An Empirical Study Of The Impact Of Internet Of Things On Traditional Retail Enterprise Performance

Although the Internet of Things was proposed for the first time just13years ago, it isbecoming the lead topic of all walks of life. There is no doubt that the Internet of Things willbring about revolutionary changes to each part of our lives, such as traffic management, safetymanagement, and digital city management. In the context of business, Internet of things isconsidered as a set of technologies that improves supply chain efficiency by improving inventoryefficiency, optimizing logistics, and coordinating the flow of materials. Although recentlyInternet of things has achieved great attentions in many business applications, the financialbenefits that companies have achieved over time since the adoption of Internet of things is notwell understood.On the base of literature review of the studies about the benefits of Internet of thingstechnologies such as RFID and EPC on the traditional retail business, this paper selected20IoTretail firms and20matched non-IoT retail firms as the research object. Selecting inventory ratio,sales efficiency and financial slack as the core explanatory variables, and profit margin as theexplained variable, this paper conducted an empirical study on the impact of Internet of things onretail enterprise performance in terms of financial performance according to Heckman two-stageregression model. This paper also conducted parameter estimation and hypothesis tests on theempirical study results, hoping that the results of this paper would have practical reference valueon the adoption of Internet of things technologies in traditional retail businesses.This paper examines the impact of Internet of things on retail enterprise performance whileconsidering endogenous of firm choice of whether to adopt such technology in the company.Through the study, this paper finds that firms self-select into a certain adoption mode, i.e. adoptor not adopt Internet of things technology, on the basis of their unique organizational attributes.The results also show that Internet of things technology, such as RFID and EPC, conferssignificant benefits for firms that have adopted it. Interestingly, enhanced inventory efficiencyand sales efficiency begin to play a greater role in contributing to the profitability over time forfirms that have adopted Internet of things. This outcome may be due to the fact that firms requirea long time to get benefits from the Internet of things. However, this paper finds that the valuesof Internet of things that accrue to firms are not universal across firm. That is, the results of the study suggest that technologies such as RFID and EPC confer significant value for certain firmswhile they does not for other firms with unobservable disadvantages.In conclusion, this study reveals some meaningful views on what drives firms to adoptInternet of things and on which firms achieve higher financial performance in a post-adoptionperiod as a result of Internet of things adoption.