Industrial Robots and Firm Innovation: Big Data Evidence from China

Robots are widely used in industrial manufacturing and services around the world. Based on a large Chinese dataset of more than three million records, this study examines the impact of imported industrial robots on firm innovation. Using a differences-in-differences method, we find that the application of industrial robots increases firm innovation. We identify two possible channels through which robots promotes innovation: financing constraints alleviation and the improvement of human capital. Further analysis shows that the effect of robots on innovation is more pronounced for firms that are highly dependent on external financing, belong to high-tech industries, import high-end robots, and have insufficient supply of skilled labor. We also find that industrial robots increase the marginal contribution of innovation to firms’ total factor productivity. Overall, our study provides big data evidence on the unintended positive consequences of industrial robots on firm innovation.