Journal of the Association for Information Systems

Volume 24 Issue 2 Article 7

2023

Theorizing about the Early-Stage Diffusion of Codependent IT

Innovations
Srikanth Parameswaran
Binghamton University, sparames@binghamton.edu

Rajiv Kishore
University of Nevada, Las Vegas, rajiv.kishore@unlv.edu

Xuanhui Yang
Xiamen University, xxhhyang@gmail.com

Zhenyu Liu
Xiamen University, zhenyliu@xmu.edu.cn

Follow this and additional works at: https://aisel.aisnet.org/jais

Recommended Citation
Parameswaran, Srikanth; Kishore, Rajiv; Yang, Xuanhui; and Liu, Zhenyu (2023) "Theorizing about the
Early-Stage Diffusion of Codependent IT Innovations," Journal of the Association for Information Systems,
24(2), 379-429.
DOI: 10.17705/1jais.00789
Available at: https://aisel.aisnet.org/jais/vol24/iss2/7

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 Journal of the Association for Information Systems (2023) 24(2), 379-429
doi: 10.17705/1jais.00789

RESEARCH ARTICLE

ISSN 1536-9323

Theorizing about the Early-Stage Diffusion

of Codependent IT Innovations

Srikanth Parameswaran,1 Rajiv Kishore,2 Xuanhui Yang,3 Zhenyu Liu4

1
Binghamton University, State University of New York, USA, sparames@binghamton.edu
2
University of Nevada, Las Vegas, USA, rajiv.kishore@unlv.edu
3
Xiamen University, China, xxhhyang@gmail.com
4
Xiamen University, China, zhenyliu@xmu.edu.cn

Abstract

In this paper, we focus on the early-stage diffusion of codependent IT innovations, which are a type
of innovation in which the overall innovation consists of two complementary parts that are adopted
by two different adopter communities but where both parts need to be jointly adopted by the two
coadopter communities for successful diffusion of the overall innovation. Using innovation
diffusion, organizing vision (OV), and institutional entrepreneurship theories as the key theoretical
lenses, and an in-depth case study reconstructed using 20 years of discourse surrounding Walmart’s
campaign in the early stage of diffusion of the RFID-in-retailing technology, we develop a four-
phase process model for the early-stage diffusion of codependent IT innovations. We make three
specific contributions to the IS discipline, specifically to the literature on IS innovation adoption and
diffusion. First, we add the notion of coadopter relative advantage and posit that the organization in
the coadopter community with a higher coadopter relative advantage that perceives the highest
degree of coadopter relative advantage will emerge as an institutional entrepreneur (IE) and will
influence the early-stage diffusion of the codependent IT innovation. Second, we add the notion of
an internal-external influencer and posit that the IE may be an actor who is internal to the overall
adoption phenomenon, which involves two different coadopter communities, but external to the
coadopter community with a lower coadopter relative advantage that adopts the innovation
component. Third, we divide the early-stage diffusion process into four phases—emergence,
structuralization, evolution, and chasm—and identify the institutional entrepreneurship strategies
used and the OV functions enacted by the IE during each phase. We propose that the IE for a
codependent innovation will: (1) use the rationale development strategy and enact the interpretation
OV function during the emergence phase, (2) use the resource mobilization strategy and enact the
mobilization OV function during the structuralization phase, (3) use the relationship development
strategy and enact the legitimation OV function during the evolution phase, and (4) use all the three
institutional entrepreneurship strategies and enact all the three OV functions during the chasm phase.

Keywords: Codependent IT Innovation, Early-Stage Innovation Diffusion, Coadopter Relative

Advantage, Internal-External Influencer, Institutional Entrepreneurship, Organizing Vision,
Innovation Diffusion Theory, RFID Technology

Suprateek Sarker was the accepting senior editor. This research article was submitted on August 22, 2015 and
underwent five revisions.

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1 Introduction
Compared to the extensive research on the diffusion of
single-whole innovations in the IS field, scant attention
has been paid to the diffusion of a class of innovations
termed multiproduct innovations in the prior literature
(Bucklin & Sengupta, 1993), which we call
codependent innovations. Distinct from single-whole
innovations such as personal computers, spreadsheets,
ERP systems, and database technologies, codependent
innovations are a type of information technology (IT)-
based innovation in which the overall innovation
consists of two complementary parts that are adopted
by two different adopter communities, where both the
parts need to be jointly adopted by members, or
coadopters, of the two adopter communities for
successful diffusion of the overall innovation (Bucklin
& Sengupta, 1993). The radio frequency identification
and detection (RFID) technology used in retailing for
supply chain management, the focus of the current
study, is an example of a codependent innovation.
There are two main parts to this RFID-in-retailing
innovation1—the RFID chip (also known as an RFID
tag) and the RFID reader—which are adopted by
different adopter communities. Suppliers of consumer
packaged goods attach RFID tags to their products
before shipping them to retailers. Retailers install
RFID readers in their supply chain, including
warehouses, trucks, retail stores, etc., to track these
packages. RFID technology promises to benefit the
overall supply chain of retailing only if both retailers
and suppliers jointly adopt their respective parts.
Innovation diffusion theory (IDT) posits two key
notions that explain the diffusion of single-whole
innovations. The first notion is the innovation’s
relative advantage, as perceived by the adopter
community. Potential adopters perceive a relative
advantage in adopting an innovation if they assess that
the innovation’s benefits outweigh its costs, given their
existing practices (Akhlaghpour & Lapointe, 2018;
Rogers, 2003; Sun et al., 2018). The earlier that
adopters perceive a relative advantage, the earlier they
adopt the innovation. The second notion is the role of
influencers, both external and internal to an adopter
community, in influencing the adoption of the
innovation at various stages of diffusion (Akhlaghpour
& Lapointe, 2018; Bass, 2004; Strang & Soule, 1998).
In the early stages of the diffusion process, external
influencers, such as mass media, research institutes,
1 Theoretically there can be more than two complementary
parts to a codependent innovation, with more than two
different adopter communities adopting each of the different
part of the codependent innovation. However, typically there
are two complementary parts to a codependent innovation, as
in the case of RFID technology, which is the focus in our
The Early-Stage Diffusion of Codependent IT Innovations
technology vendors, and consulting firms,
communicate the innovation to potential adopters,
shape their perceptions, and fuel the early adoption of
the innovation (Brancheau & Wetherbe, 1990; Jeyaraj
& Sabherwal, 2014; Rogers, 2003). Later on, these
early adopters become internal influencers within the
adopter community and fuel more widespread
adoption (Jeyaraj & Sabherwal, 2014; Rogers, 2003).
While the notions of relative advantage and
external/internal influencers are the primary
explanations for the diffusion of single-whole
innovations in the literature, scholarship on the
diffusion of codependent innovations has been rather
scarce.
Codependent innovations challenge both of the key
IDT notions discussed above. Consider the notion of
relative advantage: Regarding codependent
innovations, the costs and benefits that the two adopter
communities will gain from the adoption of their
unique part of the codependent innovation are likely to
be different and unique to that community. Further,
due to these differences, the relative advantage gained
from the codependent innovation for the two coadopter
communities is likely to be asymmetric, with one
community enjoying a higher relative advantage from
the codependent innovation, especially during the
early stages of the innovation diffusion process
(Gaukler et al., 2007). Therefore, the overall interest of
coadopter communities in adopting their respective
parts of the innovation is also likely to be asymmetric
in the early stages of the diffusion phenomenon.
In the RFID-in-retailing example, retailers can expect
immediate benefits from enhanced product visibility,
traceability, availability, and lower ongoing costs due
to the one-time fixed cost of installing RFID readers
and associated systems. On the other hand, in the early
stages, the supplier community realizes no immediate
benefits but incurs higher ongoing costs due to the
recurring cost of affixing RFID chips onto products
sold to retailers, a cost that is not incurred by retailers.
As such, in the early stages of diffusion, the retailer
community is likely to have more favorable opinions
about the RFID-in-retailing innovation than the
supplier community and is likely to adopt its part of the
innovation sooner than the supplier community. In
contrast, in single-whole innovations, there is a single
adopter community with a single cost-benefit calculus
(Agarwal & Prasad, 1997; Junglas et al., 2019; Moore
& Benbasat, 1991). For example, organizations
paper, or in the case of other innovations, such as EMV credit
cards (i.e., cards with a computer chip). For the sake of
clarity and tractability in our exposition, in this paper, we
consider only two complementary parts to a codependent
innovation.
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adopting ERP systems calculate relative advantage
from this technology over current technology based on
similar benefits (e.g., seamless business process
integration) and costs (e.g., software licensing,
workforce training) as those incurred by other
members of the adopter community (Su & Yang,
2010). In essence, while the traditional notion of
relative advantage considers heterogeneity in
perceptions of relative advantage, such heterogeneity
is in the perceptions of members within a single
adopter community based on a single set of costs and
benefits; however, heterogeneity in the perceptions
between two different coadopter communities, which
is based on two different and unique sets of costs and
benefits, is not considered.
In addition, the successful diffusion of a codependent
innovation requires the joint adoption of two different
parts of the innovation by two different coadopter
communities. This implies that the realization of a
coadopter community’s relative advantage from
adopting their part of the codependent innovation is
contingent on the other coadopter community adopting
their part of the codependent innovation. Therefore,
even if a coadopter community perceives a high
relative advantage, its members will not be able to
realize this relative advantage by adopting their part of
the codependent innovation if members of the other
coadopter community resist adopting their part of the
codependent innovation due to their lower relative
advantage, especially during the early stages of the
diffusion process. In other words, a high relative
advantage for one community, which is a strong
predictor of diffusion in the traditional innovation
diffusion literature, may be insufficient to kickstart the
diffusion of codependent innovations overall. In the
RFID-in-retailing example, retailers’ relative
advantage in adopting RFID readers will bear fruit
only if suppliers also adopt RFID tags and affix them
on product packaging or palettes. As discussed above,
members of the supplier community might resist the
adoption of this innovation due to a lower or negative
relative advantage, especially during the early phases
of the diffusion phenomenon, in turn reducing the
likelihood of realization of the retailers’ relative
advantage from the RFID codependent innovation
(Dutta et al., 2007; Gaukler et al., 2007). For this
reason, we also need to extend the traditional notion of
relative advantage to the notion of a coadopter relative
advantage to explain how the early-stage diffusion
process for codependent innovations unfolds.
Next, we consider the role of influencers. External
influencers who typically play an influential role in the
early stages of the diffusion process in the context of
single-whole innovations might find it hard to
influence the adoption of the part of the innovation that
yields a lower relative advantage to the relevant
381
coadopter community. In the context of the RFID-in-
retailing innovation, external influencers might find it
difficult to influence the adoption of RFID tags by the
supplier community due to their higher costs and lower
relative advantage vis-à-vis the supplier community.
On the other hand, members in the coadopter
community adopting the innovation component with a
higher relative advantage might have the incentive to
serve as influencers for the coadopter community
adopting the innovation component with the lower
relative advantage, as the former community will
benefit from the codependent innovation only when
the latter community also adopts the Innovation. In the
context of the RFID-in-retailing innovation, retailers
might have an incentive to serve as influencers for the
supplier community that is adopting RFID tags
because retailers will benefit from this overall
innovation only when suppliers adopt their part of the
innovation. So, are these influencers internal or
external influencers? Traditional IDT would suggest
that retailers as influencers for the supplier community
are internal influencers because they belong to one of
the two adopter communities. However, we argue that
retailers are external to the supplier adopter
community that is being influenced to adopt the
innovation component with a lower relative advantage,
i.e., the RFID tag.
Therefore, we ask: How does the diffusion process
unfold during the early stages of codependent
innovations? Specifically, which actors play the role of
influencers during the early-stage diffusion process for
codependent innovations? And what actions do these
influencers engage in to influence the early-stage
diffusion process for these types of innovations? These
questions are important to address because new
codependent IT innovations continue to be developed
and implemented in various industries, as IT continues
moving toward more open and decentralized systems
and as interdisciplinary advancements in fields
including nanotechnology, computer science, and
biomaterials continue pushing the horizons of these
types of IT innovations. Further, many of these
innovations are targeted for adoption by very large
adopter communities, such as the recent Europay,
Mastercard, and Visa (EMV) chip-embedded credit
card payment system, which is expected to be adopted
by hundreds of millions of consumers and millions of
retailers, banks, credit card companies, and other
organizations. Finally, these innovations will likely
transform industries, organizations, and the way that
individuals live and work in fundamental ways, as can
already be seen with the RFID and EMV-credit card
technologies in the supply chain and retailing arenas.
However, the successful diffusion of such innovations
necessitates that all parties (e.g., individuals, retailers,
and processing networks for credit cards) jointly adopt

these innovations in order for the benefits to flow to
different parties in the value chain. As with the RFID-
in-retailing diffusion discussed above, the diffusion of
the EMV-chip credit card payment technology has also
been slow and complicated. A CNBC report showed
that in its early stages, only 37% of US businesses had
adopted EMV credit card payment technology by
March 2016, despite the deadline of October 1, 2015
that was set for adoption of this payment technology
by all parties concerned and despite significant
penalties for the failure to adopt (Dimyan, 2016).
This paper is an attempt to fill the current research gap
through an in-depth case study of the early stages of the
diffusion of RFID technology in retailing. We use
innovation diffusion theory (IDT) (Akhlaghpour &
Lapointe, 2018; Rogers, 2003; Strang & Soule, 1998),
organizing vision theory (OVT) (Swanson & Ramiller,
1997), and institutional entrepreneurship theory (IET)
(Hardy & Maguire, 2017) as the key lenses for this
study. First, IDT deals with the notions of relative
advantage and influencers (i.e., external vs. internal) in
explaining innovation diffusion (Akhlaghpour &
Lapointe, 2018; Rogers, 2003; Strang & Soule, 1998).
The notion of the coadopter relative advantage helped
us conceptualize a potential coadopter’s assessment of a
codependent innovation. The notion of internal-external
influencers allowed us to conceptualize the source of
influence, which is internal to the codependent
innovation’s adopter community but external to the
coadopter community that has a lower coadopter
relative advantage. Second, IET studies why and how
proactive actors who may benefit from new business
practices “create new institutions or transform existing
ones” (Maguire et al., 2004, p. 657). Thus, this theory is
aligned with our goal of theorizing the role of proactive
actors who may benefit from a codependent innovation
to act as influencers and the strategies they use in the
early-stage diffusion of codependent innovations.
Finally, OVT deals with the public discourse
surrounding IT innovations created by actor
communities with a vested interest in the diffusion of the
IT innovation. At the institutional-field level, an
organizing vision (OV) interprets and legitimizes the IT
innovation and mobilizes appropriate resources for the
diffusion of that IT innovation, functions that may lead
to the development of an institutional field surrounding
the focal IT innovation (Swanson & Ramiller, 1997;
Wang & Ramiller, 2009). OVT provides us with a
theoretical lens for analyzing the key OV functions that
influencers enact through their actions during the early-
stage diffusion process in the context of codependent
innovations in the institutional field.
We contribute to the IS innovation diffusion literature
by studying codependent innovations with two
complementary parts, and examine how they diffuse
during the early stages of the innovation process.
The Early-Stage Diffusion of Codependent IT Innovations
Based on the case of the adoption of RFID-in-retailing,
we develop a process model of the early-stage
diffusion process for codependent innovations and
examine the different roles of the institutional
entrepreneur (IE) during the different phases of the
early-stage diffusion process. There are three specific
ways in which we make this contribution. First, we add
the notion of coadopter relative advantage and posit
that the member of the coadopter community that
perceives the highest degree of coadopter relative
advantage between the two different adopter
communities will emerge as an IE and will influence
the early-stage diffusion of the codependent
innovation. Second, we add a nuanced understanding
that the key influencers in the early stages of the
diffusion process need not be external to the adopter
community, as suggested by the traditional innovation
diffusion literature. We add the notion of an internal-
external influencer and posit that the IE as an
influencer may be an actor internal to the overall
adoption phenomenon involving two different adopter
communities but external in terms of the actor’s
influence on the focal coadopter community. Third, we
divide the early-stage diffusion process into four
phases—emergence, structuralization, evolution, and
chasm—and identify the institutional entrepreneurship
strategies used and the OV functions enacted by the IE
during each phase. Our contributions also have
important practical implications for all the entities
involved in the institutional field surrounding a
codependent IT innovation.
2 Theoretical Background
2.1 Codependent Innovations and
Innovation Diffusion Theory
Codependent innovations differ from single-whole
innovations according to two aspects. First,
codependent innovations consist of two
complementary parts that are adopted by two different
adopter communities (e.g., RFID in retailing). On the
other hand, single-whole innovations are adopted as a
whole by a particular community of individual or
organizational adopters. The adopters stand to benefit
from the adoption of “single-whole” innovations both
directly from their use of the innovation as well as
indirectly from any network externalities that may
result from the diffusion of the focal innovation in the
adopter network (Katz & Shapiro, 1985, 1986; Rogers,
2003). Enterprise resource planning (ERP) is an
example of a single-whole innovation. While there
may be several parts of ERP, including software,
hardware, database, services, etc., all of these parts are
adopted by a single adopter community (Wang &
Ramiller, 2009).
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Journal of the Association for Information Systems
Second, there is a need for joint adoption of the two
different but complementary parts of a codependent
innovation by two different adopter communities in order
for the benefits to flow in the value chain. Joint adoption
occurs when an entity in one adopter community adopts
one part of the codependent innovation, and another entity
in the other adopter community adopts the other
complementary part of the codependent innovation. For
example, the RFID-in-retailing innovation will be
beneficial to the overall supply chain, i.e., both retailers
and their suppliers, only when there is joint adoption of
this codependent innovation, with suppliers adopting
RFID tags and the retailers adopting RFID readers (Dutta
et al., 2007). Retailers can better manage their supply
chains using RFID technology only when their suppliers
collectively tag all their products, because only then can
retailers read the RFID tags to identify each product as it
flows through their supply chains in order to accurately
estimate product arrival times, shortages, stock-outs, etc.
Suppliers can benefit by directly tracking shipments,
which can obviate the need to investigate chargebacks
from cargo theft. Further, if retailers share their data on
sales, inventory, and shipments collected from RFID
readers at the point-of-sale, store shelves, and
warehouses, etc., suppliers can replenish out-of-stock
items faster, based on sales data, and verify the timeliness
of promotions schedules, based on information about
when products reach the store shelf (Wailgum, 2006;
Whitaker et al., 2007). These supply chain benefits will
not be realized if either the retailers or their suppliers do
not adopt their complementary parts.
These two aspects of codependent innovations are
intriguing and have important implications for
advancing the two key notions in the IDT literature: (1)
relative advantage and (2) the role of influencers. The
first notion of relative advantage is well established as
one of the most important innovation attributes in the
broader innovation diffusion literature (Agarwal &
Prasad, 1997; Rogers, 2003). This construct has also
emerged as one of the most dominant predictors of the
diffusion of IT innovations (Akhlaghpour & Lapointe,
2018). Relative advantage “is a ratio of the expected
benefits and the costs of adoption of an innovation”
(Rogers, 2003, 233). However, relative advantage is not
an objective, invariant innovation attribute, and different
adopters in a community of adopters perceive an
innovation’s relative advantage at different levels given
their current situation and future expectations (Moore &
Benbasat, 1991). Because different adopters have
different perceptions of the relative advantage of the
innovation, they adopt it at different times. This
phenomenon is the essence and basis of the innovation
diffusion process and the associated S-shaped diffusion
curve (see Figure 1), which is essentially the cumulative
normal distribution curve. The S-shaped curve shows
the cumulative number of adopters as a function of time
(Rogers, 2003). During the early stages, the diffusion
curve rises slowly because only a few venturesome
383
adopters, also called innovators, see the relative
advantage from adopting the innovation (Libai et al.,
2008; Moore, 2014; Rogers, 2003). Next, the innovation
is embraced by early adopters, who are visionaries and
do not require much evidence of the innovation’s
relative advantage. As the diffusion process continues to
evolve, the innovation is adopted by the “early
majority,” followed by the “late majority,” and finally
by “laggards” according to the adopters’ understanding
of the relative advantage to be gained from the
innovation based on both external and internal
communication influencing the adoption phenomenon.
The percentage of adopters from the overall adopter
community in each of these adopter categories may vary
for different innovations, but the generally accepted
percentages based on the assumption of a normally
distributed diffusion process are 2.5% innovators,
13.5% early adopters, 34% early majority, 34% late
majority, and 16% laggards. Once a certain percentage
of the adopter community, somewhere between 10%
and 20%, has adopted the innovation, the peer influence
process accelerates the S-curve until all other adopter
categories—early majority, late majority, and
laggards—adopt the innovation. The diffusion is said to
be in an early stage until a majority of adopters embrace
the innovation. In the S-curve, the early stage ends when
the early majority starts adopting, after which the growth
stage begins.
Scholars have argued that there is a chasm between the
early and growth stages of the diffusion (Clarysse et al.,
2014; Moore, 2014). The validation provided by early-
stage adopters does not serve as a good reference for the
adopters in the early majority (i.e., growth-stage) due to
the psychographic profile differences between the
adopters in these groups (Moore, 2014; Xu et al., 2017).
Until the innovation fits the pragmatist orientation of a
typical early majority adopter, diffusion reaches a
standstill, creating what scholars call a “chasm” between
the early and the growth stages of diffusion (Moore, 2014;
Xu et al., 2017). Indeed, the innovations that fail to appeal
to the early majority adopters do not cross the chasm
(Davidson et al., 2015; Moore, 2014; Purdy & Gray,
2009). Only those innovations with a confirmed relative
advantage and applicability to the early majority adopter
category will cross this chasm to achieve mainstream
adoption in the growth stage (Moore, 2014).
In the context of codependent innovations, there are two
different coadopter relative advantages for the two
different adopter communities adopting two different but
complementary parts, which confer different sets of
benefits and costs to their respective coadopter
communities. For example, in the case of the diffusion of
the RFID-in-retailing innovation, suppliers and retailers
are the two different adopter communities (i.e., the
coadopter communities) adopting RFID tags and RFID
readers, respectively.

