The team studied industry data from the UK and 24 other European countries between 1995 and 2017 and found that, at low levels of adoption, robots have a negative effect on profit margins.

However, at higher levels of adoption, robots can help to increase profits. This U-shaped phenomenon is due to the relationship between cost reduction, development of new processes and innovation of new products, the study suggests.

While many companies first adopt robotic technologies to decrease costs, this process can be easily copied by competitors. However, as levels of adoption increase and robots are fully integrated into a company’s processes, the technologies can be used to increase revenue by innovating new products.

Firms using robots are likely to focus initially on streamlining their processes before shifting their emphasis to product innovation, which gives them greater market power via the ability to differentiate from their competitors.

Industry’s widespread...