The Robot Revolution: Managerial and Employment Consequences for Firms

Speaker: Prof. Lynn Wu, Associate Professor of Operations, Information, and Decisions, Wharton School, University of Pennsylvania

Abstract 

As a new general-purpose technology, robots have the potential to radically transform employment and organizations. In contrast to prior studies that predict dramatic employment declines, we find that investments in robotics are associated with increases in total firm employment, but decreases in the total number of managers. Similarly, we find that robots are associated with an increase in the span of control for supervisors remaining within the organization. We also provide evidence that robot adoption is not motivated by the desire to reduce labor costs, but is instead related to improving product and service quality. Our findings are consistent with the notion that robots reduce variance in production processes, diminishing the need for managers to monitor worker activities to ensure production quality. As additional evidence, we also find robot investments predict improved performance measurement and increased adoption of incentive pay based on individual employee performance. With respect to changes in skill composition within the organization, robots predict decreases in employment for middle-skilled workers, but increases in employment for low- and high-skilled workers. We also find robots not only predict changes in employment, but also corresponding adaptations in organizational structure. Robot investments are associated with both centralization and decentralization of decision-making authority depending upon the task, but decision rights in either case are reassigned away from the managerial level of the hierarchy. Overall, our results suggest that robots have distinct and profound effects on employment and organizations that require fundamental changes in firm practices and organizational design.

About the Speaker

Lynn Wu is an associate professor at the Wharton School. She teaches MBA, undergraduate and PhD classes about the use and impact of emerging technologies on business. Her research examines how emerging information technologies, such as artificial intelligence and analytics, affect innovation, business strategy, and productivity. Specifically, her work follows three streams. In the first stream, she examines how data analytics and artificial intelligence affect firm innovation, business strategy, labor demand, and productivity for both large firms and startups. In her second stream, she studies enterprise social media and information derived from online platforms affect individuals’ work performance, career trajectories, and examine new type of biases that arise from using technologies. In her third stream of research, Lynn leverages fine-grained nanodata available through online digital traces to predict economic indicators such as real estate trends, labor trends and product adoption. Lynn has published articles in economics, management and computer science. Her work has been featured by the Wall Street Journal, Businessweek, New York Times, Forbes, and The Economist. Lynn received her undergraduate degrees from MIT (Finance and Computer Science), her master’s degree from MIT (Computer Science) and her Ph.D. from MIT Sloan School of Management (Management Science). Lynn has experiences working with a variety of firms in the technology industry (e.g. IBM, SAP, Google, Facebook etc), government agencies and think tanks (e.g the World Bank, the Russel Sage Foundation). She has also consulted and advised several startups. Prior to academia, she was a software engineer and a research scientist at MIT AI lab and IBM. 

Meeting ID: 928 6655 6209

Password: 157328