Note: yellow line—S-shaped diffusion curve showing the cumulative number of adopters; blue line—bell curve showing the number of adopters;
double-headed brown arrow—distinguishes early and growth stages of diffusion
Figure 1. Diffusion of Innovations Model for Single-Whole Innovations
Hence, we add nuance to the notion of relative
advantage and introduce the notion of coadopter
relative advantage in this paper. We define coadopter
relative advantage as the extent to which one part of a
codependent innovation (e.g., RFID reader) offers a
relative advantage (over prior technology) to its
coadopter community (e.g., the retailer community)
contingent upon the other coadopter community (e.g.,
the supplier community) adopting the other part of the
codependent innovation (e.g., RFID tags). We explore
whether and how a member of the coadopter community
that perceives a higher degree of coadopter relative
advantage influences the early-stage diffusion of a
codependent innovation.
We clarify and emphasize that there will be
heterogeneity in perceptions of coadopter relative
advantage among members of both coadopter
communities, including the community with a lower
coadopter relative advantage, such that some members
of each community are likely to perceive their respective
coadopter relative advantage to be fairly high while
others perceive it to be quite low. In fact, the diffusion
of a codependent innovation will occur only if some
members in each of the two coadopter communities
perceive their respective coadopter relative advantage to
be high and thus adopt their respective complementary
parts of the codependent innovation. For example, in the
The Early-Stage Diffusion of Codependent IT Innovations
case of the RFID-in-retailing innovation, the retailer
community is overall more likely to have a higher
coadopter relative advantage as compared to the
supplier community, especially during the early stages.
Suppliers bear RFID tagging costs from the start, which
are immediate and recurring, whereas the benefits from
RFID-in-retailing are long-term and not immediate. In
contrast, retailers incur an initial fixed cost of installing
RFID readers but they realize supply-chain benefits
right from the earliest stages. Therefore, the retailer
community perceives a higher coadopter relative
advantage than the supplier community in the early
stages (Gaukler et al., 2007). However, this does not
mean that there is no heterogeneity in how different
members of the supplier community view their
coadopter relative advantage. Indeed, some suppliers
might perceive a higher coadopter relative advantage as
they foresee a long-term reduction in their supply-chain
costs by investing in RFID tags in the early stages,
despite knowing that their adoption of RFID tags will
also benefit retailers and likely to a higher extent. The
same is true of the retailer community. Essentially, it is
these innovators and visionaries in the two coadopter
communities, i.e., retailers and suppliers, who initiate
and spur the early-stage diffusion of the RFID-in-
retailing codependent innovation.
384
Journal of the Association for Information Systems
The second notion is the role of influencers, both
external and internal to an adopter community, in
influencing the adoption of the innovation at various
stages of diffusion by serving as communication
channels (Bass, 2004; Strang & Soule, 1998). The
classical innovation diffusion process unfolds for single-
whole innovations fueled by some innovators and early
adopters who adopt based on information obtained from
external influencers, e.g., a technology vendor, a
consultant, etc. External influencers, such as mass media
channels (e.g., television, radio, brochures, and
magazines), rapidly disseminate generic information
about the innovation to a large number of potential
adopters (Jeyaraj & Sabherwal, 2014). However, the
early majority does not adopt the innovation based
solely on information from mass media. Early adopters
become internal influencers within the adopter
community by sharing more specific, experiential
information about the innovation with adopters in the
early majority category with whom they share an
interpersonal relationship (Jeyaraj & Sabherwal, 2014).
In the case of codependent innovations, the coadopter
community that sees the highest degree of coadopter
relative advantage may act as an influencer for the other
coadopter community with a lower coadopter relative
advantage. In the case of RFID-in-retailing, a retailer
may influence the supplier adopter community to foster
joint adoption of this codependent innovation at a rapid
clip. This finding is in consonance with the extant
literature on diffusion. However, a nuance we add here
is that of an internal-external influencer. In the case of
RFID-in-retailing, a retailer is an internal influencer
when we consider the overall innovation diffusion
phenomenon, which involves two different coadopter
communities coadopting two different but
complementary parts of the codependent innovation.
However, a retailer is an external influencer in terms of
the influence on the coadopter community of suppliers,
who are not likely to be highly motivated to adopt RFID
chips due to a lower coadopter relative advantage for
them as compared to that for the retailer community.
Therefore, we add a nuance to the notion of the
influencer, and define an internal-external influencer as
a member of one coadopter community (e.g., the retailer
community) who adopts one part of a codependent
innovation (e.g., RFID readers) but influences members
of the other coadopter community (e.g., the supplier
community) who are adopting the other part of the
codependent innovation (e.g., the RFID tags).
When organizations explore innovative IT solutions,
scholars recommend an institutional perspective to learn
how institutions develop, produce, and diffuse new IT
solutions (Hinings et al., 2018; Nielsen et al., 2014;
Wang & Ramiller, 2009). Organizations seldom exist as
silos. They are embedded in an institutional field, its
interorganizational relationships, and the material and
linguistic objects that both constrain and enable their
efforts to innovate with IT. An institutional field is a set
385
of actors formed by the same regulatory processes or
sharing the same meaning systems (Nielsen,
Mathiassen, & Newell, 2014). These actors include
adopters, vendors, consultants, governments, investors,
journalists, research institutions, and professional
associations. Using an institutional perspective, we
borrow from two streams of research. In the first stream,
we focus on the institutional entrepreneurship literature.
In the second stream, we focus on the OV, which is the
IT discourse created and employed by an
interorganizational community of actors with varying
material interests (Swanson & Ramiller, 1997).
2.2 Codependent Innovations and
Institutional Entrepreneurship Theory
We borrow from IET and conceptualize influencers as
institutional entrepreneurs (IEs). IET explores why and
how proactive organizations with strategic interests try
to initiate changes that bring about new institutions or
transform existing ones (Leca et al., 2008). This theory
views IEs as actors trying to bring about an institutional
change while being institutionally embedded. If actors
are institutionally embedded, their norms and collective
beliefs will be institutionally determined (Battilana et
al., 2009). How, then, do IEs initiate institutional change
in spite of the institutional field’s pressure toward stasis
(Battilana et al., 2009)? This central problem in IET is
called the “paradox of embedded agency” (Seo & Creed
2002). IEs can bring about institutional change by
certain conditions that trigger them to sense an
opportunity for institutional change. These conditions
include institutional field conditions like the extent of
institutionalization of existing practices, regulatory
forces, and states of crisis (Hardy & Maguire, 2017).
These conditions can increase uncertainty or create
problems for an actor and consequently persuade actors
to seek ways to reduce problems (Hardy & Maguire,
2017). Moreover, an actor’s relative power among the
actors in the institutional field and/or the availability of
financial, political, or social resources at their disposal
could grant them the power to influence the field.
To study the role of influencers in the diffusion of
codependent innovations, we focus on the influencing
strategies used by an IE to affect the diffusion of an IT
innovation within an adopter community in the
institutional field. Based on their synthesis of the IET
literature, Hardy and Maguire (2017) proposed that IEs
utilize three broad strategies to promote change: (1)
rationale development: IEs construct and communicate
rationales to persuade other actors to support the
institutional change; (2) resource mobilization: IEs
mobilize resources to reward or punish other actors to
persuade them to support the institutional change; and
(3) relationship development: IEs establish relationships
to garner support for the proposed change (Hardy &
Maguire, 2017). Rationale development activities may
include but are not limited to telling stories about their

(un)successful implementation of an innovation, using
frames to get the community to focus on the innovation,
and producing, consuming, and distributing knowledge
pertaining to the innovation (Battilana et al., 2009;
Phillips et al., 2004). Resource mobilization activities
may include but are not limited to actors funding
research activities for developing an innovation,
implementing negative consequences like penalties on
dependent actors, materially rewarding supporters, and
using formal authority in legal and professional spheres
to authorize new practices or create new rules (Hardy &
Maguire, 2017). Relationship development activities
may include but are not limited to conducting research
studies for developing an innovation in collaboration
with another actor, joining a standards body as a
member, and forming alliances and partnerships (Hardy
& Maguire, 2017).
2.3 Codependent Innovations and
Organizing Vision Theory
We borrow from OVT to conceptualize how
institutional change happens around a codependent IT
innovation. OVT concepts of the public discourse
around an IT innovation, and OV functions that foster
diffusion provide a framework to analyze the diffusion
of codependent innovations. Analyzing the public
discourse surrounding a codependent innovation would
help us understand how different adopter communities
communicated and perceived the coadopter relative
advantage. OV is a collective (to some degree),
convergent, institutional field-level idea of an IT
innovation that is based on actors’ knowledge about and
experience using the IT innovation (Wang & Ramiller,
2009). Actors in the innovation community such as
adopters, vendors, research analysts, consultants, and
journalists develop a set of ideas about the application
of an IT innovation in organizations.
An OV diffuses an IT innovation through three
functions: (1) interpretation by conveying the uses and
usefulness of the innovation to the community
(Davidson et al., 2015), (2) legitimation by backing the
innovation and demonstrating its applicability to
accepted business problems (Davidson et al., 2015;
Kaganer et al., 2010), and (3) mobilization by
motivating actors to participate in the diffusion process
(Amadoru et al., 2021; Davidson et al., 2015).
Interpretation in the institutional field will be evident
through research and development activities to identify
the usefulness of the innovation, activities funding
research institutes to better understand an innovation,
and using public discourse to generate buzzwords
(Kaganer et al., 2010; Liao, 2016; Swanson & Ramiller,
1997). Mobilization in the institutional field will be
evident through vendors displaying new products in
forums, powerful actors coercing other actors to adopt
the innovation, actors deploying or calling other actors
to deploy resources for implementing the innovation,
The Early-Stage Diffusion of Codependent IT Innovations
and actors using discourse to outline how to diffuse the
innovation (Amadoru et al., 2021; Swanson & Ramiller,
1997; Wang & Swanson, 2007). Legitimation in the
institutional field will be evident in actors using
authority and power to attach legitimacy to an
innovation, using success stories to convey why other
actors need to embrace the innovation, setting standards
for the innovation, and using discourse to show how the
innovation fit into norms (Kaganer et al., 2010; Marsan
et al., 2020; Paré et al., 2020; Swanson & Ramiller,
1997; Wang & Swanson, 2007).
3 Theoretical Integration
3.1 Innovation Diffusion Theory and
Organizing Vision Theory
OVT and IDT share similarities and differences. Both
theories discuss the role of adopters, vendors,
consultants, research institutes, standards organizations,
and mass media. Actors in IDT, including adopters, act
as communication channels interacting with potential
adopters to transmit the innovation (Akhlaghpour &
Lapointe, 2018). Potential adopters are also placed in the
social system category to conceptualize the adopter
community (Hu et al., 1997). OVT focuses on an
interorganizational community consisting of actors with
material interests in an innovation. However, the
interactions represent this community’s public
contemplation of new technology to make sense of the
innovation at the community level, in contrast to a
relatively private sensemaking effort discussed in IDT
(Swanson & Ramiller, 1997).
The relative advantage concept is also applicable in both
theories. According to IDT, potential adopters assess the
relative advantage of an innovation based on
information provided by external and internal
influencers. In OVT, potential adopters make an
adoption decision based on the business problematic
linked to the OV and discussed by way of public
discourse around the innovation, which in turn helps
them assess the costs and benefits (i.e., the relative
advantage) associated with the innovation (Marsan et
al., 2012; Miranda et al., 2015; Ramiller & Swanson,
2003; Swanson & Ramiller, 1997).
The mechanisms in IDT are the influencers’ actions and
the relative advantage perceived based on adopter
profiles (Akhlaghpour & Lapointe, 2018). OVT
mechanisms are mobilization, interpretation, and
legitimation. In contrast to IDT mechanisms, OVT
counterparts have broader outcomes because they foster
diffusion by shaping the institutional field around an IT
innovation. Thus, while both theories focus on the
adoption and diffusion of technology as outcomes, OVT
also focuses on commercial opportunities, community
structure, and technology invention and adaptation as
outcome variables (Nielsen et al., 2014; Swanson &
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Journal of the Association for Information Systems
Ramiller, 1997). Moreover, the mechanisms posited by
the two theories are related. For instance, an OV’s
mobilization function forges a network of adopters to
bring about strong ties needed for IDT’s internal
influence mechanism (Strang & Soule, 1998).
Both theories discuss the influential roles different
actors play in different phases based on their perceived
benefits from the diffusion of an innovation. While OVT
discusses which actors dominate the discourse at each
phase (Wang & Ramiller, 2009), IDT posits that
external influencers initially influence potential
adopters, which is followed by influence based on
firsthand experience by internal influencers (Jeyaraj &
Sabherwal, 2014). Taken together, these two theories
can better illuminate the diffusion process by (1)
identifying the sources that shape the relative
advantage—influencers and the business problematic
linked to the OV, (2) highlighting the role of
influencers—directly influencing potential adopters and
shaping the OV, (3) conceptualizing the mechanisms
fostering diffusion, and (4) explaining multiple
outcomes at the adopter and the institutional levels.
3.2 Innovation Diffusion Theory and
Institutional Entrepreneurship Theory
IDT and IET share both similarities and differences as
well. Both theories focus on the interorganizational
community surrounding an innovation, with IET
focusing more on an IE that engages proactively with
the adopter community for an innovation’s widespread
adoption. Both theories discuss different actors playing
an influential role at different phases based on their
perceived benefits from an innovation’s diffusion.
Both theories also focus on the role of influencers and
their strategies as mechanisms that drive the
widespread adoption of an innovation. The influencers
in IDT act as communication channels transmitting the
relative advantage to potential adopters. Despite the
influencer’s efforts, some innovations do not diffuse
due to the existing unsupportive institutional
arrangements, which reduce the benefits and increase
the cost of adoption (i.e., lower the relative advantage).
To address this, IET discusses the role of influencers,
also called as IEs, who bring out the new institutional
arrangements needed to foster innovation diffusion
(Wang & Swanson, 2007). The IE’s actions go far
beyond just communicating the relative advantage
with potential adopters. They build relationships,
mobilize resources, and develop rationale (Hardy &
Maguire, 2017) to develop, test, fund, regulate,
legitimize, and use the technology (Wang & Swanson,
2007), essentially increasing the relative advantage for
potential adopters.
The mechanisms for innovation diffusion are also
related in the two theories. For instance, IET suggests
that we can expect vendors to fund media houses to
387
campaign for an innovation and to author special
sections in business magazines discussing the future of
an industry (Wang & Swanson, 2008). Such actions
create a market for the innovation at an institutional
level. For potential adopters, these actions convey the
relative advantage to be gained from adopting an
innovation, thereby acting as the IDT’s external
influence mechanism.
Regarding outcome variables, both theories also focus
on the adoption and diffusion of a new technology. In
addition, IET also focuses on institutional field change.
The two theories taken together can better illuminate
the diffusion process by conceptualizing the role of
actors in (1) directly influencing potential adopters (as
in IDT) and (2) developing an institutional field when
current institutional arrangements do not support an
innovation (as in IET).
3.3 Institutional Entrepreneurship Theory
and Organizing Vision Theory
OVT and IET also share some similarities and
differences. First, both theories highlight the role of the
actor community in influencing institutional change
even though they do so differently. On the one hand,
OVT designates roles to each actor in the community
that collectively creates the OV, namely vendors,
adopters, research institutes, consultants, etc.
(Davidson et al., 2015; Swanson & Ramiller, 1997).
On the other hand, IET discusses one proactive actor
embedded in the adopter community of the
institutional field who occupies a position of power
within that community and serves as an IE for
institutional change (Hardy & Maguire, 2017; Marsan
et al., 2020).
Both theories also focus on institutional change
mechanisms. The OV in OVT interprets, legitimizes,
and mobilizes to diffuse the IT innovation and make it
the new paradigm (Amadoru et al., 2021; Kaganer et
al., 2010). The IE in IET interprets the field, develops
rationale, mobilizes resources, and develops relations
to effect institutional change (Hardy & Maguire,
2017). While in OVT, diffusion mechanisms are
performed by the institutional field-level construct OV
on the actors in the field, in IET, individual actors
(organizations or individuals) perform their actions to
influence other actors in the institutional field toward
institutional change.
The mechanisms in both theories are related. When an
IE’s actions build rationale and develop relationships to
understand an innovation, it represents the OV function
of interpretation (Marsan et al., 2020). An IE using their
resources to back an innovation and building rationale
by publishing case studies represents the OV function of
legitimation (Kaganer et al., 2010). When an IE builds
relations to structure the community and mobilizes
resources to activate the market, it represents the OV

function of mobilization (Wang & Swanson, 2007). In a
similar vein, OVT argues that, like an IE, certain
opportunistic actors try to command the OV to suit their
interests (Swanson & Ramiller, 1997).
Both theories also focus on the dynamics of the
diffusion process. While OVT identifies the actors who
are likely to dominate the OV at each phase of the IT
innovation diffusion (Amadoru et al., 2021; Liao, 2016;
Wang & Ramiller, 2009), IET discusses the actions
performed by an IE at each stage of an institutional
change (Morrill, 2006; Purdy & Gray, 2009).
Scholars have also integrated OVT and IET by arguing
that IEs can enact an OV function when they perform
actions that interpret, legitimize, and mobilize an IT
innovation (Kaganer et al., 2010; Marsan et al., 2020;
Paré et al., 2020; Wang & Swanson, 2007). Through
these actions, ambitious players in an
interorganizational community can carve out a
preferred institutional environment where they can
benefit from innovation diffusion and
institutionalization. In line with this thought, Wang
and Swanson (2007) studied the diffusion of
professional services automation and proposed that IEs
promote IT diffusion by (1) perceiving the opportunity
for institutional transformation based on the likelihood
of IT diffusion, (2) using discourse to incorporate
compelling success stories from adopters and vendors
to legitimize the innovation, and (3) mobilizing the
community by urging the members to focus their
attention on the innovation.
3.4 Moving from One Institution to the
Next
We now integrate the three streams of literature from
IDT, OVT, and IET and discuss how they collectively
inform how an institutional field around an incumbent
technology moves to a new state to foster the diffusion
of a different new technology. The incumbent
technology is the well-accepted and widely adopted
means for solving a business problem. However, this
technology is never perfect. New technologies are
launched to address the incumbent technology’s
problems and, in many cases, provide additional
applications for the user (Fayard et al., 2016). Some
actors may see a tremendous advantage in launching a
new technology. But launching it requires massive and
enduring new institutional arrangements necessitating
an institutional field change, which faces major
resistance from other actors in an institutional field
(Marsan et al., 2012). The three theories discussed
above inform this change process by which an
institutional field moves from a prior state to a new
state, as well as the role the key influencers play during
this process. Below, we discuss how each perspective
informs the institutional change process.
The Early-Stage Diffusion of Codependent IT Innovations
According to IDT, actors who see an advantage in a
new technology serve as communication channels and
transmit the innovation directly to the potential
adopters to enhance the adopter’s relative advantage
and foster adoption (Jeyaraj & Sabherwal, 2014). The
diffusion is initially confined to venturesome and
visionary adopters based on the innovation’s potential
communicated by external influencers (Rogers, 2003).
Subsequently, the innovation diffuses in the
mainstream market once benefits are confirmed by
members of the adopter community, i.e., the internal
influencers (Rogers, 2003). Thus, the new technology
becomes the dominant technology in the industry,
replacing the incumbent one.
IET posits that actors with vested interests in the
innovation strive to bring about institutional-level
arrangements through rationale development, resource
mobilization, and relationship development (Hardy &
Maguire, 2017). Such actions promote diffusion
through legitimacy, authorized practices, regulations,
rules, interactor relationships, resource pools,
community attention, norms, mandates, and rewards
(Battilana et al., 2009; Hardy & Maguire, 2017; Purdy
& Gray, 2009). Consequently, a new institutional field
emerges surrounding an innovation whose adoption is
taken for granted and advantageous.
According to OVT, opportunistic actors shape the
discourse surrounding an innovation (Munir &
Phillips, 2005) and enact the OV functions of
interpretation (Amadoru et al., 2021; Kaganer et al.,
2010), legitimation (Kaganer et al., 2010; Marsan et
al., 2020; Paré et al., 2020; Wang & Swanson, 2007),
and mobilization (Wang & Swanson, 2007) to promote
the diffusion of the innovation. Such actions promote
the material realization of the innovation through
market offerings and support infrastructure, interactor
relationships, standards, adoption manuals, technology
development, and research. These actions motivate the
community by promoting a common understanding of
the technology’s uses, usefulness, legitimacy, and
future (Davidson et al., 2015). Hence, potential
adopters obtain institutional support for their adoption
and draw upon the common understanding to shape
their perception of the innovation’s business use cases
(Marsan et al., 2012; Miranda et al., 2015; Ramiller &
Swanson, 2003).
Table 1 summarizes the theoretical foundations we
discuss above. This table presents the key theoretical
concepts and their definitions from the three theories—
IDT, IET, and OVT. These concepts form the building
blocks of our processual model of early-stage diffusion
of codependent innovations that we develop in this
paper. This table also presents the coding examples for
the concepts of interest in our conceptual model, which
is discussed later in Section 5. We describe our coding
process in Section 4.4.
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Table 1. Key Theoretical Concepts
Concept Definition
Key notions in the early-stage diffusion of codependent innovations—Rooted in innovation diffusion theory
Extent of joint Adoption and diffusion have been
adoption/ joint established concepts in the innovation
diffusion literature since the 1970s. Adoption occurs
when an entity in a particular community
adopts (e.g., accepts, buys, starts using,
etc.) an innovation, which is a new idea,
technology, product, etc. Diffusion is the
process by which information about an
innovation is communicated through
certain channels over time among the
members of a community and results in
the adoption of the innovation by an
increasingly larger number of entities
within the adopter community. The extent
of diffusion of an innovation over time has
been found to typically follow an S-curve.
We extend these concepts in the context of
codependent innovations. Joint adoption,
therefore, occurs when an entity in one
adopter community (e.g., the supplier
community) adopts one part of a
codependent innovation (e.g., RFID tags),
and another entity in another adopter
community (e.g., the retailer community)
adopts the other part of the codependent
innovation (e.g., RFID readers). The
extent of joint diffusion of a codependent
innovation captures the extent to which
the different parts of the codependent
innovation have been adopted by the
different adopter communities.
Perceived This is an enhancement of the established
coadopter concept of relative advantage, which has
relative been studied in the innovation literature
advantage since the 1970s. Relative advantage is “a
ratio of the expected benefits and the costs
of adoption of an innovation” (Rogers,
2003, p. 233).
As an extension, coadopter relative
advantage is the extent to which one part
of a codependent innovation (e.g., RFID
readers) offers a relative advantage to its
coadopter community (e.g., the retailer
community) contingent on the other
coadopter community (e.g., the supplier
community) adopting the other part of the
codependent innovation (e.g., RFID tags).
External This has been an established concept in
influencers the innovation literature since the 1970s.
External influencers are actors who do not
adopt the innovation but disseminate
generic information about the innovation
to a large number of potential adopters.
For example, research institutes,
technology vendors, consultants
389
Coding examples Sources
“Wal-Mart has installed RFID systems in 104 Akhlaghpour &
Wal-Mart stores, 35 Sam’s Clubs and three Lapointe (2018);
distribution centers. In total 14,000 pieces of Lai et al. (2006);
hardware has been installed connected with 230 Rogers (2003)
miles of cable” (IDTechEx, 2005b).
“In a related development, Gillette announced
Monday that it agreed to purchase 500 million
so-called radio frequency identification (RFID)
tags, which contain the special microchips that
can communicate wirelessly with computers
when in the presence of a scanning device—all
without any human intervention” (Gilbert,
2003)
“The retailers involved have the same interests. Akhlaghpour &
‘In-stock is a key focus for us, but so is loss Lapointe (2018);
prevention,’ says Wal-Mart spokesman Bill Lai et al. (2006);
Wertz. ‘This technology offers us some Rogers (2003)
potential to improve in both
areas’” (RFIDUpdate, 2003).
“Gillette says that retailers and consumer-goods
firms in America lose around $30 billion a year
in sales because shop shelves run out of
products and stand empty….The benefits to
manufacturers include far fewer wasteful
inventory glitches and, for retailers, lower
shoplifting losses. Procter & Gamble's goal is to
use the intelligence provided by the tags to cut
its inventory by 40%, or $1.5 billion. P&G’s
preliminary analysis is that they could lop 4
cents off the dollar in every transaction”
(Schoenberger, 2002).
“The Auto-ID Center continues to add to the Bass (2004);
impressive lineup of vendors backing its Jeyaraj &
standards efforts. Intermec Technologies of Sabherwal
Everett, Wash., and STMicroelectronics N.V. (2014); Rogers
(NYSE: STM) of Geneva, Switzerland, join the (2003); Strang &
likes of Intel, Philips Semiconductor and Tagsys Soule (1998)
as sponsors” (RFIDJournal, 2002).

