Wednesday, May 31, 2023

How Business Travel Spurs Innovation

Source: muratart/shutterstock

Dany Bahar, Prithwiraj Choudhury, Do Yoon Kim and Wesley W. Koo have written a new working paper titled, "Innovation on Wings: Nonstop Flights and Firm Innovation in the Global Context."  The scholars collected data from over 5,000 airports around the world over a ten-year period (2005-2015).  They married flight data with other datasets that provided information about company patents.  The scholars found that, "a 10 percent increase in nonstop flights between two locations led to a 1.4 percent increase in new patents between firms in those places."   Choudhury explains the finding in a comment for a HBS Working Knowledge feature about the research: 

"We’re showing that business travel matters for innovation, but it only matters if two firms’ locations are either culturally or temporally far away from each other,” he says—that is, if the two firms possess different cultural norms or don’t have overlapping business hours, defined as 1.5 hours or less.

For instance, colleagues who speak different languages and possess unique cultural norms around meeting styles would benefit from in-person meetings, whereas people who speak the same language and operate meetings similarly won’t realize the same benefit.

Choudhury hopes business leaders consider the research when refining post-pandemic work policies. Because of the vast sample size of flights used in this paper, he believes the findings are generalizable for all business leaders.

The paper appears to be a strong endorsement for face-to-face interaction as a catalyst for innovation under certain circumstances.   One caveat - the study focused on data from the pre-pandemic period.  Companies clearly have adopted a range of improved communication technologies since 2020, and managers have become more adept at using these technologies.   Does face-to-face interaction matter as much today as it did during the 2005-2015 period?  Future research will help us answer that question.  For now, the study at least requires us to question whether we can achieve desired innovation results simply by relying on remote communication and collaboration. 

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