Robotics and Productivity: A Multi-Level Analysis Across Firms and Supply Chains

Abstract

The widespread use of robotics and digitisation in Industry 4.0 enables real-time communication and data exchange, leading to increased speed, accuracy, and flexibility. Additionally, these technologies have the potential to cut costs, enhance product quality, and improve responsiveness to customer demand. Despite these benefits, there has been a recent decline in productivity growth in manufacturing industries, especially since the 2007–8 financial crisis, often known as the ‘productivity paradox’. Literature reviews suggest that while adopting robotics and digitisation can boost productivity, factors such as skills gaps, organisational barriers, a lack of business model innovation (Velu 2024), and implementation complexities can counteract these gains. Notably, the complex supply chain structure could also influence the benefits of technology adoption. A number of studies have underscored the nuanced relationship between technology adoption and productivity, with many studies showing short-term gains that do not last and others finding no significant effect. Such counter-intuitive findings emphasise the need for further research to better understand how robotics, digitisation, and productivity interact. The aim with this PhD dissertation, therefore, is to explore this interaction further. This study explores the drivers of productivity gains, identifying barriers to realising these gains from the perspective of the business model, and examining how the structure of the supply chain impacts this relationship. This dissertation encompasses three studies that shed light on the impact of robot adoption and digitisation on productivity at company level and in the supply chain. The first study investigates the implications of robotics use on firm-level productivity and explores the intricate interplay between digitisation and the relationship between robotics and productivity. Through analysing data obtained from US companies, this research establishes a quantifiable correlation between the use of technology and productivity. The study employs keyword searching methods to proxy for the levels of robotics and digitisation. Building on the findings established in the first chapter, the second chapter looks further into robot adoption and productivity in dyadic alliances, and we find that robot adoption improves collaborative productivity. We also identify an inverted U-shaped pattern in the relationship between partner companies’ adoption of robotics and focal companies’ productivity, highlighting the existence of an optimal point beyond which further adoption may yield diminishing returns. We argue that the investment in robotic technology leads to the development of network resources within alliances, benefitting both focal and partner companies. In addition, the observed inverted U-shaped relationship between robotics and productivity sheds light on the complex dynamics between alliances. The use of digitisation improves overall productivity. We discuss the practical and theoretical implications of our findings, emphasising the applicability of the resource-based view (RBV) to power relations in dyadic alliances. Different supply chain structures significantly influence the advantages that companies gain. To understand this mechanism, the third chapter looks at the diffusion and impact of technology adoption on the productivity of partner companies within a concentrated three-firm supply chain (CSC) following Lanier et al. (2010). Using data from secondary databases, this study introduces a novel approach to quantifying technology diffusion through centrality measures. It measures how the benefits of digital technology adoption by one company extend to its partner companies in the manufacturing sector. The findings reveal a positive correlation between the focal company’s degree of robotic technology adoption and its partner company’s productivity. Moreover, the study identifies that firms with a stronger relationship with the technology-adopting partner experience greater benefits from the improvement in robotic productivity. This implies a deep interconnection among companies in the supply chain ecosystem, indicating that the implementation of robotic technology by one firm can lead to cascading or trickle-down productivity improvements across other firms in the network. The work yields valuable insights for policy-makers and company managers addressing supply chain challenges. The research conducted in these three works examines the relationship between the adoption of robotics and digitisation and firm-level productivity. Additionally, these studies reveal the mechanisms underlying technology diffusion within partnerships and along the CSC. In summary, through the methodologies employed and the results obtained, this dissertation makes valuable contributions to the literature on technology adoption and productivity. The findings also reveal considerable implications for both policy-makers and company managers.