Internal This has been an established concept in
influencers the innovation literature since the 1970s.
Internal influencers are actors within the
adopter community who share specific,
experiential information about the
innovation to potential adopters.
Internal- We extend the ideas of external and
external internal influencers (above) in the context
influencers of codependent innovations and develop
the notion of an “internal-external”
influencer. We define an internal-external
influencer as a member of one coadopter
community (e.g., the retailer community)
who adopts one part of a codependent
innovation (e.g., RFID readers), but who
influences the members of the other
coadopter community (e.g., the supplier
community) who adopt the other part of
the codependent innovation (e.g., the
RFID tags). We call this influencer as an
internal-external influencer because they
are internal to the overall adoption
phenomenon, but are external in terms of
their influence for the focal coadopter
community.
Influencing strategies used by an institutional entrepreneur to effect institutional change (i.e., to effect the diffusion of an IT
innovation within an adopter community in the institutional field)—Rooted in institutional entrepreneurship theory
Institutional entrepreneurs (IEs): Actors who have an interest in particular institutional arrangements and who leverage resources to
create new institutions or to transform existing ones (DiMaggio, 1988; Hardy & Maguire, 2017; Maguire et al., 2004).
Rationale IEs use discourse to construct and
development communicate rationales to other actors
about why they should support, or, at a
minimum, not resist the
institutionalization project in question.
Resource IEs mobilize resources for endorsing and
mobilization supporting the implementation of
institutional change.
Relationship IEs establish new interactor relations and
development perform collective actions to implement
institutional change.
The Early-Stage Diffusion of Codependent IT Innovations
“In addition to the investment, CPG Bass
manufacturers are also worried that RFID will (2004);Jeyaraj &
bring little benefit and perhaps disruption to Sabherwal
their current operations” (Violino, 2003a). (2014);Rogers
(2003);Strang
and Soule (1998)
“Why is RFID Hot Now?” Bass
(2004);Jeyaraj &
“In a word, Wal-Mart. Like so many other
Sabherwal
aspects of the business world, the enormous
(2014);Rogers
impact of Wal-Mart’s buying power will dictate
(2003);Strang &
how and when consumer goods companies
Soule (1998)
adopt RFID technology. Wal-Mart had a similar
impact when they began using barcodes in the
1980s. But Wal-Mart could not have made their
decree if many other factors were not already in
place …The impact of Wal-Mart’s directive on
RFID will speed the adoption of RFID
technology not only for their suppliers, but also
for the supply chain industry as a whole. To
avoid being left behind in an unfavorable
competitive position, all supply chain
participants must begin planning how RFID
should best be deployed for their companies”
(RedPrairie, 2003).
“‘I think a lot of the [tag] studies that have been Hardy & Maguire
done prior [to the introduction of near-field (2017)
tags] are invalid, and they need to be done
again,’ says Langford. ‘The whole [playing]
field has been changed now’” (Simon Langford,
Wal-Mart's manager of RFID
strategies) (O’Connor, 2006c).
“If anyone still has any doubts that Wal-Mart is Leca et al.
serious about deploying RFID technology in its (2008); Hardy &
supply chain, they should be dispelled by its Maguire (2017);
latest revelation. The world's largest retailer says Misangyi et al.
it will require all suppliers to put RFID tags (2008)
carrying Electronic Product Codes on pallets
and cases by the end of 2006. …‘We have
asked our 100 top suppliers to have product on
pallets employing RFID chips and in cases
with RFID chips,’ says Wal-Mart spokesman
Tom Williams. ‘By 2006, we will roll it out
with all suppliers.’” (Roberti, 2003a).
“Two major retailers and a consumer products Garud et al.
giant are teaming up to test a new ‘smart shelf’ (2002); Hardy
technology that allows for real-time tracking of and Maguire
inventory levels….Gillette, Wal-Mart and the (2017)
U.K.-based supermarket chain Tesco plan to
install specially designed shelves that can read
radio frequency waves emitted by microchips
embedded in millions of shavers and related
products” (Gilbert, 2003).
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Journal of the Association for Information Systems
Functions of organizing vision enacted by actors within an institutional field to effect institutional change (i.e., to effect the
diffusion of an IT innovation within an adopter community in the institutional field)—Rooted in organizing vision theory
Organizing vision: A focal community idea for the application of information technology in organizations (Davidson et al., 2015;
Swanson & Ramiller, 1997)
Enacting IEs’ actions that convey the innovation’s
interpretation essential features and its institutional
coherence to the innovation community.
Enacting IEs’ actions that activate the entire
mobilization community of actors surrounding the
innovation and get them involved in
realizing the innovation.
Enacting IEs’ actions that convey to the community
legitimation the rationale, backed by evidence, for the
innovation adoption.
4 Research Design
4.1 Research Site Selection
We chose Walmart’s promotion of RFID in retailing as
our research site because it is well-suited to this study
for several reasons. First, RFID technology is an
example of a codependent innovation. There are two
main parts to this innovation, the RFID tag and the RFID
reader. These two parts were adopted by two different
adopter communities, suppliers and retailers,
respectively. Second, because of the uncertainties in
RFID adoption, including the retailer mandate,
technology issues, and cost-benefit absorption, the
criteria used to justify RFID investment in retailing were
based on cost-benefit calculations and a mental image of
the diffusion trajectory (Rogers, 2003). Therefore, both
the individual calculus as well as collective beliefs about
diffusion helped organizations consider their options
when choosing whether or not to adopt RFID. This
exemplifies the roles of the coadopter relative advantage
and OV in the diffusion of RFID. Third, powerful
initiators and vested interests characterized the process
of early-stage RFID diffusion in retailing. The mandate
by Walmart and other retailing giants were the most
remarkable events that shaped the OV (Swanson &
Ramiller, 1997) and the diffusion of RFID-in-retailing.
The strategies of these influential actors with vested
391
“‘This technology won’t just improve the Davidson et al.
supply chain—it will revolutionize it in ways (2015); Swanson
we are only just beginning to understand,’ and Ramiller
Ashton said. ‘Computers are basically blind (1997); Kaganer
today. The technology we are developing will et al. (2010);
enable them to see, for the first time ever’” Amadoru et al.
(Mayfield, 2002). (2021)
“The group’s next important step will be to Davidson et al.
contract an independent, third-party consultant (2015); Swanson
and issue an open call for patent submissions for and Ramiller
all parties believing they hold patents essential (1997); Amadoru
to the deployment of UHF RFID technology. et al. (2021)
The consultant will review each patent to
determine whether it is essential to standards
for UHF air-interface RFID protocols”
(O’Connor, 2006b).
“This study provides conclusive evidence that Davidson et al.
EPCs increase how often we put products in the (2015); Swanson
hands of customers who want to buy them, and Ramiller
making it a win for shoppers, suppliers and (1997); Kaganer
retailers” (IDTechEx, 2005b). et al. (2010);
Marsan et al.
(2020)
interests exemplify the role of institutional
entrepreneurship in the early-stage diffusion process of
RFID in retailing. Fourth, RFID diffusion was not just
about upgrading technology; it was also about changing
the institutional environment (Riggins & Slaughter,
2006) as well as transforming existing supply chains
(Soon & Gutiérrez, 2008) and business models of
retailing (DiMaggio, 1988, p. 15), because it would
become an essential IT infrastructure in retailing after it
was adopted. These four reasons make the diffusion of
RFID-in-retailing directly pertinent and quite valuable
to enhancing the understanding of the early-stage
diffusion of codependent innovations.
4.2 Research Method
We used the case study research method, which is an
empirical inquiry that analyzes the phenomenon under
question in a real-life context (Myers, 1997). The case
study method is best suited when studying processes
(i.e., “why” and “how” questions), when the focus is on
contemporary events and when the boundaries between
the context and the phenomenon under study are not
apparent (Benbasat et al., 1987; Yin, 2008). Since we
were studying the contemporary events and the process
through which IEs influence the early-stage diffusion of
a codependent innovation in an institutional field, we
found that the case study methodology best suited our
purpose. In our case study, we employed the interpretive

philosophical perspective (Walsham, 1993). This
philosophical perspective posits that reality can be
understood only through social constructions such as
language, consciousness, tools, documents, shared
meanings, and other artifacts (Klein & Myers, 1999;
Walsham, 1993). Further, this perspective gave us the
freedom to use theory as an initial guide (IDT, OVT, and
IET in our paper) while also being open to the data
collected from the case. Thus, the interpretive tradition
allowed us to iterate between our data and the theory
and, in the process, helped us refine, expand, or abandon
the initial theory we started with (Walsham, 1995).
We used a case study reconstructed using 20 years of
discourse surrounding RFID diffusion and promotion by
Walmart in retailing. Based on the data (described in
detail below) we collected from the discourse
surrounding RFID technology, we used the narrative
strategy to explicate the process of RFID diffusion. The
narrative strategy involves the construction of a story
from raw data (Bartis & Mitev, 2008; Langley, 1999;
Myers, 1997; Pentland, 1999), which in our case is the
data from the RFID discourse. Time is a key anchor
point in this strategy (Langley, 1999). In this strategy,
the researcher develops a chronology of events that
serves to organize data and present theory (Langley,
1999). Using this strategy, we developed a chronology
to uncover the timing and sequence of events
championed by certain actors that led to the diffusion of
RFID. Then we focused on Walmart to present a
narrative of the early-stage diffusion of RFID in
retailing.
4.3 Data Collection
For our analysis, we collected data about RFID-in-
retailing from the internet, disseminated through the
following channels: trade press, academia, online
journals, white papers, and analysis reports. We chose
internet-based sources for the following reasons: First,
internet-based data sources have been used to capture
the status of RFID diffusion in research (Fish, 2006;
Quaadgras, 2005). These sources are timeless and have
paid great attention to Walmart’s RFID strategy.
Second, most of the internet reports are based on official
interviews conducted by journalists from leading media
outlets. Although we did not conduct interviews in
person, we used the interviews that are publicly
available. Finally, text on the internet is an essential part
of the RFID discourse that RFID players use as a
reference.
We conducted a systematic effort to access publicly
available information about RFID diffusion on the
internet from 1999 to the end of 2019, thereby amassing
20 years of public discourse on RFID diffusion. We
2 Walmart publishes its public statements in Walmart Facts
(http://www.walmartfacts.com), the official website for
Walmart Inc.
The Early-Stage Diffusion of Codependent IT Innovations
monitored several sources to understand industry
events. Table 2 summarizes our data sources and the
purpose of each particular source of data. We collected
reports on RFID in retailing published in several online
news services, including RFID Journal, The New York
Times, The Wall Street Journal, InformationWeek, and
Computerworld, among other similar sources. We also
subscribed to several RFID-specific blogs including
RFID Update, RFID Weblog, and RFID Gazette. We
acquired white papers and analysis reports from
consulting companies including IBM Business
Consulting, A.T. Kearney, AMR Research, and others.
We also obtained information from the RFID tracks of
leading IS conferences (e.g., ICIS, HICSS, and
INFORMS). Finally, we kept records of public
statements on RFID released by Walmart 2 and other
major players in retailing, such as Best Buy, Target,
P&G, and Intermec to triangulate the validity of news
reports. These sources formed a cross-reference network
to ensure that our data not only represented the discourse
surrounding RFID in retailing but were also detailed and
comprehensive. All the data were stored in a qualitative
research database for further review, retrieval, and
interpretation.
4.4 Analysis Strategy
We analyzed our data in three steps. First, using data
from the above sources, we developed a chronology of
key events in RFID diffusion in retailing as they
evolved. The time horizon of the list ranged from
December 1999 when the future of RFID in retailing
was framed for the first time to the end of 2019 when
RFID diffusion crossed the chasm. Thus, this list
provides a comprehensive snapshot at different points in
time as the diffusion of RFID in retailing unfolded.
Table 3 presents a chronology of key events in the early-
stage diffusion of RFID in retailing. We narrate these
events when we present the process model in the next
section. In particular, we focus on the key events of our
case that relate to actions of the four key actors—RFID
research institutes, retailers, suppliers, and RFID
vendors—that pertain to the various institutional
entrepreneurship strategies and functions of OV in the
context of early-stage diffusion of codependent
innovations along with the development of the RFID-in-
retailing institutional field. In our second step of data
analysis, we used our theoretical concepts as sensitizing
instruments to analyze our research questions (Nielsen
et al., 2014; Patton, 2014). We pooled all the text
documents and analyzed our data using the recursive
pattern of interpretive qualitative research (Klein &
Myers, 1999; Miles et al., 2018; Miles & Huberman,
1994; Nielsen et al., 2014; Walsham, 1993).
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Table 2. Sources of RFID Texts Used in the Study

Source Purpose Examples Number

Online news To get insights into the coadopter
services and relative advantage of RFID for
online press coadopter communities and the
statements from reception of RFID technology by
companies various actors in the innovation
community, their discursive and
influential activities with respect to
RFID, and the extent of joint
adoption of RFID.
InformationWeek, RFID Journal, Inbound Logistics, 178
Computerworld, CNET, Business Wire, CFO
Magazine, News.com, PRNewswire, Capgemini,
Creative Weblogging, SecureIDNews, Business Week,
Guardian Unlimited, IDTechEx Ltd, ID TechEx., CIO,
ABI Research, BaseLine, RFID consortium,
CNNMoney, The Wall Street Journal, and PCWorld, as
well as public statements from Walmart* and other
major players in RFID in retailing such as Impinj,
Kimberly-Clark, SUN Microsystems, and RFID-
specific blogs such as RFID Update, RFID Weblog,
and RFID Gazette

White papers To get insights into the costs and IBM Business Consulting, A.T. Kearney, AMR 47
and analysis benefits of RFID and eventually Research
reports from shed light on the issue of coadopter
consulting relative advantage.
companies

Academic To get insights into the factors International Conference on Information Systems 33
conferences related to the adoption of RFID and (ICIS), Americas Conference on Information Systems
the issues of coadopter relative (AMCIS), Hawaii International Conference on System
advantage and joint adoption. Sciences (HICSS)

Magazine To get insights into the diffusion
articles pattern of RFID, the actors taking
part in RFID activities, and the
powerful positions of and
dependence between various actors
in retailing. In addition, these
sources also provided insights into
each actor’s discursive and
influential activities with respect to
RFID.
CIO, InformationWeek, Retail Merchandiser, Supply 36
Chain Management Review, Logistics Management,
Computerworld, CIO Insight, SETLabs Briefings, DM
Review, Manufacturing Business Technology Focus,
Telephony, DC Velocity, Manufacturing Engineering,
Pharmaceutical Technology, EDN, Computerworld,
Digital ID World, Communications of the Association
for Information Systems, Business Week

Books To get insights into the technical
details of RFID as a technology,
the business case and the
economics surrounding RFID, and
the history of RFID technology.
RFID Sourcebook; Revolution at the Checkout 8
Counter; RFID: Applications, Security, and Privacy;
and Wal-Mart World: The World's Biggest
Corporation in the Global Economy.

Note: Walmart publishes its public statement in Walmart Facts (http://www.walmartfacts.com), the official website for Walmart Inc.

Table 3. Key Events in the Institutional Field Development of RFID in Retailing

Date Event
10/99 The Auto-ID Center was set up (Quinn, 2003).
6/03 Walmart mandated top suppliers to use RFID on pallets and cases (RFIDJournal, 2003).
10/03 EPCglobal was formed to manage EPC network and RFID standards (Violino, 2003d).
11/03 EPCglobal released the UHF Class 1 RFID Standard Draft (EPCGlobalInc, 2003).
11/03 Walmart detailed RFID mandate requirements to its top 100 suppliers (Becker, 2004; Wysong, 2005).
2/04 Target announced its RFID mandate plan (RFIDJournal, 2004a).
3/04 Albertsons announced its RFID mandate plan (PRNewswire, 2004).
4/04 Walmart launched the first RFID-tagged cases and pallets (Whitcomb, 2004a).
5/04 Walmart lowered the tagging rate expectation for suppliers to meet its deadline (Sliwa, 2004 ).

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 The Early-Stage Diffusion of Codependent IT Innovations

6/04 Walmart outlined a three-step RFID expansion plan (Whitcomb, 2004b).

8/04 Best Buy announced its RFID mandate plan (Roberti, 2004).
12/04 EPCglobal announced the ratification of the UHF Gen 2 RFID standard (RFIDUpdate, 2004).
1/05 Walmart presented its RFID mandate achievement (Roberti, 2005c).
4/05 The first EPC Gen 2 UHF product, Impinj’s RFID tag, was announced (O’Connor & Roberti, 2005).
10/05 Target and Walmart launched a pilot to share EPC data with suppliers (Roberti, 2005d).
4/06 Walmart announced it would no longer accept the Gen 1 tag after 1/30/2006 (O’Connor, 2006c).
7/06 ISO approved the EPC Gen 2 Class 1 UHF standard as an amendment to the ISO18000-6C (O’Connor, 2006a).
4/07 EPCglobal ratified the EPC Information Services specification (Bacheldor, 2007).
5/07 Metro asked 650 top suppliers to place EPCglobal Gen 2 RFID tags on all pallets (Roberti, 2007).
9/07 Walmart, Best Buy, and the entertainment industry conducted an item-level tagging pilot (Swedberg, 2007b).
10/07 Walmart unveiled three new RFID initiatives (O’Connor, 2007).
1/08 Sam's Club asked suppliers to use EPC Gen 2 RFID tags on single items (RFIDUpdate, 2008).
1/08 Walmart announced its first penalties for noncompliance to its mandates (RFIDJournal, 2008b).
1/09 Sam’s club relaxed the mandate deadlines and sharply reduced noncompliance fees (RFIDJournal, 2009b).
2/09 P&G pulls out of its landmark promotional campaign trials with Walmart (RFIDJournal, 2009a).
5/09 A research study by Dillard’s and the University of Arkansas establishes item-level RFID’s superiority to
manual inventory counts (Studio98Test, 2009).
8/09 Bloomingdale’s research study finds that item-level RFID improved accuracy by 27 percent and reduced labor
costs (O’Connor, 2009).
10/09 GS1 EPCglobal released RFID-based Electronic Article Surveillance (EAS) guides (GS1, 2009a).
7/10 Wal-Mart announced the adoption of item-level RFID to track clothing (Bustillo, 2010).
10/10 Major retailers and industry groups launch item-level RFID Guidelines Initiative (Swedberg, 2010).
07/11 Voluntary Interindustry Commerce Solutions Association’s (VICS) item-level RFID initiative enters phase II
(Swedberg, 2011c).
09/11 Macy’s announced the commencement of item-level tagging in 850 Stores (Swedberg, 2011a).
03/12 The representatives from MIT and Johnson & Johnson were elected to lead GS1 EPCglobal Board (GS1,
2012).
06/12 The University of Arkansas opens a new RFID research center (Studio98Test, 2012).
09/12 GS1 US and Voluntary Interindustry Commerce Solutions Association (VICS) merged their operations
(Edwards, 2012)
11/13 GS1 upgraded and ratified the Gen 2 RFID standard (GS1, 2013).
04/14 The RAIN RFID Alliance was launched by Google, Impinj, Intel, Smartrac, and AIM Global to promote RFID
adoption (RAINRFID, 2014).
09/14 Macy’s expands RFID deployments by tagging fashion items at its Macy’s and Bloomingdale’s stores
(Swedberg, 2014a).
01/16 Macy’s introduces the Pick to the Last Unit Program for omnichannel sales (Swedberg, 2016c).
03/16 American Apparel and Postmates offer one-hour delivery service using RFID visibility (Swedberg, 2016a).
10/16 Macy's announced that it would RFID-tag 100% of its inventory by 2017 (McKevitt, 2016a).
12/16 Target’s RFID investments lead to a massive increase in digital sales (Gillo, 2016).
04/17 Macy’s RFID effort initiative boosts fulfillment and sales (McKevitt, 2017).
10/18 Auburn University and GS1 US studied retailer-supplier data exchange and showed RFID’s superiority over
bar code (GS1US, 2018; Lopez, 2018).
03/19 Nike shared that RFID improves its product visibility (Cosgrove, 2019).
Note: We include only critical events above. We shaded rows that pertain to the institutional entrepreneur at each stage. Walmart played the IE
role until the chasm. During the chasm phase, Walmart and other big retailers played the IE role.

