["Journal of Regional Science, Volume 66, Issue 2, Page 399-425, March 2026. ", "\nABSTRACT\nIndustrial automation technology, represented by industrial robots, has changed socioeconomic development. Using a general equilibrium framework and panel data on Chinese listed manufacturing firms from 2011 to 2019, this study divides firm innovation performance into innovation quantity and quality, incorporating industrial robots, resource misallocation, and firm innovation performance into a unified theoretical framework for empirical research. The results show that adopting industrial robots can effectively promote firms' innovation performance from both the dimensions of innovation quantity and quality, but there exists an inverted U‐shaped relationship between industrial robot adoption and firm innovation performance. Industrial robot adoption can promote firm innovation performance by alleviating labor misallocation among firms. However, it can also hinder firm innovation performance by alleviating capital misallocation. Furthermore, the impact of industrial robots on firms' innovation performance exhibits significant heterogeneity. The positive innovation effect of industrial robots is relatively stronger in high‐tech industries, capital‐intensive, and collaborative innovation firms.\n"]