To what extent are labor-saving technologies improving efficiency in the use of human resources? Evidence from the banking industry

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25 Citations (Scopus)


With special reference to the banking industry, the objective of this study is to address managerial concerns over the impact of labor-saving technologies on efficiency in the use of human resources. A bank is viewed as a collection of human, technology, and capital resources. Labor-saving technologies are represented by two categories of technology resources - information technologies and patented in-house process innovations. The estimation of a stochastic frontier manpower-requirement function shows that, whereas information technology resources have a direct impact on efficiency in the use of human resources, in-house process innovations have an indirect impact through spillovers. The reduction in labor costs resulting from a more efficient use of human resources is more than enough to cover the required increase in information technology expenditures. This cost-reducing impact is stronger for firms currently employing a lower level of information technologies. The empirical findings also suggest a complementary relationship between information technologies and spillovers of in-house process innovations. The empirical framework proposed in this study can help decision makers determine the optimal input mix of technology and human resources.
Original languageEnglish
Pages (from-to)75-92
Number of pages18
JournalProduction and Operations Management
Issue number1
Publication statusPublished - 1 Jan 2008


  • Banking
  • Efficiency
  • Human resources
  • Labor-saving technology

ASJC Scopus subject areas

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

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