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We identified four distinct phases heuristically based on
the substance of the discourse and inspired by the
distinct issues that needed to be addressed during those
phases for the successful diffusion of RFID in retailing.
We identified the cutoff points for the four phases of
early-stage diffusion based on the coadopter relative
advantage of RFID-in-retailing, specific OV functions
enacted and IE strategies used by the IE at different
points in time, and the extent of joint adoption of the
RFID technology by retailers and their suppliers. The
four periods range from 1999, when the RFID idea
surfaced, to 2019, when RFID diffusion crossed the
chasm. The issues to be addressed in the four RFID
phases we identified are congruent with the issues and
the discursive activities we identified by synthesizing
the work on IDT (Rogers, 2003), and on phase models
from IET (Morrill, 2006; Purdy & Gray, 2009) and OVT
(Nielsen et al., 2014; Wang & Ramiller, 2009).
In each of these phases and in each article, we searched
for the theoretical concepts we identified during our
review of theoretical foundations. We read each article in
our data line by line, coded them, and summarized them
based on these concepts and their relationships (presented
in Table 1) (Wang & Swanson, 2007). Table 1 provides
coding examples for the concepts of interest. To identify
the actors who played the role of an IE, the IE strategies
they used, and the OV function they enacted, we focused
on the actions of the four key organizational actors
including RFID research institutes, retailers of consumer
packaged goods, suppliers of consumer packaged goods,
and RFID vendors because we found that these four
actors were deeply involved in the early-stage diffusion
and shaping of the RFID-in-retailing institutional field.
Table 4 presents the actors who were part of the RFID-in-
retailing institutional field during the four phases of our
study. We identified the actions performed by each actor
in these four phases and coded which of the three IE
strategies (rationale development, relationship
development, and resource mobilization) the actor
performed, and which of the three OV actions
(interpretation, legitimation, and mobilization) the IE
enacted by performing these actions. To attribute an
action to an actor, we determined the cited contributor for
each coded text using the categories of research institutes,
retailers, suppliers, and vendors (Abrahamson &
Fairchild, 2001). In the cases where the coded text
belonged to white papers and analysis and press reports,
we recorded the category as the organization that
published these articles. To code3 rationale development
we coded all actions performed by an actor where they
used the discursive realm to promote the IT innovation.
To code resource mobilization, we coded all actions
3 4
To reduce repetition, we briefly describe the strategies here,
and provide more examples of each strategy in Section 2. See
Table 1 for definitions of these strategies and coding
examples.
395
performed when actors used financial, political, social,
and discursive resources to either gain support for the IT
diffusion or to lever against the detractors (Hardy &
Maguire, 2017). To code relationship development we
coded all actions performed by an actor when they
developed new relationships, such as collaborations,
coalitions, and alliances, to get other actors to help diffuse
the IT innovation (Hardy & Maguire, 2017). To code4
enacting interpretation we coded all the actions the IE
performed to convey the essential features of the
innovations and their usefulness (Swanson & Ramiller,
1997). To code enacting mobilization, we coded all of
actions the IE performed to motivate and involve other
actors in materially realizing the innovation (Swanson &
Ramiller, 1997; Wang & Swanson, 2007). To code
enacting legitimation, we coded all of the actions the IE
performed to develop, test, refine, and legitimate the
innovation (Swanson & Ramiller, 1997; Wang &
Swanson, 2007).
5 Case Analysis and Theoretical
Framework
5.1 Institutional Change from UPC Bar
Codes to RFID in Retailing
Barcode technology has been the dominant institutional
logic for supply chain management in retailing for the last
four decades (Harford, 2017). A barcode consists of
machine-readable black and white stripes printed on each
product package (Harford, 2017). It encodes the universal
product code (UPC) that uniquely identifies a product
(Dodge & Kitchin, 2014). Upon scanning the code using
a laser scanner, a user can look up a product’s type and
price from the stock database (Dodge & Kitchin, 2014).
Retailers use barcode scanners to more accurately and
efficiently track and automate inventory. With just half a
cent spent on printing each barcode label, suppliers can
utilize inventory and sales data from retailers to improve
their demand forecasts and better plan their production
(McCathie, 2004). By encoding traceability information
on the barcode, suppliers can enhance shipment tracking,
quality control, and product recalls (McCathie, 2004).
However, barcodes have limitations, such as a minimal
information-holding capacity, line-of-sight optical
scanning requiring human involvement, and low
durability (McCathie, 2004). For supply chain
management, this could mean that barcodes are labor-
intensive, prone to human errors, restricted in traceability
and visibility, incapable of item-level tracking, and
sensitive to environmental conditions (McCathie, 2004).
To reduce repetition, we briefly describe the functions here,
and provide examples of each function in Section 2. See
Table 1 for definitions of these functions and coding
examples.
 The Early-Stage Diffusion of Codependent IT Innovations

Table 4. Actors in the RFID-in-Retailing Innovation Community in the US (1999–2019)

Retailers:
Retailers, members of the coadopter community that adopted one complementary part (RFID readers), served as the hub of the
institutional field of RFID in retailing because it was their mandates that triggered RFID diffusion. Though Walmart was the
first to issue the mandate and trigger RFID diffusion, other retail giants including Best Buy, Target, Tesco, Carrefour, Royal
Ahold, and Metro contributed to the diffusion by issuing mandates. Smaller retailers found the need to evaluate the impending
RFID revolution in retailing.
Suppliers:
Consumer packaged goods suppliers, members of the coadopter community that adopted one complementary part (RFID tags),
served as another pillar in the institutional field of RFID in retailing. Manufacturing giants like P&G, Gillette, and Kimberly
were the pioneers aiming for rewards from RFID-based inventory control, theft prevention, product promotion, and other
applications. Smaller suppliers aimed to improve their logistics management or were trying not to lose their contracts from
retailers who mandated RFID tagging.
RFID Vendors and Consultants:
Like other technology innovations, RFID diffusion provided a great business opportunity for technology vendors. New ventures
such as Intermec, Impinj, and Alien emerged and were supported by venture capitalists who trusted RFID’s potential. Established
semiconductor giants like NXP, NEC, Intel, Motorola, and Texas Instruments, as well as software providers like Sun, Oracle,
SAP, HP, and Microsoft entered the RFID business. Consulting companies like IBM, Ernst & Young, Accenture, A. K. Kearney,
and McKinney prepared for consulting opportunities related to RFID diffusion.
Research Institutes, Industry Associations, and Standard-setting Bodies:
Research institutions obtained funds to solve engineering problems, compile business cases, and study the business strategy of
RFID. Research institutes set up special research programs, opened seminars, and published academic papers focused on RFID.
Industry associations in retailing, such as Grocery Manufacturers Association (GMA) and Global Commerce Initiative (GCI),
invited universities and consulting companies to survey and predict the RFID trend. Standard-setting bodies strived to create a
mutual platform. As the most successful standards management institution in retailing, the UCC and EAN set up a joint venture,
EPCglobal, to extend their barcode expertise to RFID. The International Standard Organization (ISO) wanted to merge RFID
standards with its vast body of standards.
Media:
Media played the role of an information channel to convey the progress and frenzy in RFID diffusion. Mainstream business
journals like The New York Times, The Wall Street Journal, and Computerworld regarded RFID as a key venture to attract more
audiences. Internet media, such as RFID journals and RFID news blogs, profited from RFID-related commercials. Conference
organizers, such as the EPCglobal Annual Conference, the Retailing Industry Conference, and RFID Journal Live, profited from
organizations that wanted to either exhibit their RFID products or to gain knowledge about the latest technology and business
information about RFID.

Compared to barcodes, RFID technology is a
significant advancement in representing and
communicating product information. RFID tags
consist of an embedded circuit that encodes product
information (such as price, unique identification, stock
number, batch number, date of production, etc.) and an
antenna that broadcasts this data (Dodge & Kitchin,
2014). An RFID reader can query the information
transmitted by the tag from a considerable distance,
even if the RFID reader is not in the line of sight. The
RFID technology addresses all the limitations of the
barcode technology. It is durable, reliable, accurate,
carries rich information that is updateable throughout
the supply chain, eliminates line-of-sight scanning,
affords item-level tracking and simultaneous
automatic scanning, and requires less labor (McCathie,
2004).
RFID’s superior capability offered retailers and
suppliers a coadopter relative advantage over the
barcode technology based on different sets of benefits
and costs. Retailers could benefit from RFID through
enhanced product visibility, traceability, and
availability, accurate sales estimates, reduced out-of-
stocks, fewer expired products, increased labor
productivity, faster replenishment rates, and faster
unloading times (Kaplan, 2018b; McCathie, 2004).
The costs of RFID adoption for the retailers were a
fixed cost of installing RFID readers and the
supporting IT infrastructure. Suppliers could benefit
from RFID from promotions tracking, shipments
tracking, theft prevention, accurate sales data from a
retailer, targeted recalls, and counterfeit protection
(McCathie, 2004). The costs of RFID adoption for
suppliers are the recurring cost of attaching RFID tags
to each product. However, their benefits are not
immediate. Only economies of scale in the RFID tag
production resulting from huge demand can reduce the
costs for suppliers. In addition, suppliers bear the costs
of tagging as they are most likely to attach the RFID
tags in almost all supply chain implementations
because item-level tags need to be attached to the
carton wrapping of consumer packaged goods or sewn
into clothing material (Basker & Simcoe, 2021;
Gaukler et al., 2007). It is not economically feasible to
tag at the retailer location because the tagging and
encoding equipment must be present at each location

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Journal of the Association for Information Systems
(Basker & Simcoe, 2021; Gaukler et al., 2007). In
essence, although RFID-in-retailing offered a
coadopter relative advantage to both retailer and
supplier communities, the coadopter relative
advantage was systematically higher for the retailer
community beginning with the early stage.
We noted earlier that an organization in the coadopter
community that perceived the highest degree of
coadopter relative advantage (i.e., the retailer
community) sensed the opportunity of an institutional
change from UPC bar codes to RFID in retailing.
Among all the retailing players, Walmart perceived a
high coadopter relative advantage in adopting RFID-in-
retailing from a very early stage. Walmart’s strategy is
to offer low prices to customers, reflected in its slogan
“Everyday Low Prices” (Hyde, 2019). Cutting
operational costs through innovative retail supply chain
technologies has been one way Walmart can provide
low prices to customers—in fact, it was Walmart that
pioneered the diffusion of barcode technology (Hyde,
2019). Given all the potential benefits discussed above,
Walmart sensed that RFID technology would help them
provide lower prices to their customers. Walmart felt
that it could leverage its market dominance, cutting-
edge expertise, and power over suppliers to diffuse
RFID. More importantly, Walmart perceived lower
costs with higher benefits compared to suppliers who
had higher costs with no immediate benefits (Kaplan,
2018b). Thus, Walmart perceived a high degree of
coadopter relative advantage in RFID and focused on
introducing RFID as a next-generation supply chain
technology in retailing.
Walmart faced several challenges in introducing RFID
in retailing. Barcodes had been firmly embedded in
retailing for four decades. It was the supply chain
management standard around which retailers and
suppliers trained their personnel and built their
infrastructure and processes (McCathie, 2004). For
suppliers, barcodes were easy to use and affordable
(McCathie, 2004). It was a mature technology. Despite
that, there were ongoing innovations to advance the
technology (McCathie, 2004). Universally accepted and
understood standards existed for encoding labels and the
design and development of barcode equipment
(McCathie, 2004). Most importantly, all actors accepted
the benefits of barcode technology in retailing. Thus,
5 We agree with the IET literature that institutional field
conditions and the strategies used by organizations are in
constant flux, meaning that one is shaped by the other. The
OV literature posits that the diffusion process for an
innovation is always in flux as the discourse surrounding the
innovation evolves. However, we argue that there is still a
sequential progression of the diffusion process into distinct
phases as the roles of the actors, particularly that of the IE,
change to enact different functions of the OV. In the same
397
introducing RFID-in-retailing was an institutional field-
shaping project for Walmart.
Introducing RFID meant that Walmart had to tackle
resistance from suppliers because Walmart’s coadopter
relative advantage from adopting RFID readers would
only bear fruit if suppliers started affixing RFID tags to
their product packaging. In the early stages, suppliers
might have perceived risk in embracing a revolutionary
technology for one retailer only. Typically, one supplier
supplies the same products to multiple retailers, many of
them large ones (Malone, 2012). If the rest of the
retailers do not adopt RFID, the supplier has to
implement the new RFID technology for Walmart but
continues using the barcode technology with perhaps
even a larger share of their business (Malone, 2012).
Such an investment might be too much of a risk because
the supplier’s returns from RFID may be for naught if a
newer technology surpasses the RFID technology and
retailers leapfrog to the new technology (Goldenberg &
Oreg, 2007; Guo & Chen, 2018; Huang, 2011; Malone,
2012). For example, retailers might leapfrog to wireless
sensors by sensing their superiority over RFID
technology (Mayberry, 2005). Because RFID provides
no short-term benefits and higher costs for suppliers,
research institutes might find it challenging to obtain
funding from suppliers. Vendors might hesitate to
develop and market RFID solutions until a critical mass
of retailers and suppliers adopt the RFID tags and
readers (Basker & Simcoe, 2021; Gaukler et al., 2007;
Malone, 2012). Such a stalemate would deter standard-
setting bodies, resulting in a lack of accepted standards
to move the technology forward. Given these tensions
inherent to bringing about an institutional change in
support of RFID in retailing, we conducted a research
project on Walmart’s efforts to influence the early-stage
diffusion of the RFID-in-retailing innovation.
5.2 Process Model of the Early-Stage
Diffusion of Codependent Innovations
Based on our case analysis of RFID diffusion in
retailing we arrived at a four-phase process model of
the early-stage diffusion of codependent innovations.
We divided 5 the early stage into four phases 6 and
named them: emergence, structuralization, evolution,
and chasm. Figure 2 presents our abstract process
model. We present the case description of Walmart’s
promotion of RFID in retailing below.
vein, Morrill (2006), whose work we adapt to designate the
phases of early-stage diffusion, characterizes these phases as
“conceptually distinct, yet empirically interpenetrating
historical” phases.
6 We use the term “stage” to denote early-stage diffusion. We
use the term “phase” to denote the four phases of our process
model including emergence, structuralization, evolution, and
chasm. These phases occur within the early-stage diffusion
of an innovation.

Legend:
R – retailers (with Walmart being the dominant retailer)
S – suppliers
V – vendors
A – academia/research institutes/standard-setting bodies
IE – institutional entrepreneur
OV – organizing vision
I – interpretation OV function
M – mobilization OV function
L – legitimation OV function
Figure 2. Four-Phase Process Model for the Early-Stage Diffusion of Codependent Innovation: Based on
the Case of Walmart’s Promotion of RFID in Retailing
In each phase, we presented the expected IE and their
actions based on our synthesis of the work on IDT
(Rogers, 2003), and on phase models from IET
(Morrill, 2006; Purdy & Gray, 2009) and OVT
(Nielsen et al., 2014; Wang & Ramiller, 2009). Then,
based on case analysis, we identified the actor that
turned out to be the IE, the institutional
entrepreneurship strategies they used, and the OV
function they enacted.
5.2.1 Phase 1: Emergence
The emergence phase in the early-stage diffusion
process for a codependent innovation is when an OV
around a new technology such as RFID starts taking
shape, and a community begins to form around this
vision (Wang & Ramiller, 2009). It is during this phase
when concrete ideas for the application of a technology
in commercial endeavors start being developed
(Greenwood et al., 2002). External influencers—
research institutes and inventors—are accordingly
expected to take center stage in the institutional field
The Early-Stage Diffusion of Codependent IT Innovations
Rationale – rationale development institutional entrepreneurship
strategy
Resource – resource mobilization institutional entrepreneurship
strategy
Relationship – relationship development institutional
entrepreneurship strategy
Green shaded circles – actual IE based on our theory
Red shaded circles – expected IE based on prior theory
Blue arrow – influential action
Double-headed arrow – collaborative action
surrounding the innovation (Liao, 2016; Rogers, 2003;
Wang & Ramiller, 2009) and are expected to play the
role of an IE during this phase. At this point in the
innovation process, it is these entities who have the
most knowledge about and the most interest in the
potential applications of the new technology for
solving business problems. Therefore, it is these
players who are expected to promote and spur the
community discourse toward the potential applications
and benefits of the innovation in the business world
(Rogers, 2003; Wang & Ramiller, 2009). These
entities perform research and development activities to
show the feasibility of the innovation and its business
value, draft standards, and develop hardware and
software for the innovation. They team up with
adopters who fund these entities’ activities. Vendors
also observe these entities to understand how they can
build and sell these innovations (Nielsen et al., 2014;
Swanson & Ramiller, 1997). Such events, championed
by research institutions, signal the emergence of an
institutional field. But in the case of RFID diffusion,
we found that it was Walmart, the coadopter of one
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complementary part of the innovation that played the
role of an IE and led the emergence of the RFID-in-
retailing institutional field.
Until October 1999, the RFID-in-retailing institutional
field did not exist. There was neither an actor
community involved in the RFID-in-retailing
innovation nor was there a public discourse around this
innovation. Early in the RFID development, it was
Walmart that realized the benefits of RFID. Walmart
envisioned RFID as the next-generation supply-chain
technology through which it could find efficient ways
to reduce its operational costs and build newer trade
models (Haberman, 1999). Suppliers were excited
about RFID as a tool for tracking shipments and
managing cargo theft but were concerned about the
high cost of tagging (Violino, 2002). In spite of the
massive costs of installing RFID readers and the
supporting infrastructure, Walmart decided to leverage
RFID, given its cutting-edge IS expertise and prior
experience in pioneering several important supply
chain management technologies (Violino, 2002). So,
Walmart perceived the highest degree of coadopter
relative advantage.
In Table 5 below, we present the tensions in the
retailer’s calculus of coadopter relative advantage in
the RFID adoption decision. In Table 6 below, we
present the tensions in the supplier’s calculus of
coadopter relative advantage in the RFID adoption
decision. We can note that retailers and suppliers
assessed different costs and benefits. Figure 3a, 3b, 3c,
and 3d presents the interactions among actors in the
four phases—emergence, structuralization, evolution,
and the chasm—of early-stage diffusion of
codependent innovations in our case, namely
Walmart’s promotion of RFID in retailing. In order for
Walmart’s coadopter relative advantage to bear fruit,
suppliers need to buy into the RFID-in-retailing
codependent innovation. Walmart focused on building
a case for RFID’s use in retail in the emergence phase
because Walmart’s initial RFID pilots with IBM in the
early 1990s faded out (Violino, 2002). RFID in
retailing was never commercialized due to the high
cost of technology, low sales volumes, lack of open
standards, and IBM’s financial troubles (Roberti,
2005a). The Auto-ID Center, a nonprofit research
institute (Roberti, 2002) located at the Massachusetts
Institute of Technology (MIT) (Roberti, 2002) was
founded with support from suppliers, Walmart, other
retailers, and standard-setting organizations. The
Auto-ID Center has researched topics such as RFID
standards, RFID production, building supporting
infrastructure, and harnessing methods (Quinn, 2003).
Walmart was the first retail member of the Auto-ID
Center (Ashton, 2003; Violino, 2002). By funding and
collaborating with the Auto-ID Center, Walmart
played an influential role in the Auto-ID Center’s quest
for the RFID rationale (Roberti, 2002). Walmart
conducted both public and secret pilots (Roberti,
2003b, 2014) with interested suppliers to test RFID
technology (Gilbert, 2003; Semilof, 2001). Walmart
created a buzz in the public discourse by using terms
such as “smart shelves” (Gilbert, 2003).
Sanjay Sarma, a professor at the Massachusetts Institute
of Technology and a co-founder of the Auto-ID Center,
mentioned four turning points in RFID diffusion, one of
which happened during the emergence phase and used
Walmart as the IE. Referring to Walmart joining the
Auto-ID Center, he wrote:
In 2001, Wal-Mart joined the Auto-ID
Center, and this move would prove to be a
very important event. For a company
renowned for its innovative but grounded
attitude to join a research effort meant that
the research was getting close to
practicality. (Garfinkel & Rosenberg, 2006;
Wehr, 2005)
Walmart coordinated the knowledge-building
activities during this phase even though research
institutes and inventors played a key role by serving as
a hub for creating knowledge about RFID. The Auto-
ID Center was looking at all possible applications of
RFID, but Walmart pioneered the idea and tested the
use of RFID in retailing. Referring to Walmart’s
planned trials (which were later shelved) (Violino,
2003b), Kevin Ashton, a Procter & Gamble executive
and executive director of the Auto-ID Center, said:
Until now, the Auto-ID Center’s tests have
involved identifying and tracking the
location of shipping containers in
warehouses. The tests starting this month at
Wal-Mart and Tesco will be among the first
major trials of the technology developed
with the Auto-ID Center to track individual
items on store shelves ... It’s the last Russian
doll. It’s the hardest thing, and it’s what
we’ve been working toward. (Gilbert, 2003)
The role of vendors was minimal at this stage because
they were still analyzing the feasibility of building and
selling RFID technology. The other efforts in this
period included RFID journal startups (Roberti,
2003a), RFID improvement efforts of scholars and
universities (Lee et al., 2004), RFID startups (Impinj,
2000), and business media selling the idea of RFID
(Anderson, 2002; 2004; Bacheldor, 2004; Collins,
2003; Johnson, 2005; Jones et al., 2005; Kevin, 2005).
Overall, Walmart’s actions in funding research
institutes and conducting trials in collaboration with
research institutes and suppliers reflect the institutional
entrepreneurship strategy of rationale development.

