Housing Prices and Robot Adoption in Corporate Management

High housing prices may hinder firms from adopting labor-saving technologies, limiting opportunities for technological upgrading. This paper examines the mechanisms through which housing prices affect firms’ robot adoption. Using fixed effects and two-stage least squares (2SLS) methods on data from 2000–2013, we find that a 10% increase in housing prices reduces a firm’s probability of adopting robots by 1.44 percentage points. Rising housing prices decrease firms’ robot adoption on the extensive margin rather than the intensive margin. The negative impact is stronger for non-state-owned firms and those highly dependent on external finance, but weaker in industries with low capital and skill intensity. Further, we find that investments outside a firm’s core business crowd out robot adoption. Weak corporate governance that exacerbates managerial myopia amplifies these effects. Against the backdrop of China’s overheated housing market, our findings highlight the risks that high housing prices pose to technological upgrading and underscore the importance of improved corporate governance.