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Robot adoption and firm's capacity utilization: Evidence from China

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  • Wang, Hua
  • Liao, Lingtao
  • Wu, Ji (George)

Abstract

We examine the impact of a firm's robot adoption on the capacity utilization rate for Chinese manufacturing firms between 2011 and 2019. Our result shows a significant positive relationship between a firm's robot adoption and capacity utilization rate. Further analysis finds that the main finding is only significant for non-SOEs, firms with low supply-demand balance, low-tech firms, firms in labor-intensive industries, high financial constraints firms, high-profit volatility firms, and under-hiring firms. The path analysis suggests that a firm's robot adoption improves the firm's capacity utilization rate by reducing its labor investment inefficiency. Our main result remains significant on the industrial level. Finally, the main finding held after alleviating the endogeneity concerns and several robustness tests.

Suggested Citation

  • Wang, Hua & Liao, Lingtao & Wu, Ji (George), 2023. "Robot adoption and firm's capacity utilization: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:pacfin:v:82:y:2023:i:c:s0927538x23002676
    DOI: 10.1016/j.pacfin.2023.102196
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