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Table 5. Tensions in the Retailer Calculus of Coadopter Relative Advantage in RFID Adoption Decision
Tensions Benefits
Adopt • Reduce operational costs
• Build newer trade models
• Improve product tracking
• Improve inventory management
• No recurring cost of tagging
• Capture rich information on each
product
• Uniquely identify products
• Reduce labor and time
• Increase inventory counts per year
• No line-of-sight requirement for
product scanning
• Reduced expired products
• Faster replenishment rates
• Reduce out-of-stocks
• Accurate sales estimates
• Faster unloading times
• Supplier’s dependence
Do not • No disruption in current operations,
Adopt which is based on the standardized and
mature barcode technology
• Maintain relationship with suppliers
• No investments needed in adopting
• No investments needed in researching
and developing new technology
Table 6. Tensions in the Supplier Calculus of Coadopter Relative Advantage in RFID Adoption Decision
Tensions Benefits
Adopt • Tracking shipments
• Managing cargo-theft
• Long-term supply-chain optimization
• Short-term maintenance of revenue from
Walmart
• Reduce out-of-stocks
• Promotions management
• Less chargebacks due to proof-of-
shipment
• Accurate sales data from retailer
• Targeted recalls
• Counterfeit protection
Do not • No increase in immediate cost
Adopt • No disruption in current operations,
which is based on the standardized and
mature barcode technology
The Early-Stage Diffusion of Codependent IT Innovations
Costs
• Disruption in current processes based on barcode
technology
• Fixed costs of investment in RFID readers and supporting
Infrastructure
• Sever relationship with suppliers
• Negative publicity from press
• Lost opportunity in championing a supply chain revolution
• Labor-intensive inventory due to use of barcode
• High human errors due to the use of barcode
• Inventory count sensitive to environmental conditions due
to the use of barcode
• Less frequent Inventory counts due to the use of barcode
• Line-of-sight requirement for product scanning due to the
use of barcode
• Impossible to achieve item-level tracking due to the use of
barcode
• Impossible to capture more information on products while
scanning due to the use of barcode
• Restricted product traceability
• Restricted product visibility
• Other retailers could leapfrog to another technology
Costs
• Recurring costs of tagging products with RFID tags
• Immature technology
• High cost of RFID tags
• Risk of RFID becoming obsolete
• Disruption to current operations, which is based on the
standardized and mature barcode technology
• RFID less reliable compared to barcode
• No short-term returns
• Other retailers could leapfrog to another technology
• Lack of ROI
• Maintain two separate product encoding processes—one
for RFID-based retailers and another for barcode-based
retailers
• Loss of revenue due to losing business with Walmart
• Lost opportunity in long-term supply-chain optimization
• Risk becoming technologically ineffective and obsolete
• Long-term risk of becoming incompatible with RFID-
based retailers
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Figure 3a. The Emergence Phase Figure 3b. The Structuralization Phase

Figure 3c. The Evolution Phase Figure 3d. The Chasm Phase
Legend: Green shaded circles – actual IE based on our theory
R – retailers (with Walmart being the dominant retailer) Red shaded circles – expected IE based on prior theory
S – suppliers Blue arrow – influential action
V – vendors Double-headed arrow – collaborative action
A – academia/research institutes/standard-setting bodies

Figure 3. Interactions among Actors in the Early-Stage Diffusion of Codependent Innovation: Based on the
Case of Walmart’s Promotion of RFID in Retailing

401

All of Walmart’s activities, such as research funding,
standards setting, and pilot testing, were geared toward
providing an understanding of the RFID innovation and
its uses in retailing. Walmart’s efforts focused on two
main questions: What is RFID good for? How does
RFID work? Through these efforts, Walmart
accumulated and aggregated common knowledge about
the emerging RFID-in-retailing institutional field.
Walmart’s actions led to buzzwords in the public
discourse. For example, when Walmart planned pilot
tests, one headline from a reputed online news magazine
said, “Major retailers to test ‘smart shelves’” (Gilbert,
2003). Another expert called RFID tags “license plates”
(Nelson, 2001). Chana Schoenberger of Forbes titled her
article “RFID: The Internet of Things.” Interpreting
Walmart’s pilots, she wrote, “Stores have eyes. Now
they’re getting ears and brains. Soon tiny wireless chips
stuck on shampoo bottles and jeans will track all that
you wear and buy” (Schoenberger, 2002). Walmart’s
actions during this phase represent an actor enacting the
OV function of interpretation.
There were also a few instances where Walmart’s
actions represented enacting mobilization and
legitimation. Walmart mobilized the actors in the
institutional field by increasing their awareness about
RFID and encouraging them to act on this awareness.
However, the project was only getting close to
practicality. Walmart championing the RFID project
lent legitimacy to RFID, but the legitimation of RFID in
retailing was not fully there. Not convinced of the merits
of RFID, Andy Robson, CHEP’s business development
manager for supply chain information services, said:
“Certainly, we believe the Intermec/Marconi/Savi
solution that we’re now working with is the best
available in the market, but because it’s in a pilot
context, we still believe there is further and better
technology coming down the line” (Douglas, 2002;
Gilbert, 2003). This leads to our first proposition:
Proposition 1: The IE for a codependent innovation
will use the strategy of rationale development and
enact the OV function of interpretation during the
emergence phase of the early-stage diffusion
process for that codependent innovation.
The extent of joint adoption at the end of this phase
could be best described as one restricted to pilot tests
by powerful retailers with research institutes and
interested suppliers. Suppliers would not adopt RFID
technology until the cost of tagging was reduced and
they saw evidence of RFID benefits. Vendors would
not achieve economies of scale in production for them
to be able to provide low-cost RFID solutions until
there was sufficient joint adoption. One CNET report
aptly summarized the extent of diffusion:
A major barrier to the broad adoption of
smart-shelf technology in the thin-margin
businesses of mass-market retail and
The Early-Stage Diffusion of Codependent IT Innovations
consumer commodities has been the high
cost of the equipment. For the tags alone,
manufacturers can expect to pay 30 cents
per tag at a minimum, according to one
developer, Alien Technology in Morgan
Hill, Calif., which is supplying Gillette with
its tags. At that price, it’s unfeasible to
embed the tags on, say, a 50-cent bar of
soap. That’s why Alien Technology and
others are working to lower the cost of tags
to 5 cents to 10 cents over the next several
of years. Even so, Ashton said widespread
adoption of RFID could take until 2010—if
it ever does occur. (Gilbert, 2003)
5.2.2 Phase 2: Structuralization
The structuralization phase in the early-stage diffusion
process for a codependent innovation starts after the
initial discourse in the innovation community during the
emergence phase has led to the formation of the
fundamental ideas and notions about the potential
applications of the new technology for solving business
problems. While discourse will continue in the
community throughout the innovation life cycle, now is
the time when the various actors in the innovation
community need to take action to further the diffusion
agenda (Morrill, 2006; Purdy & Gray, 2009). During
this phase, the vendors who produce the technologies
that are part of the innovation are expected to play the
role of an IE as external influencers because they want
to sell their products to the adopter community (Rogers,
2003; Wang & Ramiller, 2009). Based on the guidelines
from research institutes and inventors, technology
vendors build and test their products (Nielsen et al.,
2014). Using marketing campaigns, vendors promote
the benefits of the technology and try to sell the
innovation to adopters through marketing avenues such
as tech fairs, press releases, and advertisements (Paré et
al., 2020; Rogers, 2003; Swanson & Ramiller, 1997).
Vendors also team up with research institutes,
consultants, and adopters to learn how to improve the
technology and its production (Nielsen et al., 2014). The
innovation is realized during this phase in the form of
vendor-developed products that are ready to be adopted
by prospective adopters. Adopters, some of which
experiment with the vendors’ technology (Rogers,
2003), also contemplate the widespread adoption of the
innovation based on community discourse. But in the
case of RFID diffusion, we found that it was Walmart,
the coadopter of one complementary part of the
innovation, that played the role of the IE and
championed the structuralization of the RFID-in-
retailing institutional field.
The ongoing pilots and other interpretation activities
helped Walmart reassess the costs and benefits of
RFID (InformationWeek, 2001; TalkBusiness, 2004;
Murphy, 2003). In this phase, Walmart further
crystalized the benefits of RFID—better product
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tracking and inventory management—perceived in the
prior phase (TalkBusiness, 2004). As a downstream
site in the retail supply chain, Walmart did not have to
bear the recurring cost of RFID tagging (Dutta et al.,
2007). Walmart just needed to bear the fixed costs of
installing RFID readers and the supporting IT
infrastructure. Being the largest retailer, Walmart had
suppliers depending on them for their business
(Roberti, 2003a). Suppliers were enthusiastic about
shipment tracking, promotions management, and
reducing out-of-stocks (InformationWeek, 2001;
Murphy, 2005). However, suppliers had concerns
about immature technology (TalkBusiness, 2004;
Violino, 2003c), the risk of RFID becoming obsolete
(Violino, 2003c), disruption to current operations
(Violino, 2003c), lesser reliability compared to
barcodes (Wired, 2003; Violino, 2003c), the high cost
of tags (Violino, 2003c), and the lack of short-term
returns given huge investments in RFID tagging
(TalkBusiness, 2004; Wehr, 2004). So, Walmart
perceived the highest degree of coadopter relative
advantage.
Walmart understood that actions on its part were
needed to get suppliers to adopt RFID tags in order for
its coadopter relative advantage to bear fruit. At a
retailing conference in June 2003, Walmart issued a
mandate asking its top suppliers to adopt RFID
technology, which was a substantial push for the
diffusion of RFID-in-retailing innovation
(RFIDJournal, 2003, 2004b). Walmart focused on
pallet- and case-level RFID in its mandate with the
objective of improving the inventory accuracy in its
warehouses as opposed to item-level tagging, which
would have meant disruption to its in-store operations
and even heavier investments in installing readers for
store shelves and points of sale (O’Connor, 2014;
Roberti, 2010a). At the same time, using its massive
resources, Walmart deployed RFID systems in almost
12 distribution centers and 1,000 stores. With the
tagged cases and pallets, Walmart conducted several
pilots to evaluate RFID in real scenarios (Whitcomb &
Gallagher, 2004). Eight consumer packaged goods
manufacturers participated in an RFID trial in
Walmart’s distribution centers in April 2004 to assess
the technology in the real world (Whitcomb &
Gallagher, 2004). Walmart joined the board of
directors of EPCglobal, an organization chosen by
actors in the retail industry to develop standards for
RFID (WalmartFact, 2005). Walmart urged vendors to
exhibit their products in industry conferences,
collaborate on pilot tests, and to give price discounts
and technology support to suppliers. To ensure
continued RFID diffusion, Walmart reduced the
number of pallets that required tagging and extended
the mandate deadline when suppliers complained
about the lack of benefits (Wailgum, 2004). Overall,
on one hand, Walmart substantially raised the demand
for RFID technology through mandates. On the other
403
hand, Walmart encouraged the supply, affordability,
and maturity of the technology through vendor
motivation, investments in research, and standard-
setting efforts. Walmart’s actions during this phase
reflect the institutional entrepreneurship strategy of
resource mobilization.
Although vendors took the required steps at this stage,
Walmart played the influencer role in the diffusion of
RFID during this phase. In fact, RFID vendors built
their RFID plans around Walmart, mainly through
testing and cost cutting. Sun Microsystems, which
built a Walmart-compliant test center, was one such
example (Sun, 2003). Suppliers had to comply even if
they did not want to because they were highly
dependent on Walmart. As Pete Abell, co-founder of
the EPC Group Ltd., an independent consulting
company, frames it, “You can’t [ignore the mandate] if
10 percent to 40 percent of your business is going
through Wal-Mart” (Roberti, 2003a). Even with
research institutes and standard-setting bodies, it was
Walmart that played an influential role. Sanjay Sarma
identified the mandate as the final turning point in
RFID diffusion:
The final, and perhaps most powerful, step
in the gathering momentum behind RFID
was the Walmart “mandate” announced in
the middle of 2003… Starting from there,
the expansion would encompass the entire
supply chain. Nothing riveted attention
more than the largest corporation on the
planet making an announcement of this
magnitude. (Garfinkel & Rosenberg, 2006;
Wehr, 2005)
In the structuralization phase, Walmart actively
contributed to the discourse by communicating its RFID
adoption strategy. “By 2006, we will roll it out with all
suppliers,” said Walmart spokesman Tom Williams in
2003 when Walmart first spelled out its mandate
(Roberti, 2003a). Such statements sketching the
diffusion plan set the tone and trajectory for the actors
in the structuralization phase. Walmart shaped the
public discourse not only through official statements
about RFID mandates, but also in more tangible ways,
such as involving resource commitment in its pilot tests
and participating in EPCglobal. When some of
Walmart’s suppliers were not able to meet the January
2005 adoption deadline, Walmart tried to lower the
proportion of tagging to 65% and postponed the
deadline to keep its RFID initiative alive (Sliwa, 2004 ).
Also, when suppliers complained about the lack of
benefits, Walmart kept downplaying the cost of tagging
to avoid any hindrance to the diffusion (Vijayan &
Brewin, 2003). Walmart indirectly shaped the discourse
by urging its suppliers to organize a forum to share the
lessons learned from the field operation.

The mandate effectively mobilized the actors in the
institutional field surrounding RFID. Walmart’s
influence on suppliers and other retailers meant that
vendors envisioned a large and sustainable market for
RFID. This market potential attracted vast sums of
capital that were invested in RFID start-ups. Soon after
Walmart imposed the mandate, other major retailers
such as Target (RFIDJournal, 2004a), Best Buy
(Roberti, 2004), Albertsons (PRNewswire, 2004),
Tesco (IDTechEx, 2005a), and Metro (RFIDUpdate,
2005) issued similar mandates and RFID pilot
requests. Giant manufacturers also became eager to
carry out RFID pilot tests. This market potential also
stimulated RFID vendors to release new products
(Capgemini, 2004) and provide a substantial discount
for suppliers who purchased RFID tags in bulk, with
discounts in some cases ranging up to 70% (Swedberg,
2007a). The competition among RFID vendors also
emerged because of Walmart’s strategic actions.
Vendors started soliciting input from suppliers in
devising their solutions and began offering attractive
discounts. The slap-and-ship7 solution was invented to
attract suppliers who wanted to comply with
Walmart’s mandate at the lowest cost (Swedberg,
2007a). Small suppliers also began seeking affordable
RFID compliance solutions. The standard-setting
body, EPCglobal, was set up and began to release
standards to meet Walmart’s pace (RFIDUpdate,
2004). The media started following the RFID
compliance movement in a more concerted way and
started guessing the result of the 2005-Sunrise mandate
(IDTechEx, 2005b; Feder, 2004; Hill, 2004 ;
Incucomm, 2005).
Based on the above discussion, Walmart’s actions
during this phase represent an actor enacting the OV
function of mobilization. “The fact that the largest
company in the world is publicly adopting EPC open
standards should give companies confidence that the
day of a single, interoperable RFID system is close at
hand,” said Kevin Ashton, executive director of the
Auto-ID Center (Vijayan & Brewin, 2003). Walmart’s
mandated diffusion model provided an answer for how
RFID diffusion can happen in retailing. Walmart’s
actions denoting interpretation and legitimation were
less prevalent in this phase. Rather than focusing on
what RFID technology could do, Walmart was keen on
mobilizing the field to get RFID adopted. It did so by
focusing on the feasibility and success of its mandate.
At the end of this phase, reflecting on the RFID
strategy, Linda Dillman, executive vice president and
chief information officer for Walmart, summed up the
mandate: “I don’t have to stand up here and debate
whether it will happen, because it did” (IDTechEx,
7 Slap-and-ship is a method for consumer packaged goods
manufacturers to implement RFID by affixing tags on goods
just before being shipped to retailers. Since this method
The Early-Stage Diffusion of Codependent IT Innovations
2005b). Walmart’s market power downplayed the
concerns about the mandated diffusion model. For
example, when confronted with the lack of common
protocols and standards around RFID, Keith Mahoney,
Walmart’s food logistics controller, said, “We could
not allow the lack of them to hang up the project”
(Vijayan & Brewin, 2003). This leads to our second
proposition:
Proposition 2: The IE for a codependent innovation
will use the strategy of resource mobilization and
enact the OV function of mobilization during the
structuralization phase of the early-stage diffusion
process for that codependent innovation.
The extent of joint adoption at the end of this phase
was characterized by suppliers adopting RFID tags
purely to satisfy retailers’ mandates. Suppliers faced
problems such as the immaturity of RFID standards
and the high costs of RFID products. For small
suppliers, tight budgets and lack of expertise made
compliance impossible, even by the deadline. The
retailers, including Walmart, installed RFID
equipment in their stores and distribution centers. In
March 2005, Walmart made a statement to
summarize its mandate: 127 suppliers sent almost 5
million tags to Walmart (Whitcomb & Gallagher,
2005). Walmart itself deployed 14,000 sets of RFID
equipment in its 104 stores and 35 Sam’s Club
locations (IDTechEx, 2005b). Patrick Ervin, Vice
President of Business Development, Retail Supply
Chain Vertical, Alien Technology’s aptly
summarized the extent of joint adoption:
It’s clear that Wal-Mart is more committed
than ever. They’re going to another 200
vendors. They’re adding store sites and
they’re increasing the number of SKUs that
they’re tagging. They have a large
investment and they’re not backing off.
(RFIDJournal, 2005)
5.2.3 Phase 3: Evolution
The excitement and action that was generated during
the structuralization phase may taper when
implementation complexities and technology glitches
are found during early implementations of the
technology, and if the return on investment (ROI) is
not in line with what was touted. This dissonance
between vision and reality marks the transition of the
early-stage diffusion process into the new evolution
phase. Now, is the time to focus on increasing the
normative appeal of the innovation and convincing the
innovation community that these early problems are
nothing to be disheartened about and that the ROI can
required little data integration, it was preferred by suppliers
who only wanted to meet the mandate at the lowest cost.
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Journal of the Association for Information Systems
be generated for all parties by making suitable
improvements to technologies, implementation
methods, and organizational processes and practices
(Marsan et al., 2020; Nielsen et al., 2014).
Accordingly, during the evolution phase, suppliers are
expected to play the role of an IE due to their own vested
interests at this point in terms of reducing their own costs
and even gaining advantage over their competitors from
the innovation that has now been accepted as a valid
innovation in the field (Rogers, 2003; Wang & Ramiller,
2009). Suppliers are expected to work with academia
and research institutes to devise standards and improve
the innovation’s ROI (Purdy & Gray, 2009; Tolbert &
Zucker, 1983). Suppliers are also expected to convey the
results of pilot tests to the community to attract more
retail customers and more retail business from current
customers touting the benefits of the RFID technology.
As more suppliers foster the innovation, vendors can
offer RFID tags at lower costs. However, contrary to
these expectations, we found that in the case of RFID
diffusion, it was Walmart, the coadopter of one
complementary part of the innovation, who played the
role of an IE and led to the evolution of the RFID-in-
retailing institutional field.
Among the adopters, it was again Walmart that had the
highest degree of coadopter relative advantage from
RFID diffusion. Walmart already significantly invested
in the RFID project by installing RFID equipment in
stores, distribution centers, and Sam’s Club locations.
Walmart could get more out of the investments only
when more suppliers adopt RFID because there would
be more data to capture, share, and leverage within and
across organizations (Malone, 2012). Suppliers also saw
benefits in RFID. The benefits for suppliers included
maintenance of business with Walmart, and long-term
supply chain optimization if the RFID technology
sustains and matures. In addition, a supplier might lose
its competitive advantage by getting technologically
obsolete if other suppliers start adopting RFID and
reduce their supply chain costs. However, compared to
the structuralization phase, suppliers sensed even higher
costs and the lack of ROI in an immature technology that
is primarily going to benefit the retailers. Walmart
understood further actions were needed to convince
suppliers that there is a good ROI from adopting RFID-
in-retailing technology because its coadopter relative
advantage was contingent upon suppliers also adopting
RFID tags.
Walmart’s actions during this phase reflect the
institutional entrepreneurship strategy of relationship
development. First, Walmart took several steps to
identify and assess the ROI in RFID implementation for
suppliers. Walmart commissioned a research study with
the University of Arkansas. The result of the study—
reduction in out-of-stocks, faster replenishment rate, and
reduction in manual orders—encouraged the entire
community (WalmartFact, 2005). This finding coupled
405
with internal assessments shifted Walmart’s RFID focus
from distribution-center use to in-store use (Songini,
2007b) and expanded its RFID deployment plan
(WalmartFact, 2006). Second, Walmart collaborated
with another retailer, Target for a joint pilot to share
EPC data with suppliers (Roberti, 2005d). Third,
Walmart pursued actions to mature, standardize and
spur demand for the technology. Walmart upgraded its
facilities to next-generation RFID standards and asked
suppliers to upgrade to these RFID standards citing
better performance and lower cost (O’Connor, 2006c).
They polled suppliers to learn about their readiness in
adopting the new standards (O’Connor, 2006c). Inspired
by this move, some RFID chip manufacturers began
introducing new RFID products. “We wanted to kick-
start the industry, so to speak, which would help spur
demand for our silicon,” said Impinj president and chief
executive officer William Colleran during the unveiling
of next-generation tags and readers (O’Connor &
Roberti, 2005). However, these actions never
established the ROI for suppliers. Except for a few
suppliers like Kimberly-Clark, Unilever, and P&G, who
declared benefits from RFID (KimberlyClark, 2006;
Songini, 2007a), most suppliers still suffered from
unstable technology, high costs, implementation
problems, and few benefits (Fabris, 2007; Wailgum,
2004).
There was less cooperation from other actors in the
institutional field. Proactive suppliers began
withdrawing radical RFID implementation plans, and
many smaller suppliers only minimally adopted RFID.
The installed base resulting from Walmart’s mandate
was not big enough to achieve economies of scale since
most suppliers took a passive attitude and purchased as
little as they could (Fabris, 2007). Many vendors began
postponing new product releases, citing the costs
involved in producing equipment according to new
standards and minimal adoption from suppliers
(O’Connor, 2006b; Roberti, 2005b). “It’s a classic Catch
22 situation. In order for prices on radio frequency
identification (RFID) tags to fall to what has been
described as the ‘magic 5-cent’ mark, manufacturers
need to see more wide-spread adoption of the
technology”, wrote Mel Duvall, a veteran business and
technology journalist (Duvall, 2007a). Other retailers
retreated from an aggressive implementation plan even
after they had confirmed the benefits of RFID through
pilot tests (Duvall, 2007b). Complaints about the RFID
mandate became a public secret (Gardner, 2004;
Hudson; McWilliams, 2007). Rapid introduction of
newer standards (O’Connor, 2006a), patent wars,
royalty declaration issues, and a short time gap to
transition between standards made the above challenges
more daunting (O’Connor, 2006b; Roberti, 2005b).
Walmart understood that some concrete actions were
again needed to ensure that their RFID initiative did not
fizzle out. It saw the potential benefits of RFID for itself

