The impact of industrial robot uses on the labor cost stickiness of Chinese firms
Abstract
Purpose
The study aims to investigate the impact of industrial robot application on corporate labor cost stickiness and labor investment efficiency in China.
Design/methodology/approach
Using the textual analysis to construct firm-level industrial robot application indicators in China, we implement the methodology in Anderson et al. (2003) and Banker and Byzalov (2014) to estimate cost stickiness.
Findings
We argue that the industrial robot uses in China would increase firms’ labor adjustment costs by increasing the employment scale and upgrading the employment structure (i.e. by employing more high-skilled and high-educated labor). Consistent with our expectation through the channel of labor adjustment costs, the use of robotics increases firms’ labor cost stickiness. We further find that the positive impact is more significant among labor-intensive industries, and among state-owned enterprises with lower labor adjustment flexibility. We also find that industrial robot uses do not decrease the labor cost stickiness even when robots are more likely to substitute labor. Finally, we find that industrial robot uses significantly facilitate more efficient hiring practices by mitigating overinvestment in labor (i.e. over-hiring).
Originality/value
Against the backdrop of intelligent manufacturing worldwide, our study sheds new insight into the effects of new technologies on corporate labor cost behavior in developing countries. We contribute to scant studies examining how robotics, AI adoption or other automation technologies (e.g. specialized machinery, software, etc.) affect corporate cost behavior.
Keywords
Acknowledgements
We thank Tao Chen, Yuanyuan Liu, Yunguo Liu, Zhiming Ma, Subin Wen, Cheng Xiang, and Xingqiang Yin for their helpful comments. We also thank the participants of the 2023 China Accounting & Financial Research Conference, 2023 China Technological Economy Forum, 2023 Academic Annual Meeting of the Accounting Society of China, 2023. The training camp of China Government Audit Research Center, 2022 China New Silk Road Forum hosted, the first Maritime Silk Road Accounting and Finance Seminar, and seminars at Nanjing Agricultural University, Shantou University, Shihezi University, Zhejiang Gongshang University, Nanjing Audit University, the Institute of Quantitative Economy and Technological Economy of the Chinese Academy of Social Sciences and the Government Audit Research Center. Feng Chen acknowledges financial support from the Social Sciences and Humanities Research Council of Canada (SSHRC). Xichan Chen acknowledges financial support from the National Social Science Foundation of China (approval No. 22BGL074). Mei Zhao acknowledges financial support from the National Natural Science Foundation of China (approval No. 72202029) and the Ministry of Education Humanities and Social Sciences Youth Program (approval No. 22YJC790178).
Citation
Chen, X., Chen, F., Liu, X. and Zhao, M. (2024), "The impact of industrial robot uses on the labor cost stickiness of Chinese firms", Journal of Accounting Literature, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JAL-07-2023-0127
Publisher
:Emerald Publishing Limited
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