Does Remote Work Adaptation Work? Exploring Workplace Flexibility and Innovative Activities

Abstract

This study investigates how flexible workplace arrangements enable innovative activities. We integrate an extant literature on telecommunicating, an intrinsic motivation theory, and crisis management practices to explain the consequences of firms’ actions toward attracting and maintaining talents have on their innovative activities. Utilizing a novel measure of work-from-home (WFH) suitability based on over 200 million job postings, we find that firms with high levels of WFH suitability achieve greater innovation success. The impact of WFH suitability on innovation is more pronounced when firms are led by talented managers and when firms operate in a highly competitive environment. Our results are robust to various endogeneity checks using a propensity score matching approach, an instrumental variable approach, and an exogenous shock to workplace arrangements. WFH flexibility enables employees with high autonomy in scheduling their work, enhances intrinsic motivation, offers growth opportunities, attracts more talent, and therefore facilitates more firm innovation. The findings from our study have significant practical and policy implications, given the critical role of innovative activities in achieving sustainable corporate development and the growing significance of workplace arrangements in the future of work.

Keywords: Workplace flexibility, intrinsic motivation, innovation, future of work