but also understood the hesitation of other members of
the RFID community, particularly those of suppliers and
RFID vendors, in investing in RFID due to a lack of
ROI. To break this deadlock, Walmart came up with
three initiatives to continue extending RFID diffusion.
In the middle of 2007, it further pushed the agenda of
RFID-in-retailing by unveiling the three new initiatives:
mandating RFID use on entire specific product
categories, deploying whole-process RFID in Sam’s
Club, and applying RFID on weekly product
promotions (O’Connor, 2007). The initiative in Sam’s
Club was rolled out in January 2008 (RFIDUpdate,
2008). During this phase, Walmart pursued its RFID
initiative using its technical capabilities, resources, and
dominant power to provide legitimacy to the RFID-in-
retailing innovation and to continue promoting the
diffusion of this codependent innovation when doubts
about it started emerging.
Walmart’s actions during this phase reflect an actor
enacting the OV function of legitimation. Walmart’s
actions focused more on answering the following
question for the actor community: How can the value
of RFID be realized? The community asked for
financial justification for their RFID adoption.
Walmart projected the next-generation Gen 2
technology as the answer to the financial justification
(RFIDUpdate, 2004). Walmart hosted a chief
information officer summit and announced the change
from Gen 1 to Gen 2 tags. Simon Langford, Walmart’s
manager of RFID strategies, called the new tags a
“breakthrough” (O’Connor, 2006c), thereby shaping
the discourse. To add legitimacy, he quashed the
current reports about ROI and added, “I think a lot of
the [tag] studies that have been done prior [to the
introduction of near-field tags] are invalid, and they
need to be done again” (O’Connor, 2006c). He
concluded by saying, “The whole [playing] field has
been changed now” (O’Connor, 2006c). By forcing the
Gen 1 to Gen 2 standards change, Walmart promoted
chip manufacturers to design and display their
products at major summits (O’Connor, 2006c). The
promotions were aimed at how the new products would
reduce the cost of RFID. During one of their product
demonstrations, RFID manufacturer Impinj’s
president and chief executive officer William Colleran
mentioned, “An RFID reader is no more complicated
than an 802.11 Wi-Fi router. … And we’ve seen the
price of Wi-Fi routers fall from many hundreds of
dollars to less than $100” (O’Connor & Roberti, 2005).
Walmart tried hard to lead the whole community
toward novel scenarios in which the benefits of RFID
might be realized. At the beginning of 2008, at an
annual member conference, Walmart spelled out three
new initiatives: A mandate to Sam’s Club’s suppliers,
applying RFID in weekly promotions, and pilots to test
if RFID can improve sales across an entire product
The Early-Stage Diffusion of Codependent IT Innovations
category (O’Connor, 2007). Dubbing this move as a
“change in focus,” Carolyn Walton, Walmart’s VP of
IT said: “We’re coming at [RFID] from a different
angle” (O’Connor, 2007). This leads to our third
proposition:
Proposition 3: The IE for a codependent innovation
will use the strategy of relationship development
and enact the OV function of legitimation during
the evolution phase of the early-stage diffusion
process for that codependent innovation.
In January 2008, in order to take a firmer stance on
RFID, Walmart followed up its new mandate by
imposing deadlines, and for the very first time, it
charged a service fee of up to $3 per nontagged pallet
(RFIDJournal, 2009b). Compared to how they reacted
to Walmart’s 2003 mandate, suppliers did not show
great urgency, considering how accommodating
Walmart had been for noncompliant suppliers in the
prior mandate (RFIDJournal, 2008a). Suppliers
wanted to evaluate the benefits of the new mandate
requirements (RFIDJournal, 2008a). Vendors were
getting demand for RFID tagging mainly from
Walmart and Sam’s Club suppliers (RFIDJournal,
2008b). However, in January 2009, Walmart
significantly relaxed its mandate requirements,
reducing the fee and indefinitely postponing the
deadline after considering the lack of benefits for
suppliers and the time required to comply
(RFIDJournal, 2009b). Sam’s Club established a
supplier council to help suppliers identify benefits
from each type of RFID tagging (RFIDJournal,
2009b). As another big blow to Walmart’s campaign,
P&G withdrew from the pilot programs it was
conducting with Walmart (RFIDJournal, 2009a;
SCDigest, 2009)—an event that industry experts felt
might have informed the community about the lack of
benefits of RFID technology (FierceRetail, 2009).
Overall, Walmart overestimated its ability to drive
institutional change—it overpromised but
underdelivered by setting up a very ambitious timeline
for its RFID vision.
At the end of the evolution phase, all actors were
dormant with respect to their RFID activities. Walmart
chose not to unveil any new initiative until it worked
closely with the suppliers and found RFID benefits for
them. Suppliers, vendors, and research institutes were
waiting for the next definitive move from Walmart.
The extent of joint adoption at the end of this phase
could be best described as one where retailers
(including Walmart) were cautious about the further
installation of RFID systems in their distribution
centers. Suppliers adopted the minimum required
technology. Compared to what it had originally
envisioned, Walmart installed fewer RFID systems in
its own distribution centers and influenced fewer
suppliers to embrace RFID. One industry expert said:
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Journal of the Association for Information Systems
Five years into the RFID revolution, it’s
clear that implementation is occurring
more slowly than Walmart originally
envisioned…. Today, 600 of Walmart’s
60,000 suppliers (plus 750 Sam’s Club
suppliers) have deployed RFID. On
Walmart’s end, RFID has been rolled out at
1,000 of the roughly 4,000 Walmart and
Sam’s Club stores in the United States.
Walmart’s original goal was to have 12 of
its roughly 120 distribution centers outfitted
for RFID by 2006. Today, only five are set
up for RFID, as the company has shifted its
RFID focus to in-store implementations.
(Webster, 2008)
Walmart abandoned the RFID mandate considering the
cost of alienating the suppliers and the flak it received
from the press (Roberti, 2010b). Walmart did not want to
force suppliers with additional expenses given the global
financial crisis (Roberti, 2010b). The innovation diffusion
literature shows a chasm between the early stage and the
growth stage of the diffusion process (Moore, 2014). It,
therefore, does not come as a surprise to know that the
diffusion of RFID in retailing suffered a similar fate
(Malone, 2012; Roberti, 2017). The diffusion went into
an abyss and near death only to rise again.
5.2.4 Phase 4: Chasm
The innovator suppliers’ success stories to legitimize the
innovation do not serve as good references for suppliers
in the growth stage because the latter are risk averse, price
sensitive, fear change, and look for incremental
performance improvements (Moore, 2014; Rogers, 2003;
Xu et al., 2017). These adopters buy whole products that
are easily implementable, backed by mature technology,
and sold by leading vendors. Innovations often do not
cross the early stage, which results in a chasm because
growth-stage adopters are a self-referencing group; they
will not adopt until the ROI is confirmed by adopters from
their category (Xu et al., 2017). During this phase,
vendors are the external influencers and act as IEs
because they can gain substantial profit and growth by
winning over growth-stage adopters (Mola et al., 2022).
They devote resources to finding a use case for a niche
adopter segment, around whom they develop the
innovation and its support infrastructure (manuals,
service partners, and additional products) (Mola et al.,
2022; Moore, 2014). They establish relationships with
adopters to convince them and to directly sell their
innovation to them, often working closely with them for
installation (Gombault et al., 2016; Moore, 2014). They
forge tactical alliances with other vendors and consultants
for delivering sales support and related products (Marsan
et al., 2020). They dominate the public discourse to
convey their market leadership, the innovation’s ROI, and
the availability of customized solutions tailored to suit
each adopter (Marsan et al., 2020; Swanson & Ramiller,
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1997). Eventually, vendors build a marketplace and a
support infrastructure around the innovation that appeals
to the mainstream adopters. Once acquired, these growth-
stage adopters show loyalty to the innovation by
standardizing it in their operations, appreciating it, and
influencing other suppliers, thereby accelerating diffusion
(Akhlaghpour & Lapointe, 2018). However, contrary to
these expectations, we found that in the case of RFID
diffusion, Walmart and other retailers, the members of
one complementary part of the innovation, who played
the role of an IE in the early phases also helped the RFID-
in-retailing institutional field cross the chasm (Moore,
2019).
After two years in oblivion, Walmart took a new
approach. Based on pilot tests, Walmart realized that
RFID benefits lie in item-level tracking in stores,
particularly in the apparel section (Roberti, 2010a). Item-
level tracking uniquely identifies a product and
distinguishes product varieties. Walmart was able to
perform frequent, efficient, and cheaper inventory
management, and trace a product from the backroom to
the store shelf and checkout, leading to inventory
accuracy, on-shelf availability, and granular product
visibility in higher orders of magnitude than manual
counting and barcoding (Roberti, 2010a). This new
approach played to the strengths of RFID, as opposed to
the pallet-level tagging enforced by Walmart in its earlier
mandates. Pallet-level tagging focused on maintaining
inventory accuracy for shipments arriving at warehouses,
where the accuracy was already at 99% (O’Connor,
2014). It is at the stores where accuracy is impacted due
to various factors such as customers, nonrepeatable
processes, employee distractions, weather conditions, and
buying patterns (O’Connor, 2014). Other retailers like
Macy’s, Zara, Target, and JC Penney conducted pilots
and understood the benefits and future use cases of item-
level RFID (Studio98Test, 2009; University of Arkansas,
2009; Kay, 2010; O’Connor, 2009). Speaking about the
benefits of item-level RFID at a retailer conference, Peter
Longo, president of logistics and operations at Macy’s
said, “no matter how good the bar code is, it is woefully
short of what you can do with RFID” (Roberti, 2011).
Regarding the benefits from Macy’s RFID trials, he
stated: “Inventory accuracy went from 70 to 75 percent to
95 to 99 percent. … That’s practically stunning. We see
that as the most important benefit” (Roberti, 2011).
Summarizing his views on the technology’s future, he
said: “A year ago, we used to talk about whether to use
RFID or not” and added, “The debate is over. Our
position is that the technology is here, and it is time. RFID
is no longer a jazzy technology being tested by academics
and consultants. It’s not acceptable to have 30 percent
inventory inaccuracy” (Roberti, 2011).
Suppliers had higher benefits and lower costs in this phase
compared to the previous phases. Unlike barcodes, item-
level RFID benefits suppliers by letting them track
promotions, automate assembly, lower chargebacks from

reduced shrinkage and shipping errors, derive sales
insights using retailer’s real-time sales data, and increase
sales due to product availability in the retail sales floor
(Kay, 2010; Roberti, 2011; Swedberg, 2011a). The costs
were lower because of the technology maturity
(Wailgum, 2010), the emergence of established vendors
(Kay, 2010; Roberti, 2010a), and the retailer’s
willingness to share the tagging costs, subsidize the
sensor costs and work closely with the former in RFID
installation (Bustillo, 2010; Roberti, 2010a). Suppliers
could see the benefits this time due not to the cost of
losing business with influential retailers for
noncompliance but due to RFID’s superiority compared
to the barcode and their cheaper cost (Bustillo, 2010; Kay,
2010). Suppliers sensed that they would lose out on the
competitive advantage if they did not invest in RFID
(Kay, 2010).
Although retailers and suppliers had their respective
coadopter relative advantage, it was again the retailers
that had the highest degree of coadopter relative
advantage. The pilot studies were retailer initiated and
retailer centric. The supplier benefits were primarily
industry predictions based on the retailer pilots, with
limited references within the supplier community (Kay,
2010). Suppliers had the cost of maintaining two supply
chains—building a new one for retailers beginning their
RFID rollouts and another for retailers using barcodes.
Moreover, the cost-sharing arrangements and the
supplier-side installation were still in flux (Kay, 2010).
Thus, despite their optimism, suppliers looked up to
retailers for the concrete actions needed for the coadopter
advantage to materialize for both parties. As an expert in
RFID in retail aptly summarized:
Simply put, this is an instance where everyone
is a winner. Even apparel suppliers currently
concerned about whether retailers will pay an
appropriate share of tagging costs would
have difficulty disputing the fact that RFID-
based processes are superior to barcode-
based processes. (Kay, 2010)
The actions of Walmart and the other retailers represent
all three IE strategies. Retailers’ actions reflect the
institutional entrepreneurship strategy of rationale
development. When RFID diffusion went to a standstill,
the retailers conducted pilots and identified RFID’s
niche—in-store item-level tracking in the apparel
section—in the retail supply chain and attracted the field’s
attention (Bustillo, 2010; Studio98Test, 2009; University
of Arkansas, 2009). Retailers formed and co-chaired
industry groups that served as knowledge hubs drafting
detailed tagging guidelines and sharing them publicly on
their websites (Swedberg, 2010). These resources helped
adopters in their RFID rollouts. Retailers shared their
success stories and lessons learned in conferences
(Anderson, 2016), research studies, and case studies,
which served as a reference for other retailers and spurred
RFID adoption (McKevitt, 2016b; Swedberg, 2016b;
The Early-Stage Diffusion of Codependent IT Innovations
Warry, 2015; Zaino, 2016). Retailers continued to make
a case by trying more RFID use cases such as closed-loop
supply chains, omnichannel sales, smart dressing rooms
(Moore, 2019; Swedberg, 2011c), nonreplenishment
items (Swedberg, 2014a), pick-to-the-last-unit programs
(Swedberg, 2016c), one-hour delivery (Swedberg,
2016a), and smart product displays in showrooms
(Swedberg, 2016d).
Retailers’ actions also reflected the institutional
entrepreneurship strategy of relationship development. In
collaboration with research institutes, retailers conducted
pilots (O’Connor, 2009), identified use cases, developed
standards (Swedberg, 2011c), and tailored technology for
specific use cases (Roberti, 2016a). Retailers worked
closely with suppliers by troubleshooting (Swedberg,
2011a), providing tagging guides and standards manuals
(Beck, 2018), and involving business managers in
decision-making (Roberti, 2010a). Retailers got the best
price on tags for suppliers by forecasting the volume of
tags to be bought for a particular product category and
sharing the tagging costs with a cost-of-goods model
(Roberti, 2010a). In the process, retailers gained the
supplier’s trust, which had earlier been lacking (Kaplan,
2018a). Retailers formed industry groups with other
retailers and invited participation from vendors and
suppliers (Swedberg, 2010).
Retailers’ actions also reflected the IE strategy of resource
mobilization. Retailers invested in RFID rollouts by
installing RFID readers, redesigning processes, and
building data handling capability (Bustillo, 2010). Early
adopters like Walmart and Macys served as opinion
leaders for the early majority to join the RFID bandwagon
(Bustillo, 2010; Kriz, 2018; Thau, 2017). They invested
in research and development activities by funding
research centers (Studio98Test, 2012), sharing data
(Beck, 2018; Lopez, 2018), conducting field trials
(Swedberg, 2010), and piloting new use cases (Moore,
2019; Swedberg, 2011c). They channeled their human
resources by training employees, appointing ambassadors
(Greengard, 2015), creating specialized job positions
such as chief omnichannel officer (Prince, 2013), and
showing senior leadership commitment (Zaino, 2017).
Retailers brought in vendors to sponsor such RFID
programs, letting them have a say in standards
(Swedberg, 2011c). By using their power in the retailing
field, they publicly backed RFID (Bustillo, 2010), issued
mandates to suppliers (Anderson, 2016; Zaino, 2017) and
influenced standards development (Edwards, 2012). To
get suppliers’ support and cooperation in RFID adoption,
retailers invested in significant outreach efforts and
provided resources (McBeath, 2018).
Vendors played a vital role in this phase. For instance, the
RAIN RFID alliance formed by vendors (such as Google,
Impinj, Intel, and Smartrac) was a pivotal event aimed at
accelerating RFID adoption (RAINRFID, 2014;
Greengard, 2015). Vendors kept advancing the
technology (Cook, 2014; Swedberg, 2013; Warry, 2015),
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built the support infrastructure (GS1, 2009b; Greengard,
2015), and tailored solutions to suit adopters (Woodie,
2016). With the increase in RFID demand, vendors
earned profits, achieved economies of scale in production
(Warry, 2015), and offered solutions at affordable prices
(Kriz, 2018; Swedberg, 2016b). Industry leaders emerged
in the RFID market (Zaczkiewicz, 2016). They published
case studies for potential adopters (Kay, 2010), piloted
new use cases (Zaino, 2016), offered new RFID solutions
and services (Woodie, 2016), and collaborated for
standards development, research (Swedberg, 2011c), and
installations (Prince, 2013). Vendors gained experience
with RFID implementations, learning best practices, and
common pitfalls (Kay, 2010; McBeath, 2018).
Suppliers primarily played a supporting role by
embracing RFID (Bustillo, 2010; Kay, 2010), fulfilling
tagging requirements (Zaino, 2017), collaborating on
research (Swedberg, 2011b), and actively participating in
industry groups (Swedberg, 2011c). There are also
instances where suppliers played an influential role. A
Johnson & Johnson representative was elected as the
vice-chairman of the Board of Governors of GS1
EPCglobal, a nonprofit RFID standards organization
(GS1, 2012). Realizing RFID’s future, some suppliers
even tagged products for retailers who had yet to adopt
RFID, even influencing those retailers resisting RFID
(Zaino, 2017). Suppliers like Nike (Cosgrove, 2019),
Reebok (Swedberg, 2016d), Macy’s (Swedberg, 2014a),
and Rebecca Minkoff (Swedberg, 2014b) tried novel use
cases and announced positive outcomes (Roberti, 2016b;
Wollenhaupt, 2018).
Research institutes collaborated with other actors to
publish ROI studies, case studies, manuals, and future
use cases (Beck, 2018; Studio98Test, 2009; University
of Arkansas, 2009; GS1US, 2018). With support from
other actors, they lead standards development,
upgradation, and ratification (GS1, 2012). They
supported adopters by providing education, training,
tools, and community support (Edwards, 2012).
Besides, they invested resources by opening new
dedicated RFID research centers (Studio98Test, 2012).
Finally, they performed mergers with other institutes
to better collaborate on standards development
(Edwards, 2012).
The retailer’s actions in this phase indicate that they
enacted all three OV functions. When RFID adoption
came to a standstill, the pilot studies shifted the field’s
attention from pallet-level to item-level RFID
(Bustillo, 2010; Kay, 2010). By doing so, retailers
provided a revised understanding of RFID’s
usefulness, which encouraged other retailers to test and
adopt RFID and motivated suppliers to cooperate.
Retailers kept the field enthusiastic throughout the
chasm by visualizing and testing new use cases in
different product segments, often using buzzwords
such as “buy online pickup in store,” “ship from store”
409
(Hardgrave, 2016b), “one-hour delivery” (Swedberg,
2016a), and “smart dressing rooms” (Moore, 2019) to
frame the use cases. These actions represent an actor
enacting the OV function of interpretation.
In the prior phases, RFID was a technology solution
looking for a business problem. However, the IE’s ROI
studies in the chasm established item-level RFID as a
technology solution for actual business problems,
many of which remained unsolved by barcodes until
that point (Bustillo, 2010; Kay, 2010; O’Connor,
2009). As a result, coadopters focused on tailoring
RFID to their operations instead of pondering whether
RFID would deliver ROI, signaling a mindset change
compared to prior phases (Greengard, 2015). Retailers’
public announcements about extensive RFID rollout
plans and their rationale lent legitimacy to item-level
tracking in retail (Bustillo, 2010; Greengard, 2015;
Kay, 2010). For instance, one headline stated: “Macy’s
to RFID tag everything” (Anderson, 2016). Suppliers
envisioned RFID as a mainstay of retailing due to such
public backing by retailing giants (Bustillo, 2010;
Greengard, 2015). To lend further legitimacy, retailers
played a leadership role in standards development and
maturation (Swedberg, 2011c). They participated in
big conferences (Anderson, 2016) and announced their
post-implementation success (McKevitt, 2016b).
These actions represent an actor enacting the OV
function of legitimation.
Retailers fostered joint adoption by installing RFID and
simultaneously issuing mandates to suppliers (Bustillo,
2010; Kay, 2010), working closely with them in
fulfilling the tagging requirements (Anderson, 2016;
Roberti, 2016a). To activate all actors in the institutional
field, they forged social networks to obtain sponsorship
from vendors, involvement from suppliers, and funding
for research institutes (Swedberg, 2010). Through
research studies and industry groups, they created
knowledge (e.g., websites, social media, manuals,
recommendations, and case studies) for the would-be
coadopters (Swedberg, 2011c). Retailers regularly
announced RFID roadmaps and successes using
compelling and future-oriented frames such as “a very
big part of our future” that nudged other actors to
identify the commercial opportunities in RFID (Prince,
2013). Some of the articles headlined “RFID ready for a
lift-off,” (Kay, 2010), “Why RFID is (finally) here to
stay,” (Woodie, 2016), and “Macy’s: Inventory will be
100% RFID-tagged by 2017” (McKevitt, 2016a).
Speaking of changing the future of RFID, one vendor
said, “I don’t see it [RFID] slowing down at this point.
Acceleration has been pretty consistent the last two
years” (Woodie, 2016). These actions reflect an actor
enacting the OV function of mobilization.
Proposition 4: The IE for a codependent innovation will
use all three IE strategies and enact all three OV
functions during the chasm phase of the early-stage
diffusion process for that codependent innovation.

