, for mobile asset tracking - Real Time Location Systems (RTLS), the dominant design is towards active RFID Wi-Fi enabled solutions where organisations can leverage on their existing infrastructure.

A few dominant RFID standards have started to emerge during the period 2005-2008. In fact, several standards have won the allegiance of powerful actors. For instance, the International Organization for Standards (ISO) with industry and governments have developed interoperable standards (OECD, 2007), such as the ISO 15961 which defines how data should be transferred among components of a RFID system (e.g. tags and readers), the ISO 17364-17367 which specifies regulations for RFID in the supply chain or the ISO 11784-85 and 14223 series which deals with animal tagging, as well as transmission protocols. The EPC (Electronic Product Code) which identifies each item with a unique serial number has also emerged as the consensus standard for inter-firm applications, especially in the context of supply chain management. In 2005, the EPC Gen 2 tag standard for the air-interface communication protocol can be used in all global UHF frequencies (i.e. UHF RFID communication bands between 860 MHz and 960 MHz), thereby ensuring complete interoperability. This standard was then modified by ISO⁄EPCglobal to become ISO⁄IEC 18000-6C (ISO, 2006). More recently, the standards allowing real-time information sharing based on the EPCIS system were ratified by EPCglobal (EPCglobal, 2007).

The emergence of these dominant standards reinforce end-user confidence in RFID and reduce uncertainties, leading the way to a more widespread adoption However, RFID still remains context specific and RFID implementation differs from sector to sector. We could foresee in the next years the rise of dominant designs in different industry sectors.

3.4 Retention and era of incremental changes (Phase 4)

Once the critical dimensions of merit are agreed upon, the consensus is reached with respect to dominant standards and designs and critical problems are resolved, there is a “period of order creating” (Tushman, and Anderson, 1986) where incremental changes to functionalities, components and sub-systems are made in an iterative manner. Since 2007, constant improvements are made to increase reading-writing distance, data capacity, battery life cycle, etc.

As a whole and complex system (Figure 1), RFID went through an era of ferment during the years 2003-2007 and appears to be entering as early as year 2005 in the dominant design phase. When examining the evolution of the different components and sub-systems in each layer, it becomes much harder to position the technology as a whole in the technology cycle. For instance, when looking at passive tags, the established design is being challenged by Alien Technology and Impinj which propose an hybrid more versatile tag (i.e. enabling both near and far field reads in a single tag). Similarly, in the active tags market, Ekahau, a leader in the domain just released active tags where the battery is rechargeable using an external power cable, which eliminates the battery changes and minimizes the tag maintenance (used with tracking assets that

have a power source that can be connected to the tag for a continuous power feed). Recently, less costly passive UHF tags have been tested for fixed asset tracking.

4 Open innovation strategies and RFIDOpen innovation is not new. It can be traced back to the network model of innovation integrating notions such as techno-economic networks (Callon, 1992; Larédo and Mustar, 1996) or distributed innovation processes (Coombs et al., 2003). It is also rooted in the notion of co-opetition (Brandenburger and Nalebuff, 1997) whereby firms may be more successful if they compete and collaborate simultaneously than they ever would be by relying only on their own capabilities and competencies.

An internally oriented approach to new RFID technological developments appears particularly ill-fitted in the case of RFID whereas open innovation strategies seem far more appealing for several reasons. First, because RFID is a complex system, useful knowledge, ideas and capabilities have to be tapped on beyond the boundaries of the firms. Second, technological and market uncertainties associated with an era of ferment represent obviously a strong stimulus to share risks and costs of new technological developments. Third, the struggle occurs not only between the old and the new regime but also between the new technological regimes. Groups of competing organizations thus tend speed up their collaborative efforts since the swiftest is likely to reap the rewards.

4.1 Community-driven innovations

Technological advances in RFID and selected dominant designs do not arise from the technological logic (i.e. the superior or best technology wins) but rather from a community driven logic. Indeed, numerous influential actors contribute to the evolution of RFID technologies (Figure 3).

Figure 3 : RFID technology innovation ecosystem

Antennassuppliers

Middlewareproviders

Printers and Applicatorssuppliers

Network Infrastructure

providers

Readerssuppliers

(Tags & Inlaysuppliers

Sensorssuppliers

RFID Technologies

System

Application systems providers

Consultingservice

providers

E-commercePlatformProviders

ITInfrastructure

Providers

Industry &University

LaboratoriesTraining Institutions

andrecruiters

Government& Regulatory

agencies

InfluentialAdopters

Lead Users

Coalition andpressure groups

Antennassuppliers

Middlewareproviders

Printers and Applicatorssuppliers

Network Infrastructure

providers

Readerssuppliers

(Tags & Inlaysuppliers

Sensorssuppliers

RFID Technologies

System

Antennassuppliers

Middlewareproviders

Printers and Applicatorssuppliers

Network Infrastructure

providers

Readerssuppliers

(Tags & Inlaysuppliers

Sensorssuppliers

RFID Technologies

System

Application systems providers

Consultingservice

providers

E-commercePlatformProviders

ITInfrastructure

Providers

Industry &University

LaboratoriesTraining Institutions

andrecruiters

Government& Regulatory

agencies

InfluentialAdopters

Lead Users

Coalition andpressure groups

The central part of Figure 3 displays the main technology providers that participate directly to RFID innovations. It is possible to list the following key technology actors:

