When com­pan­ies ad­opt ro­bots, they of­ten grow and hire more people

When robots move onto the factory floor, it is easy to imagine fewer people and more production being brought back home from abroad, however, that is not necessarily what happens.

A new study from Copenhagen Business School shows that not only do Danish companies that adopt industrial robots automate more; they also tend to become larger, more productive and more active internationally. 

The study is based on Danish register and customs data from 1995 to 2022 and shows that robot adoption is linked to a higher likelihood of offshoring and greater offshoring intensity, which means that companies are more likely to move tasks and production abroad.

“The key finding is that we do not see companies that adopt robots simply cutting back on employees. On the contrary, in our data robot adoption is linked to companies growing, increasing sales and hiring more people,” says Katja Mann, Associate Professor at the Department of Economics at CBS and co-author of the study.

Robots do not replace globalisation

One of the most striking findings in the study is that robots do not appear to make companies less dependent on foreign countries. It is quite the opposite, and this is noteworthy because people often make the opposite argument: that automation will make it cheaper to produce closer to the home market and therefore reduce the need to place activities abroad. But the researchers see an opposite pattern.

“We had expected that more automation might lead to less offshoring or more production being brought back home, but we find the opposite. Companies seem to build more international links, so robots do not appear to replace globalisation – instead, they may go hand in hand,” says Katja Mann. 

At the same time, the researchers find that robot adoption is linked to growth in company scale and productivity.

Not fewer hands, but a different type of work

This does not mean that robots are always good news for everyone.

Robots are particularly well suited to routine-based and repetitive tasks, and that is why they also change which employees companies need. 

“Robots are especially good at routine-based and repetitive tasks, and that is why we see the demand shifting away from some more routine-based, lower-skilled jobs and towards more non-routine and more specialised roles. This suggests that the gains are not distributed evenly,” says Katja Mann. 

This is an important point for society because the question is not only whether jobs disappear overall, but also which jobs decline, who benefits from the development and who risks being squeezed out.

If automation mainly rewards companies that can upgrade, adapt and attract new skills, then continuing education and retraining also become an important part of the answer.

Katja Mann also points out that robot adoption is often part of a broader reorganisation, where companies may hire new employees, let some go and retrain others. 

Robots are also linked to new products

The study also suggests that robots are not simply used to do the same work faster or cheaper. 

Instead, the researchers find that the link between robots and offshoring is largely driven by the development of new products and expansion into new markets. 

“We were surprised that companies offshore more rather than less when they adopt robots. This suggests that robots are not only about making existing processes more efficient but are also linked to companies developing new products and organising production in new ways,” says Katja Mann.

So, the point is not only that a robot can take over a specific task. Robots can also form part of a broader business transformation in which companies scale up, reorganise and expand internationally.

Most common in manufacturing

The study focuses on industrial robots, and manufacturing remains the main area in focus. 

The data covers all private sectors in Denmark, but robot adoption is particularly closely linked to production environments.

Katja Mann points to industry, furniture, plastics and metal products as typical areas where robots play a major role. 

The service sector is also automating more than before, but the weight still lies in those parts of the economy where tasks are standardised and repeated many times. 

An important reservation

At the same time, the researchers stress that the results should not be read as the final word on cause and effect. 

Rather, the study shows that robot adoption is linked to an overall package of company changes, which in turn is strongly correlated with offshoring, but the researchers cannot determine conclusively exactly what drives what.

“The main limitation is that we cannot be one hundred percent certain about causality. We do a great deal to get closer to it, so this is not just a simple correlation, but we do not have a natural experiment,” says Katja Mann. 

That does not change the main point. But it is an important clarification in a debate where both technology optimists and technology pessimists often tend to present robots as a simple explanation for very complex developments.

More than a story about job losses

Overall, the study suggests that the common narrative of robots as a direct threat to employment is too simplistic.

Robots can take over routine-based tasks, and some groups of employees may face job losses. 

But at company level, automation also appears to be linked to growth, more employees, new products and closer international connections. 

If robots can both boost productivity and intensify globalisation, then the political and economic challenge is not only about how many jobs exist, but about which competences the labour market will need and how the gains will be distributed.

“The idea that robots automatically kill jobs is too simplistic,” Katja Mann concludes.