Advancements in RFID technology and other fields
made RFID more useful. RFID technology advanced,
matured, and became cheaper (Wailgum, 2010),
meaning that choosing a tag for a specific application
became easier (Cooduvalli, 2017). Big data analytics
afforded the number-crunching ability not available in
the early phases (Lopez, 2017). The rise of cellular
tracking technologies rendered RFID’s privacy issues
trivial in the minds of consumers (Woodie, 2016). ERP
systems evolved to ingest real-time data and are hence
suited for RFID (Wollenhaupt, 2018). The proliferation
of handheld devices and mobile apps meant that retailers
could employ handheld readers for their inventory count
(Michel, 2015). Technologies like drones, Wi-Fi, and
the Internet of Things complemented RFID
(Baydakova, 2018). Adhesives became more resilient to
environmental conditions, improving read rates (Moore,
2019). With the popularity of social media, omnichannel
sales—where customers buy online and pick up at
stores—emerged as a new RFID use case (Swedberg,
2019).
The joint adoption of RFID increased between 2010,
when retailers introduced item-level tracking, and 2019
(Hardgrave, 2016a). A rising number of retailers moved
from pilots to deployment (Hardgrave, 2016a) during
this time, with the retail sector driving the majority of
sales volume for the vendors (Wollenhaupt, 2018). The
apparel segment within the retail industry continues to
dominate RFID adoption, with other segments gradually
catching up. The forecasts for RFID adoption by
academic scholars and industry pundits paint a bright
future (Kriz, 2018; Thau, 2017). There is consensus that
RFID fell into the “chasm” after Walmart’s mandate
(Kriz, 2018; Roberti, 2017; Thau, 2017). Experts opine
that RFID is at the tipping point and ready for prime
time, with mainstream adoption on the horizon (Kriz,
2018; Roberti, 2017; Wollenhaupt, 2018). Other experts
feel that RFID adoption has now reached the early
majority (Swedberg, 2019). The discourse around RFID
has moved from technology issues to business cases
(Warry, 2015).
Our overall case analysis discussed above shows that the
key influencers in the early stages of the codependent
innovation diffusion need not be an actor external to the
adopter community, as the traditional innovation
diffusion literature suggests (Bass, 2004; Jeyaraj &
Sabherwal, 2014; Strang & Soule, 1998). Walmart, an
actor internal to the overall adoption phenomenon but
external to the coadopter community of suppliers,
perceived the highest degree of coadopter relative
advantage in RFID and played the IE role throughout the
early-stage diffusion process. During the chasm, the
other retailers played the role of an IE as well. Although
Walmart and the other retailers are internal to the overall
adoption phenomenon, which involves two different
The Early-Stage Diffusion of Codependent IT Innovations
adopter communities, they are external to the coadopter
community of suppliers resisting adoption of RFID tags
due to high recurring costs and lower perceived benefits,
as compared to retailers. Therefore, for the diffusion of
RFID-in-retailing, Walmart acted as an internal-external
influencer in the first three phases, and the other retailers
joined in during the chasm. This leads to our fifth
proposition:
Proposition 5: Instead of external influencers of a
codependent innovation playing the role of an IE,
the internal-external influencers who perceive the
highest coadopter relative advantage of the
codependent innovation will play the role of an IE
in the early-stage diffusion process for that
codependent innovation.
6 Discussion
6.1 Key Insights about the Processual
Dynamics
Our findings show that the organization in the
coadopter community that perceives the highest degree
of coadopter relative advantage between the two
different coadopter communities influences the early-
stage diffusion of a codependent innovation. In our
RFID casework, retailers perceived the highest degree
of coadopter relative advantage throughout the early
stage and influenced the diffusion of the RFID-in-
retailing innovation. This notion is similar to the notion
of relative advantage in prior research on single-whole
innovation diffusion, which posits relative advantage
as the key predictor of adoption decisions
(Akhlaghpour & Lapointe, 2018; Rogers, 2003). In
line with this literature, retailers perceive relative
advantage from RFID adoption due to orders of
magnitude improvements in inventory management,
product tracking, and reducing operational costs.
Suppliers perceive relative advantage in RFID due to
better shipment tracking and theft prevention.
However, the notion of relative advantage perceived
by each adopter community is limited in explaining
diffusion outcomes in codependent innovations
because two different adopter communities are
adopting two different parts of the innovation with
different relative advantages, and members from both
communities need to adopt their respective parts for
their respective relative advantages to bear fruit. In the
case we examined, suppliers voiced concerns over the
recurring costs of attaching RFID tags, despite their
enthusiasm for future benefits. But retailers perceived
a higher coadopter relative advantage because of the
fixed costs of installing RFID readers and the
supporting infrastructure, while suppliers bore the high
and ongoing RFID tagging costs. The coadopter
relative advantage was thus higher for retailers than for
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suppliers beginning with the early stage, specifically
for Walmart, who factored into its calculus of
coadopter relative advantage its dominance over
suppliers and its prior experience in supply-chain
revolutions. Therefore, it adopted RFID readers.
However, retailers cannot benefit from RFID without
joint adoption of the RFID technology by suppliers.
Thus, Walmart attempted to influence the suppliers
who resisted RFID due to a lower coadopter relative
advantage for them from this technology. Therefore,
we add the notion of coadopter relative advantage to
IDT to answer who plays the role of influencers during
the early-stage diffusion process for codependent
innovations.
Our findings reveal the role of an internal-external
influencer in the early-stage diffusion of codependent
innovations. In our RFID case, Walmart played this
role in the early-stage diffusion of the RFID-in-
retailing innovation. In contrast, prior research on
single-whole innovations suggests that external actors
play the influencer role in the early stages of the
diffusion process (Bass, 2004; Jeyaraj & Sabherwal,
2014; Strang & Soule, 1998). The notion of the
internal-external influencer is similar to the notion of
internal and external influencers in prior research on
single-whole innovation diffusion. Walmart is an
internal influencer as a member of the adopter
community. Walmart influenced other retailers by
sharing RFID benefits found by its pilots and success
stories gained as an adopter. Walmart is also an
external influencer in terms of its influence on the
coadopter community of suppliers who must adopt
RFID tags in order for the benefits of RFID adoption
to accrue to any party. Walmart acted as an external
influencer for suppliers by extolling the benefits of
RFID, framing RFID as the retailing industry’s future
technology, and preparing resources (such as manuals
and tagging guides). Walmart was able to disseminate
information to many suppliers due to the sheer number
of suppliers tied to them and their use of mass media
outlets and conferences. Despite its similarity to the
notion of influencer in the IDT on single-whole
innovations, Walmart’s role adds nuance to the
influencer concept because it influenced the diffusion
of RFID, a new class of innovation that we term
codependent innovation. Walmart is an internal-
external influencer because it is internal to the overall
RFID adoption phenomenon (as the adopter of RFID
reader) but external in terms of its influence on the
coadopter community of suppliers adopting the RFID
tags. Therefore, we add the notion of internal-external
influencer to IDT to answer the question of who plays
the role of influencer during the early-stage diffusion
process for codependent innovations.
411
Based on our analysis of the early-stage diffusion of
RFID in retailing, we show how the diffusion process
unfolds during the early stages of a codependent
innovation. We divided the early stage into four
phases: emergence, structuralization, evolution, and
chasm. In each phase, we identified the actor that
played the role of an IE, the institutional
entrepreneurship strategies they used, and the OV
functions they enacted.
6.1.1 Phase 1: Emergence
In the emergence phase, which lasted from 1999 to
2003, Walmart, as the internal-external influencer,
performed IE actions by developing and testing the
RFID technology. Our findings contrast with prior IDT
literature that posits that during this phase, external
influencers (Rogers, 2003), such as research analysts
and their firms, play the role of IE by seeking
opportunities for and developing IT innovations
(Greenwood et al., 2002; Liao, 2016; Morrill, 2006;
Wang & Ramiller, 2009). They collaborate with
innovative adopters to research, experiment, and test
the IT innovation (Morrill, 2006; Nielsen et al., 2014;
Rogers, 2003). However, our case analysis shows that
Walmart performed these actions by funding the Auto-
ID Center and conducting pilots with interested
suppliers, representing the IE strategy of rationale
development. Moreover, Walmart’s actions reflected
their enactment of the OV function of interpretation.
Further, they dominated the discourse by using frames
such as “smart shelves” and by discussing the RFID’s
emergence and applicability and its future in retailing,
calling it the next-generation supply chain technology.
In contrast, prior work on OVT suggests that in this
phase, research institutes dominate the discourse to
present the new IT as superior to current practices,
thereby attracting community attention and shaping the
benefits for potential adopters (Liao, 2016; Wang &
Ramiller, 2009). At the end of this phase, diffusion was
restricted to pilot tests conducted by retailers (mainly
Walmart) in collaboration with suppliers.
6.1.2 Phase 2: Structuralization
In the structuralization phase, which lasted from 2003 to
2005, Walmart as the internal-external influencer
performed IE actions by mobilizing the retailing field
toward RFID diffusion. Our findings contrast with prior
IDT literature that posits that in this phase, external
influencers (Rogers, 2003), such as technology vendors,
perform the actions of an IE by producing and releasing
products (Wang & Ramiller, 2009). Vendors work with
visionary adopters by deploying resources to realize the
innovation (Purdy & Gray, 2009) and learn the new
technology to solve business problems (Fayard et al.,
2016). However, our case analysis shows that Walmart
influenced RFID diffusion by deploying RFID systems in
their retail stores and distribution centers and mandating
suppliers to adopt RFID tags. To activate the market,

retailers influenced vendors to reduce prices, offer
discounts, and display their products, indicating the IE
strategy of resource mobilization. Walmart’s actions
reflected their enactment of the OV function of
mobilization. Further, they dominated the discourse by
issuing and summarizing their mandate and providing
constant updates on their mandate and RFID deployment.
In contrast, prior work on OVT suggests that in this phase,
vendors dominate the discourse through their marketing
campaigns to shape the benefits for potential adopters
(Swanson & Ramiller, 1997; Wang & Ramiller, 2009).
At the end of this phase, the diffusion can be characterized
by retailers aggressively adopting RFID systems and
suppliers adopting only the minimum required RFID tags
to fulfill Walmart’s mandate.
6.1.3 Phase 3: Evolution
In the evolution phase, which lasted from 2005 to
2008, Walmart as the internal-external influencer
performed IE actions by focusing on developing and
conveying the ROI of RFID to other actors. Our
findings contrast with prior literature on IDT that
posits that in this phase, the adopters of an innovation,
i.e., the internal influencers (Rogers, 2003), are
expected to perform IE actions to get more adopters on
board in order to benefit from network externalities.
Suppliers’ actions focus on perfecting the innovation
to reduce costs and leveraging it to gain an advantage
over their competitors because the innovation has now
been validated (Fayard et al., 2016; Wang & Ramiller,
2009). However, our case analysis shows that Walmart
focused on adding legitimacy to RFID use in retailing
by sharing data with suppliers and conducting pilots in
real scenarios and standards development in
collaboration with research institutes, indicating the IE
strategy of relationship development. Walmart’s
actions reflected their enactment of the OV function of
legitimation. Further, they dominated the discourse by
framing RFID ROI, standards maturity, technology
maturity, and backing the technology. In contrast, prior
work on OVT suggests that in this phase, suppliers
dominate the discourse to incorporate their success
stories and justify a potential adopter’s investment in
innovative IT (Wang & Ramiller, 2009). Despite these
efforts, RFID diffusion came to a standstill due to a
lack of coadopter relative advantage for suppliers.
Other retailers did not follow an aggressive
implementation, limiting RFID adoption to pilots.
Vendors did not influence because they had few
suppliers and had to bear the costs of updating
standards. Our results show evidence of what scholars
call a chasm between the early and the growth stages
of diffusion (Moore, 2014; Xu et al., 2017).
6.1.4 Phase 4: Chasm
In the chasm, which lasted between 2008 and 2019, as
the internal-external influencers, Walmart and other
The Early-Stage Diffusion of Codependent IT Innovations
retailers performed IE actions by focusing on a
business problem that best suited the strengths of
RFID. Compared to their focus on pallet-level RFID in
the initial phases, Walmart and the other retailers
focused on item-level RFID in the apparel category,
which conferred a coadopter relative advantage for
retailers and suppliers. In this phase, they worked
closely with suppliers for sharing costs and
implementation, simultaneously transforming their
own sales floors by installing RFID readers. Our
findings contrast with prior literature that posits that
vendors act as external influencers and perform the
actions of an IE during the chasm to shape the relative
advantage for the pragmatic potential adopters (Moore,
2014). They deploy resources to develop a complete
product and set up support services, working closely
with the adopter and forging other tactical alliances
(Gombault et al., 2016; Marsan et al., 2020; Moore,
2014). However, our case analysis shows that retailers
performed such actions, essentially utilizing all three
IE strategies. Retailers’ actions reflected their
enactment of all three OV functions. They dominated
the discourse to pitch item-level RFID as a new
direction, sketch their implementation plans, visualize
novel use cases, showcase the maturity of standards
and technology, and share success stories. In contrast,
prior work on OVT suggests that in this phase, vendors
dominate the public discourse to demonstrate ROI and
market leadership and position the innovation in a
niche market segment (Moore, 2014). Overall, retailers
helped RFID in retailing cross the chasm, which is
critical to deeming the early-stage diffusion successful,
consequently moving the diffusion to the growth stage
(i.e., the mainstream markets).
6.2 Theoretical Contributions
Understanding codependent innovation diffusion is
critical to tapping into the transformative potential of
this class of innovations. A case in point is the RFID-
in-retailing innovation, which promised a supply-chain
revolution in retailing and involved massive
investments and process changes from all actors in
retailing. But its diffusion fell into a chasm and needed
almost a decade to enter the growth stages of diffusion
(Kriz, 2018; Roberti, 2017). There is a lack of
understanding of how codependent innovations
(Bucklin & Sengupta, 1993) diffuse in the IS
innovation diffusion literature, compared to the
extensive research on the diffusion of single-whole
innovations (Angst et al., 2010; Wang & Swanson,
2007). To address this, we study codependent
innovations with two complementary parts and
examine how they diffuse during their early stage. Our
paper makes three distinct contributions to the IS
literature by expanding the scope of IDT to the
codependent innovation context. Table 7 summarizes
our key contributions.
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Table 7. Contributions of Our Study

Concept Phase 1: Emergence Phase 2: Structuralization Phase 3: Evolution Phase 4: Chasm

(1999–2003) (2003–2005) (2005–2008) (2008-2019)

Who perceived the Retailers (specifically Retailers (specifically Retailers Walmart and other
coadopter relative Walmart): Walmart Walmart): Based on (specifically retailers:
advantage? What could lead supply pilots, Walmart further Walmart): Reap
were the key chain innovation in crystallized the benefits RFID benefits by Item-level tracking
benefits? retailing, build new perceived in the last leveraging RFID improves inventory
trade models, and find phase. They need not bear already deployed in accuracy, on-shelf
ways to lower the recurring cost of RFID stores and availability, and
operational costs. tagging. distribution centers. granular product
The more the visibility in higher
suppliers adopt, the orders of magnitude
more benefits are than manual counting
accrued. and barcoding.

Was the influencer Internal-external Internal-external Internal-external Internal-external

internal or influencer influencer influencer influencer
external?

Who will act as the Retailers (specifically Retailers (specifically Retailers Walmart and other
IE? Walmart) Walmart) (specifically retailers
Walmart)

Which Rationale Resource mobilization Relationship Rationale

institutional development development development,
entrepreneurship Resource
strategy will the IE mobilization, and
use? Relationship
development

Which OV Interpretation Mobilization Legitimation Interpretation,

function will be Mobilization, and
enacted by the IE? Legitimation

Extent of joint Joint adoption takes Joint adoption grows: Joint adoption goes Joint adoption crosses
adoption off: Retailers aggressively into a chasm: the chasm: A rising
deployed RFID systems in Retailers (including number of retailers
Adoption was stores and distribution Walmart) were moved from pilots to
restricted to pilot tests centers. Suppliers adopted cautious about deployment.
conducted by retailers only the minimum further installing Suppliers, convinced
in collaboration with required RFID tags to RFID systems. by the benefits, are
suppliers. fulfill Walmart’s mandate. Walmart installed working closely with
Some suppliers missed the fewer RFID systems retailers to fulfill
deadline. in its distribution tagging requirements.
centers and lowered Some suppliers even
its mandate tagged products for
expectations retailers yet to adopt
compared to what it RFID. The apparel
originally segment within the
envisioned. retail industry
Suppliers’ continues to dominate
complaints on the RFID adoption, with
lack of benefits and other segments soon
high cost of catching up. Pundits
implementation from academia and
grew exponentially, industry paint a bright
and they adopted the future.
minimum required
RFID tags to satisfy
the retailers.