1) Tags and inlay suppliers: 3M, Impinj, Tag Sense, TAGSYS, Right Tag, RFID Inc., Avery Dennison RFID, Checkpoint, Hitachi, Texas instrument (TI-RFID) or Paxar are considered as key suppliers. For passive tags, let us mention ASK, ASTA-SD ltd., FreedomPay or Hypercom whereas for active and semi-active tags (RTLS) firms such as AAID Security Solution, Aeroscout, Assetpulse, Avante International, Ekahau Inc., Identec Solutions, RF Code, Savi – Lokheed Martin or WhereNet are very present.

2) Sensors suppliers: Crossbow Tech. Inc., Gentag, Infratab Inc., Sensitech Inc. or Thermal solutions Inc. are particularly active.

3) Readers and antennas suppliers such as Motorola-Symbol, Intermec, Alien, A.C.C. systems, Assa Abloy identification technology (ITG), IPICO, Right Tag, RFID Inc., AWID – Applied Wireless Identification, Psion Technologix, Siemens, ThinMagic, etc.

4) Printers and applicators suppliers such as Datamax Corp., Diagraph – a ITW compagny, FoxIV, Printronix, SATO, Zebra or WS Packaging Group.

5) Middleware providers like GlobeRanger, Corp., Codeplus Inc., Bea Systems, IBM Corp., Manhatan Associate Inc., Oracle, RF-IT Solutions Gmbh, SAP (Auto ID infrastructure -AII), Microsoft (Web Sphere), Shipcom Wireless (Catamaran), SPEDE technologies Ship2Save (OMS) and Microsoft (Biz talk server)

6) Network infrastructure providers including Cisco Systems, Sun Microsystems, Omnitrol, Blue Vector Systems, Markem and Vue technology. More broadly, other IT infrastructure providers including IBM and Hewlett Packard have been early movers in the RFID sphere.

7) E-commerce platform providers traditionally offering business-to-business EDI and supply chain integration, synchronization and collaboration solutions such as GXS have proposed their platform to leverage on EPC Network. Similarly VeriSign, one of the leading provider of “intelligent infrastructure services” for the Internet and telecommunications has been actively involved in the building of the EPC Network model.

It can be observed from the above list the presence of both small innovative and established large firms in each technology segment.

In the outer oval in figure 3 are displayed other key actors that are shaping by their strategic choices the evolution and long term adoption of RFID technologies, reinforcing the technology and market strategies of the organizations in the inner circle.

1) Applications systems providers: Accellos Inc. et RedPrairie Corp. (WMS), ACSIS (MES)or SAP (ERP) ensure the necessary compability by developing interfaces with their own systems and provide hybrid solutions. For instance, SAP developed SAPAII- Auto ID Infrastructure whereas RedPrairie ∕ Marc Global offers an RFID- based solution for its WMS.

2) Consulting services providers: IBM Global Solution, Hewlett Packard or Bell Canada define themselves as solution integrators whereas large consulting firms such as Accenture, Deloitte, CapGemini and Bearing Point and specialized firms like Deuteron, Cactus and Ship2Save also offer their services.

3) Lead users and Influential adopters: large retailers like Wal-Mart in the U.S., Metro AG in Germany or Tesco in the UK and governments such as the US Department of Defence with their early and much mediated RIFD adoption since 2003 have greatly contributed to the RFID hype.

4) Governments and regulatory agencies: these organizations have been instrumental in the emergence of dominant standards as discussed in section 2. Governments note only acted as lead users but have given mandates for RFID adoption in specific sectors, contributing to the emergence of industry specific dominant designs. For instance, the US Food and Drug Administration is actively encouraging pharmaceutical manufacturers, distributors and retailers to use RFID to prevent drug counterfeiting. In Europe, a strict supervision, control and traceability of feed and food “from the farm to the fork” is required. Since 2005, the EU regulation 178/2002 on food safety makes it obligatory for firms that produce and distribute agrifood products to supply information on the products, their origin and destination, as well as label food in order to facilitate traceability. In Australia, a mandatory RFID-based National Livestock Identification Scheme has been in place since 2002.

