Robots may actually hurt company profits, study finds

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Researchers from the University of Cambridge studied data from the UK and 24 other European countries. They looked at the years 1995 to 2017.

They discovered something interesting: When companies start using robots, their profits go down.

But, after some time, profits rise again. This is like a “U” shape, where things go down first and then go up.

Why Do Profits Fall Then Rise?

At the beginning, companies use robots to save money. But other companies see this and start doing the same thing. So, everybody is trying to save money, and nobody is trying to make new things. This makes profits go down.

Later on, as companies get used to robots, they start using them in creative ways. They design new products. This makes them different from other companies. And because of this, they can earn more money.

A long time ago, when computers came into businesses, something similar happened. At first, things were slow.

Then, after some time, everything improved. The researchers wanted to know if robots had the same effect as computers.

Understanding The Bigger Picture

Robots have been around since the 1980s. They do hard, boring jobs, like putting together cars. With time, they have become more common everywhere. Newer robots are really good at detailed work, like making electronic gadgets.

The research team looked at data from different countries. They wanted to understand how robots change the money companies make. They were surprised by the “U” shape they found.

One of the researchers, Professor Velu, explained: “At first, companies use robots to be better than their rivals. But soon, everyone uses robots. This makes earning money harder.”

The team also talked to a company that makes medical equipment in America. They learned that using robots is not easy or cheap. When companies use too many robots, they have to change how they work.

Professor Velu advised companies to plan how to use robots. They shouldn’t just use them to save money. They should also think about new ways to do business and new things to make.

There’s also a project to help smaller companies use digital tools, including robots. Professor McFarlane, who is part of this project, said that small changes can help companies save money and also create new products.

In short, robots can be good for business, but companies need to think carefully about how to use them. If they do it right, profits will rise again after an initial drop.

The study was published in IEEE Transactions on Engineering Management.

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