The researchers, from the College of Cambridge, studied {industry} information from the UK and 24 different European international locations between 1995 and 2017, and located that at low ranges of adoption, robots have a detrimental impact on revenue margins. However at greater ranges of adoption, robots might help enhance earnings.

In response to the researchers, this U-shaped phenomenon is as a result of relationship between lowering prices, creating new processes and innovating new merchandise. Whereas many firms first undertake robotic applied sciences to lower prices, this ‘course of innovation’ could be simply copied by rivals, so at low ranges of robotic adoption, firms are centered on their rivals quite than on creating new merchandise. Nevertheless, as ranges of adoption enhance and robots are absolutely built-in into an organization’s processes, the applied sciences can be utilized to extend income by innovating new merchandise.

In different phrases, companies utilizing robots are more likely to focus initially on streamlining their processes earlier than shifting their emphasis to product innovation, which supplies them better market energy through the power to distinguish from their rivals. The outcomes are reported within the journal IEEE Transactions on Engineering Administration.

Robots have been extensively utilized in {industry} because the Eighties, particularly in sectors the place they’ll perform bodily demanding, repetitive duties, akin to automotive meeting. Within the a long time since, the speed of robotic adoption has elevated dramatically and constantly worldwide, and the event of exact, electrically managed robots makes them notably helpful for high-value manufacturing functions requiring better precision, akin to electronics.

Whereas robots have been proven to reliably elevate labour productiveness at an {industry} or nation degree, what has been much less studied is how robots have an effect on revenue margins at an identical macro scale.

“In the event you have a look at how the introduction of computer systems affected productiveness, you really see a slowdown in productiveness progress within the Nineteen Seventies and early Eighties, earlier than productiveness begins to rise once more, which it did till the monetary disaster of 2008,” stated co-author Professor Chander Velu from Cambridge’s Institute for Manufacturing. “It is attention-grabbing {that a} instrument meant to extend productiveness had the alternative impact, a minimum of at first. We wished to know whether or not there’s a related sample with robotics.”

“We wished to know whether or not firms have been utilizing robots to enhance processes throughout the agency, quite than enhance the entire enterprise mannequin,” stated co-author Dr Philip Chen. “Revenue margin is usually a helpful solution to analyse this.”

The researchers examined industry-level information for 25 EU international locations (together with the UK, which was a member on the time) between 1995 and 2017. Whereas the information didn’t drill right down to the extent of particular person firms, the researchers have been ready to take a look at entire sectors, primarily in manufacturing the place robots are generally used.

The researchers then obtained robotics information from the Worldwide Federation of Robotics (IFR) database. By evaluating the 2 units of information, they have been capable of analyse the impact of robotics on revenue margins at a rustic degree.

“Intuitively, we thought that extra robotic applied sciences would result in greater revenue margins, however the truth that we see this U-shaped curve as an alternative was stunning,” stated Chen.

“Initially, companies are adopting robots to create a aggressive benefit by reducing prices,” stated Velu. “However course of innovation is affordable to repeat, and rivals will even undertake robots if it helps them make their merchandise extra cheaply. This then begins to squeeze margins and cut back revenue margin.”

The researchers then carried out a collection of interviews with an American medical gear producer to review their experiences with robotic adoption.

“We discovered that it isn’t straightforward to undertake robotics right into a enterprise — it prices some huge cash to streamline and automate processes,” stated Chen.

“Whenever you begin bringing increasingly more robots into your course of, ultimately you attain a degree the place your entire course of must be redesigned from the underside up,” stated Velu. “It is necessary that firms develop new processes similtaneously they’re incorporating robots, in any other case they may attain this identical pinch level.”

The researchers say that if firms wish to attain the worthwhile aspect of the U-shaped curve extra shortly, it is necessary that the enterprise mannequin is tailored concurrently with robotic adoption. Solely after robots are absolutely built-in into the enterprise mannequin can firms absolutely use the facility of robotics to develop new merchandise, driving earnings.

A associated piece of labor being led by the Institute for Manufacturing is a neighborhood programme to assist small- and medium-sized enterprises (SMEEs) to undertake digital applied sciences together with robotics in a low-cost, low-risk means. “Incremental and step modifications on this space allow SMEs to get the advantages of price discount in addition to margin enhancements from new merchandise,” stated co-author Professor Duncan McFarlane.

The analysis was supported by the Engineering and Bodily Sciences Analysis Council (EPSRC) and the Financial and Social Analysis Council (ESRC), that are each a part of UK Analysis and Innovation (UKRI). Chander Velu is a Fellow of Selwyn School, Cambridge.