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First, we add the notion of coadopter relative
advantage to the IDT literature and posit that the
organization in the coadopter community that
perceives the highest degree of coadopter relative
advantage between the two different adopter
communities will emerge as an IE and will influence
the early-stage diffusion of the codependent
innovation. By doing so, we provide an enhanced
understanding of the notion of relative advantage in
IDT from two perspectives.
(1) Prior work conceptualizes relative advantage by
assuming that all members of the adopter community
draw from the same set of costs and benefits (Junglas
et al., 2019). This conceptualization is insufficient to
explain the diffusion of codependent innovations
because it cannot explain the asymmetry in relative
advantage between the two different coadopter
communities and how this asymmetry affects the
diffusion of the codependent innovation in its early
stages. We offer a nuanced conceptualization of
relative advantage that we term coadopter relative
advantage. Each coadopter community has its own
coadopter relative advantage, which is calculated
based on the unique set of benefits and costs in
adopting their respective part of the innovation;
however, the realization of this advantage is contingent
upon joint adoption of the entire codependent
innovation. This also helps explain why codependent
innovations generally favor one of the two coadopter
communities. While we challenge the adequacy of the
notion of relative advantage in IDT in the context
codependent innovations, we also add further nuance
to this notion, given its limitations in understanding the
costs and benefits perceived by the two coadopter
communities in codependent innovations (Agarwal &
Prasad, 1997).
(2) The conceptualization of prior work is limited in
explaining how diffusion unfolds in the light of a
hindrance to joint adoption due to the difference in the
relative advantage for the two different coadopter
communities. Our conceptualization of coadopter
relative advantage factors in the adoption likelihood of
the other coadopter community, and that calculation
determines who performs the role of an IE to influence
diffusion. We propose that the organization in the
coadopter community with a higher coadopter relative
advantage that perceives the highest degree of coadopter
relative advantage will influence the diffusion by acting
as an IE because their higher coadopter relative
advantage will bear fruit only if the other coadopter
community also embraces and adopts their part of the
codependent innovation. Through this understanding,
we add to the prior work in IDT that posits relative
advantage as the key notion in explaining the diffusion
of single-whole innovations (Akhlaghpour & Lapointe,
2018). Our conceptualization of coadopter relative
advantage aligns with prior work on relative advantage
The Early-Stage Diffusion of Codependent IT Innovations
where the focus is on different perceptions within a
community resulting from the technology component,
i.e., comparing the new technology with the incumbent
one (Moore & Benbasat, 1991).
In addition, our conceptualization focuses on the relative
advantage differences between the two coadopter
communities. Further, we show that another adopter’s
adoption likelihood (or lack thereof) is factored into the
calculation of relative advantage and determines
whether an actor plays the role of an influencer.
Moreover, we add a new understanding that a high
relative advantage by itself is insufficient to foster the
diffusion of codependent innovations. Our notion adds
value to researchers studying the diffusion of
codependent innovations, as they may direct their efforts
to develop instruments for measuring the coadopter
relative advantage for the different coadopters involved.
Further, our work offers a novel construct that
researchers can theorize as predicting codependent
innovation diffusion. Scholars focusing on strategies
like mandates and incentives (as we did in our paper)
(Rogers, 2003), and interventions in the IS design,
promotion, and surrounding processes need to focus on
this novel construct as a dependent variable when
studying codependent innovation diffusion.
Second, we add the notion of an internal-external
influencer to the IDT literature and posit that the IE as
an influencer may be an actor internal to the overall
adoption phenomenon, which involves two different
adopter communities, who is, however, external in
terms of their influence for the coadopter community
that has a lower coadopter relative advantage and thus a
lower motivation to adopt their part of the codependent
innovation. By doing so, we provide an enhanced
understanding of the notion of influencers in the IDT
from two perspectives.
(1) the concepts of internal or external influencers are
inadequate in conceptualizing the form of influence
needed for the diffusion of codependent innovations.
External influencers might find it hard to persuade
adopters due to the asymmetric coadopter relative
advantage and the consequent stalemate in
codependent innovation diffusion. A member of the
coadopter community with the higher degree of
coadopter relative advantage might influence the
coadopter community with the lower degree of
coadopter relative advantage. While this member, as
an adopter in the overall codependent innovation
adoption phenomenon, is an internal influencer, this
member is also external in terms of their influence on
the coadopter community with the lower degree of
coadopter relative advantage. To conceptualize this
influence, our work proposes a new type of influencer
in terms of internal-external influencer and adds a new
understanding to the influence processes in IDT
research on communication channels (Loh &
Venkatraman, 1992; Strang & Soule, 1998).
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(2) We add a new understanding that internal-external
influencers play the role of an IE in all the phases of the
early-stage diffusion process for codependent
innovations. In contrast, prior research on single-whole
innovations suggests that external actors play the
influencer role in the early stages of the diffusion
process (Bass, 2004; Hu et al., 1997). Our notion adds
value for researchers studying the diffusion of
codependent innovations, who might develop new
instruments to measure internal-external influence in the
context of codependent innovation diffusion. Further,
researchers can theorize the effect of diffusion
interventions involving the internal-external influencer
to speed up the diffusion process because these
influencers are most likely to obtain buy-in from
potential adopters. Such interventions can be compared
with those involving external influencers, whose
influence might slow down the diffusion. Our work aids
researchers in theorizing the timing and the nature of
influence at various phases in the early-stage diffusion
so that communication channels are utilized in the ideal
sequence as the diffusion of codependent innovations
progresses from one phase to another.
Third, we divide the early-stage codependent innovation
diffusion process into four phases—emergence,
structuralization, evolution, and chasm—and identify
the institutional entrepreneurship strategies used and the
OV functions enacted by the IE during each phase. This
contribution provides a more nuanced understanding of
influencers’ actions in the IDT from two perspectives.
(1) We add a new understanding that influencers need to
engage in institution building actions to promote the
diffusion of the new class of innovation termed
codependent innovations. The diffusion of codependent
innovations requires influencers to change the existing
unsupportive institutional arrangements, which lowers
the coadopter relative advantage and deters the key
actors’ attention and resources from the new technology.
However, prior work posits that external and internal
influencers motivate potential adopters by relying on the
communication of generic and experiential information,
respectively (Angst et al., 2010; Jeyaraj & Sabherwal,
2014). We add to this line of work and posit that
influencers foster diffusion by building new institutions
by using institutional entrepreneurship strategies and by
enacting OV functions. We also add to the growing
body of work that integrates OVT and IET to explain the
diffusion process by extending it to the context of
codependent IT innovations (Paré et al., 2020; Wang &
Swanson, 2007). In contrast to prior work focusing on
the strategies used by vendors and other external
influencers (Kim & Miranda, 2018; Paré et al., 2020;
Wang & Swanson, 2007), we focus on the strategies
used by adopters, specifically internal-external
influencers, who enact different OV functions to spur
the innovation process.
415
(2) We add a finer-grained understanding of the diffusion
phenomenon by identifying the four unique phases
during the early-stage diffusion process and discussing
which specific institutional entrepreneurship strategies to
use and OV functions to enact to address the distinct
issues that arise in each of those phases to foster the
diffusion of codependent innovations. Based on our
RFID-in-retailing casework, we propose that the IE for a
codependent innovation will: (a) use the rationale
development strategy and enact the interpretation OV
function during the emergence phase, (b) use the
resource mobilization strategy and enact the mobilization
OV function during the structuralization phase, (c) use
the relationship development strategy and enact the
legitimation OV function during the evolution phase, and
(d) use all the three institutional entrepreneurship
strategies and enact all the three OV functions during the
chasm phase. By doing so, our work extends prior work
on phase models in the IT diffusion literature that looks
at dynamic patterns in effective communication channels
(Loh & Venkatraman, 1992; Strang & Soule, 1998) and
in an actor’s discursive (Wang & Ramiller, 2009) and
material practices in innovating with IT (Nielsen et al.,
2014). We extend this work to the context of
codependent IT innovations.
In addition, our work adds to the small but growing body
of work on the strategies used by actors to enact the OV
functions of interpretation (Liao, 2016), legitimation
(Kaganer et al., 2010; Marsan et al., 2020), and
mobilization (Amadoru et al., 2021; Wang & Swanson,
2007). Further, compared to prior work that primarily
focuses on legitimation strategies (Kaganer et al., 2010;
Paré et al., 2020), our work also focuses on interpretation
and mobilization strategies (Amadoru et al., 2021). Our
work affords researchers additional mechanisms—i.e.,
institutional entrepreneurship strategies and enacting OV
functions—with which to theorize the role of influencers
in fostering the diffusion of codependent innovations.
Our four-phase process model serves as a baseline for
future researchers to test and expand the understanding
of the process of codependent innovation diffusion in
different contexts.
Our theoretical contributions offer originality through
several revelatory (i.e., surprising) insights into our
understanding of the diffusion of codependent
innovations, offer scientific utility through a clear
presentation of the research model, present boundary
conditions for further theory building and testing, and
provide practical utility through the presentation of the
managerial implications in a subsequent section (Corley
& Gioia, 2011). We made our best efforts to adhere to
the key considerations of theory development outlined
by Rivard (2014) by identifying a gap, defining and
extending the key theoretical concepts driving our
phenomenon, explicating our contributions, and
improving the presentation clarity by using various tools
like figures, tables, and propositions. In terms of

theoretical integration, our work falls into the type “close
areas of research, compatible underlying assumptions” in
the typology proposed by Okhuysen and Bonardi (2011).
All three theories—IDT, OVT, and IET—represent
close research areas because they examine a common
phenomenon—the diffusion of new practices. Further,
these three theories also have compatible underlying
assumptions, as they all assume multiple actors with
motives and self-interests and clarify that an innovation
might not benefit everyone.
We believe that our theoretical insights are generalizable
(see Appendix A for more details) within the boundary
of codependent innovations in retailing settings
involving big players. In terms of the Lee and Baskerville
(2003) generalizability framework, ET generalizability
(from empirical statements to theoretical statements)
applies to our study. To further strengthen the face
validity of our findings, we show our model’s
applicability in the case of another codependent
innovation in retail. We analyzed the early-stage
diffusion of EMV technology in US retailing. EMV
chip-based credit\debit cards and EMV chip readers are
the two complementary parts. The two different adopter
communities who adopt this innovation are banks who
issue EMV cards to their customers and merchants and
retailers who install chip readers at point-of-sale
terminals, respectively. We found that the early-stage
diffusion of this technology followed the process
model we discerned in our study of RFID diffusion in
retailing. In the early stages of EMV card diffusion,
banks perceived a higher degree of coadopter relative
advantage than retailers and played the role of an IE.
Merchants in the US resisted EMV cards mainly due
to costs associated with implementation. As a
countermeasure, banks announced a deadline beyond
which EMV noncompliant merchants would be held
liable for fraud committed by consumers at the point
of sale—a move very similar to the mandates issued by
Walmart during the structuralization phase (Pettey,
2015). Banks utilized public discourse to position
EMV technology as a solution for security breaches
and to outline EMV transition deadlines (Visa, 2019;
Orem, 2019). These efforts led to the joint adoption of
EMV cards by banks and chip readers by retailers
(Orem, 2019).
6.3 Practical Implications
Our theoretical contributions have important practical
implications for organizations’ IT innovation
practices. First, organizations engaging in the adoption
and diffusion of a codependent IT innovation should
constantly perform internal analyses of the costs and
benefits of the innovation over existing
technology/practices and the external analysis of costs
and benefits to the members of the other coadopter
community. This analysis will inform the organization
The Early-Stage Diffusion of Codependent IT Innovations
whether they need to carry out the role of a “visionary”
organization championing an innovation. Second,
visionary organizations can engage in three types of
strategies: (1) developing the rationale for the
innovation by means of press statements, online news
releases, white papers, conferences, promotional
activities, buzzwords, and keynotes; (2) mobilizing
resources by using penalties, financial clout,
investments in new equipment, research funding,
political resources for lobbying, and reward systems
for supporters of the innovation; and (3) developing
relations through coalitions, alliances, research
collaborations, think tanks, standard-setting bodies,
and/or governmental organizations. Third, our notion
that an IE can enact certain OV functions informs
organizations that their actions have industry-level
diffusion implications. In other words, their actions
can, directly and indirectly, activate the industry to
perform interpretation, mobilization, and legitimation
functions and thereby aid IT diffusion. Organizations
interested in leading the community toward
interpretation should engage in research and
development to understand innovations, fund research
institutes, and use public discourse to come up with
buzzwords. Organizations interested in leading the
community toward mobilization need to help vendors
manufacture IT solutions, urge them to display new
products in forums, mandate the adoption of other
actors, call others to deploy resources to implement the
innovation, and use discourse to outline
implementation plans. Finally, organizations
interested in leading the community toward
legitimation need to endorse innovations, help set
standards, manage the discourse, legitimize the
innovation, and promote success stories. Fourth, our
four-phase model for early-stage diffusion of a
codependent innovation shows organizations how to
time their strategies when innovating with
codependent innovations. In the emergence phase, the
IE needs to work closely with research institutes by
funding them and drafting standards. In the
structuralization phase, the IE needs to influence the
coadopter community and vendors simultaneously and
use various techniques, including mandates, to help
achieve economies of scale. In the evolution phase, the
IE should ensure that adopters get a good ROI, vendors
save on costs, and research institutes develop new
standards to improve constituent technologies. In the
chasm phase, the IE needs to find a niche target
segment for the innovation, work closely with the
coadopter community for sharing costs and
implementation, and collaborate with vendors and
research institutes for technology maturation and
standards development. Finally, the IE interested in
codependent innovation diffusion needs to perform
actions to enact the institutional functions of
interpretation, mobilization, and legitimation during
the emergence, structuralization, and evolution phases,
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respectively. In the chasm phase, the IE needs to
perform actions to enact all three OV functions.
6.4 Limitations and Future Work
Our narrative and interpretation of RFID diffusion are
based on our analysis of internet-sourced discourse.
While internet sources can play an essential and key
part in the discourse surrounding an innovation, they
could be restricted in the extent to which they represent
the diversity of opinions by each actor (Wang &
Ramiller, 2009). However, internet-based resources
are the biggest discursive arena and have also been
used in prior RFID (Fish, 2006; Quaadgras, 2005),
innovation diffusion (Davidson et al., 2015), and
institutional entrepreneurship (Garud et al., 2002)
studies. We collected data from diverse, reputed
sources to ensure the credibility of our findings. Future
research could focus on other sources like industry
expositions, social media sources, and personal
interviews to gain an insider perspective, and use
analytical tools like text mining and linguistic analysis
to gain additional insights (Amadoru et al., 2021;
Davidson et al., 2015; Miranda et al., 2015).
Also, while we studied the actions of all actors in the
retailing field, we analyzed OV around codependent
innovations primarily from a Walmart-centered
perspective. As a potential extension to OV research in
codependent innovations, scholars could explore the
OV shaping activities of other adopting parties and the
tensions in the conversations surrounding coadopter
relative advantage. Further, although suppliers in our
case study initially complied with the mandate, they
eventually abandoned it because they would have been
no worse off had they followed the mandate and
adopted RFID (Hardy & Maguire, 2017). Moreover,
retailers were unable to develop relationships in the
evolution phase to the extent needed to collectively
fulfill the mandates (Hardy & Maguire, 2017). Future
studies could extend IET with the notion of mandates
by an IE to bring about institutional change and
research the extent to which they can be effective.
We propose three additional directions for future
research. First, future research can explore how
differential levels of other important innovation
attributes, like compatibility, complexity, trialability,
and observability, play a role in diffusing codependent
innovations (Rogers, 2003; Sun et al., 2018). Experts
have opined that one of the barriers to RFID diffusion
is the complexity inherent in RFID deployment—a
process involving the integration of complicated IT
infrastructure and business process changes for which
there is no cohesive solution available in the market
(Kaplan, 2018b; Ricci, 2010). Studying the role of
relative complexity between two different adopter
communities and how it impacts their adoption
decisions is an exciting avenue for future research.
417
Second, future studies could also extend our
framework to include the later stages of codependent
innovation diffusion and study who plays the
influencer role in later stages. Future studies might also
delve deeper into the mechanisms of internal-external
influence. For instance, IDT posits that prestige and
competition influence adopters to imitate other
adopters (Jeyaraj & Sabherwal, 2014; Strang & Soule,
1998). Given that an internal-external influencer might
not be an actor from the same adopter community, it
would be interesting to study how such factors
influence imitation.
Third, future research could also focus on the structure
of the OV. Business use cases are one of the key
components of an OV (Miranda et al., 2015). We
expect the structure of an OV for codependent
innovations to be different because two different
adopter communities are involved, and the overall
innovation tends to favor one coadopter community. In
the case of the RFID-in-retailing diffusion, we noticed
that the business use cases focused on retailers fueled
by their interests. Studying the structure of OV in
codependent innovations could yield a nuanced
structure of OV (Miranda et al., 2015). As another
fruitful future research avenue, codependent
innovations may add further nuance to the notion of
community reception of an OV (Davidson et al., 2015;
Ramiller & Swanson, 2003; Swanson & Ramiller,
2004). The business use cases, legitimating claims, and
implementation guidelines and challenges are centered
around one coadopter community and thus cannot be
readily received by another coadopter community.
Although the business use cases are centered on one
coadopter community, studying the profile and
experience of actors in the other coadopter community
could explain those actors’ reception of the OV
(Marsan et al., 2012). A related concept in IET is an
actor’s social position in the institutional field
(Battilana et al., 2009), which confers upon them
financial, political, or social resources and grants them
the power to influence the field (Hardy & Maguire,
2017). Future research could explore the dynamic
patterns in an actors’ profile, experience (Marsan et al.,
2012), and social position in the institutional field at
different phases of the diffusion of codependent
innovations (Battilana et al., 2009).
Acknowledgments
We are grateful to the senior editor and the three
anonymous reviewers for a constructive and
developmental review process, which substantially
improved our manuscript. We are also thankful to Dr.
Sutirtha Chatterjee (University of Nevada, Las Vegas)
for his pointers during the revision process on how to
more clearly articulate the contribution that this
qualitative work makes to the IS field.

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 The Early-Stage Diffusion of Codependent IT Innovations

Appendix A: Generalizability
The EMV technology is another example of a codependent innovation. The complementary parts are the EMV chip
credit\debit cards and the chip readers. The two different adopter communities are banks who issue EMV cards to their
customers and merchants and retailers who install chip readers at point-of-sale terminals. Our analysis shows that the
early-stage diffusion of EMV technology in US retailing followed the process model we discerned in our study of
RFID diffusion in retailing. EMV cards create a unique transaction code for every transaction at a point of sale, which
makes these cards resistant to counterfeit frauds that magnetic strip-based cards are prone to (Kossman, 2017). Before
its implementation in the US, EMV card implementations in other countries had established massive benefits in
decreasing counterfeit fraud (Visa, 2019; Kossman, 2017). Banks perceived a higher coadopter relative advantage with
EMV cards than retailers and acted as IEs in the early stages of EMV card diffusion. EMV cards benefit banks the
most because they are liable for customer losses due to counterfeit fraud from in-store transactions; retailers and
merchants, especially consumer-oriented ones, face a loss of reputation when a security breach happens at their stores
(Chandler, 2014). However, EMV adoption would require banks to reissue EMV credit cards to all customers and set
up the supporting IT infrastructure, and would require retailers to install chip readers and associated software in all
point-of-sale terminals (Chandler, 2014). For retailers, EMV cards can frustrate customers because the checkout
process takes longer than before (i.e., using magnetic stripes). With security breaches becoming commonplace in point-
of-sale terminals in the US, banks took a leadership role in introducing EMV cards in the US by announcing their
migration plans (David & Best, 2014). Even in Europe, where EMV cards first originated, it was banks\credit card
companies who developed a rationale by inventing the EMV technology and drafting the standards (EMV, 2019;
Olson, 2017). When merchants in the US resisted EMV cards mainly due to costs associated with implementation,
banks issued a shift in liability deadline after which the EMV noncompliant merchants would have to bear the costs of
counterfeit frauds incurred by customers at the in-store point-of-sale—a move very similar to mandates issued by
Walmart at the structuralization phase (Pettey, 2015). This strategy was pivotal in influencing other banks to issue
similar notices and bringing retailers on board. Banks developed relationships by working closely with vendors and
merchants to conduct pilots and make the EMV technology easy to use for customers (Kossman, 2016). Banks utilized
the OV by positioning the technology as a solution for security breaches, outlining EMV transition deadlines, and
publishing research on fraud reductions (Visa, 2019; Orem, 2019). These efforts lead to the widespread joint adoption
of EMV cards by banks and EMC card readers by retailers (Orem, 2019).
By showing our model’s applicability in the case of another codependent innovation in retail, we strengthen the face
validity of our findings. However, it is important to note that the US was one of the last countries adopting EMV
technology, which was already a mature and standardized technology in European retailing before it reached the US
markets. On the other hand, RFID in retailing was in its infancy, with businesses developing the technology and
identifying the use cases in retail. Also, retailing in Europe has fewer banks and credit card companies than the
thousands in its US counterpart.
Although we limited our data collection and analysis to a single case study, we believe that our theoretical insights are
generalizable within the boundary of codependent innovations in the retailing context with large players. In terms of
the Lee and Baskerville (2003) generalizability framework, ET (from empirical statements to theoretical statements)
generalizability applies to our study. We demonstrate the generalizability of our model to a new setting by analyzing
the early-stage EMV technology diffusion in US retailing. Our analysis shows that the early-stage diffusion of EMV
technology in US retailing followed the process model we theorized in our study of early-stage RFID diffusion in
retailing. It is important and ethical to judge and report whether the conditions in settings from which the theory is
generalized from (RFID technology) are similar to new settings (EMV technology) to which theory is generalized (Lee
& Baskerville, 2012). Thus, in the previous paragraph, we outlined how this new setting (EMV in the US) is different
from RFID in retailing, based on which we theorized our process model.

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About the Authors

Srikanth Parameswaran is an assistant professor of management information systems in the School of Management
at Binghamton University. His research interests are in the areas of IT innovation, user-generated and web content,
and technology-mediated health outcomes. His research has been published in Organizational Research Methods,
Information and Management, Journal of the American Medical Informatics Association, Information Systems
Frontiers, and other outlets. He earned his MS in management information systems and PhD in management science
and systems from the State University of New York at Buffalo. He received his bachelor’s degree in computer science
and engineering from Anna University, India. He was featured on the Poets & Quants list of the “Top 50 Undergraduate
Business Professors of 2021.”
Rajiv Kishore is a professor of information systems and the department chair of the Management, Entrepreneurship, and
Technology Department at the University of Nevada, Las Vegas. He received his MS and PhD degrees in computer
information systems from Georgia State University. His current research interests are in the areas of online markets and
platforms, social media, and virtual communities in the context of healthcare; IT sourcing, governance, and impacts; IT
innovation; and corruption and corporate social responsibility. He has published his work in premier journals in the
information systems, medical informatics, operations management, organizational behavior, and strategic management
fields, including MIS Quarterly, Journal of Management Information Systems, Journal of the American Medical
Informatics Association, Production and Operations Management, Journal of Organizational Behavior, and Strategic
Management Journal, among others. He has also received multiyear research grants as PI and Co-PI from prestigious
federal agencies including NSF and AHRQ. Rajiv currently serves as an associate editor at Information and Management
and as an editorial board member at Healthcare. His ORCID ID is 0000-0002-9476-4479.
Xuanhui Yang received his PhD degree from Xiamen University, China. His research interests are in the areas of
innovation and entrepreneurship. He is currently a data scientist at Wilsonart LLC and focuses on effectiveness
measurement and operations optimization.
Zhenyu Liu is a professor of information systems in the School of Management at Xiamen University, China. He
received his bachelor’s degree in automation engineering (1982) and master’s degrees in management information
systems (1985) from Huazhong University of Science and Technology, Wuhan, China. He received his PhD degree in
business informatics from University of Freiburg, Germany in 1998. Zhenyu has taught courses on information
systems, operations management, and electronic commerce. His research interests include interorganizational
information systems, B2B e-commerce, coordination mechanisms, and the economic analysis of networks.

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