5) Industry and university laboratories and research centers such as the network of Auto-ID labs in different universities such the MIT (Massachusetts Institute of Technology) in the US, Cambridge University in the UK, Adélaïde in Australia, Keio University in Japon, St. Gallen University in Switzerland, Fudan University in China and ICU (Information and Communication University) in Korea. In Canada, the ePoly centre from l’École Polytechnique de Montréal is a pioneer in RFID applications while the “RFID Applications Development (RAD) Laboratory” associated to Southern Alberta Institute of Technology (SAIT) Polytechnic and the “McMaster RFID Applications Lab (MRAL)” in Ontario represent more recent initiatives.

6) Training institutions and recruiters such as OAT training in Dallas, RFID4U in Sunnyvalley or RFID recruiters and Direct Recruiters have helped companies train or find people who can implement RFID systems, therefore contributing to the facilitate the adoption process.

7) Coalition and pressure groups are also influencing the adoption cycle of the technology in various industries such as (i) the International Privacy Coalition which opposes the inclusion of biometric information and remotely-readable RFID chips in passports, or (ii) the group CASPIAN (Consumer Against Supermarket Privacy Invasion and Numbering) in the retail industry. Similarly subcutaneous RFID implants proposed by Verychip also raised number of debates, which are symptomatic of the era of ferment.

4.2 Licensing and IP strategies

Cross- and joint-licensing strategies seem particularly appropriate in an era of ferment where the regulatory framework cannot follow the speedy rate of technological change (Meza and Burgulman, 2003). For instance, the “RFID patent pool” represents a consortium of eight key technological players, namely Alien Technology, Applied Wireless Identifications Group (AWID), Avery Dennison, Moore Wallace, Motorolla/Symbol Technologies, ThingMagic, Tyco Fire & Security and Zebra Technologies which was formed in mid 2005 (O'Connor, 2006). Members of this consortium shared patent revenues and capitalize on new business opportunities (Wu andYen, 2007). Another initiative was launched by Intermec, an infrastructure RFID leader with more than 145 RFID patents: the «Intermec RFID Rapid Start Licensing Program » allows under licensing access to Intermec proprietary technologies.

4.3 Fusions and acquisitions strategies

Fusions and acquisitions are also symptomatic of an era of ferment (Roberts and Liu, 2001). For instance, Symbol Technologies, one of the largest suppliers of bar codes readers and technological leader with more than 900 patents entered in 2005 the RFID competition by buying Matrix Technology, a start-up manufacturing pioneer for RFID readers, antennas and tags. Symbol was then acquired by Motorola pour for the total sum of four billion US $ (Motorola, 2007). Nokia which has already an invested interest in RFID since 2004 initiated the “Near Field Communication Forum”and made an alliance with Verisign, the well-known provider of Internet infrastructure services that enables and protect digital interactions and one of the strong proponent for the elaboration of EPC network. More recently, industrial suppliers conglomerate Honeywell agreed to acquire AIDC hardware and software manufacturer Metrologic Instruments. This acquisition of complementary technological assets will be merged with Honeywell Security (part of Honeywell’s Automation and Control Solutions) in order to offer a broad range of solutions in the AIDC industry and strengthen its position in this market.

5 ConclusionThe discussion provided in this paper seems to support the open innovation paradigm, at least to some extent. The RFID innovation process is indeed open among numerous partners but the relative importance of open innovation strategies may depend on the different phases in the cyclical model of technological change. These strategies seem most appropriate in an era of ferment where uncertainties and inefficiencies are highest and where the different dimensions of merit of the new technological regime are unclear. There is indeed no guarantee that the best, fittest or superior technology will dominate. As noted by Tushman and Rosenkopf, “dominant design emerges not from the technological logic but from a negotiated logic enlivened by actors with interests in competing technical regimes”. This is certainly the case for RFID as technological progress and technology selection seem to be community-driven. Furthermore, the numerous key actors in the RFID community were instrumental in the early adoption of RFID applications, allowing to attain a critical mass of adopters and thereby create a bandwagon effect. The diffusion of RFID becomes self-sustaining since the utility (perceived or real) increases for all adopters as the number of adopters increases. In an era of incremental changes, open innovation strategies may be less appropriate as organizations will tend to reinforce their internal core competencies required for the selected dominant designs and by the strict regulatory and normative constraints, leading to potential core rigidities and increased commitment to status-quo.

Open innovation strategies raise a number of issues. For organizations, complexity rises when managing technological developments in different phases of the technology cycle and managing consequently managing incremental and radical innovations as well as evolutionary and revolutionary changes. This balancing act is therefore twofold: a company needs to improve its existing base (i.e. technology, processes) as well as simultaneously stimulating creative and innovative work; a dual capability detained by “ambidextrous organizations”.For policy makers, several key questions remain to be answered: How to track innovative activities that span across organizations and countries? To what extent open innovation is shared across global supply chains? Is it possible to isolate specific national patterns of innovative activities when departing from the closed innovation model? Under what frame conditions, especially regarding intellectual property law and market structure open innovation would be more effective?

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