EcoWeek

Serendipity lost? Working from home and innovation

Eco week 21-19 // 17 May 2021  
economic-research.bnpparibas.com  
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EDITORIAL  
SERENDIPITY LOST? WORKING FROM HOME AND INNOVATION  
Working from home is expected to have a positive impact on the level of productivity but will it also influence its  
growth rate? The answer largely depends on what happens to innovation. Interaction between people is key for idea  
generation and the exchange of information. Formal interaction can be easily organized using a variety of software  
applications but informal interaction is a bigger challenge. To make sure that serendipity within and amongst teams  
given its importance for a culture of innovation – is maintained, a combination of working from home and onsite  
seems to be recommended.  
Based on recent surveys, companies seem to expect a positive impact Innovation in companies depends on many factors. An extensive survey  
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of working from home on productivity . If confirmed, it remains to be of the literature has identified up to twenty innovation enablers with  
seen whether it will be an increase in the level of productivity or in three of them being mentioned the most often. Firstly, collaboration,  
its growth rate. One would expect the former as it is not obvious why which concerns open communication and free flowing information.  
working from home would cause productivity to increase year after Secondly, management of innovation with the right balance between  
year.  
formalization and informal approach, between working in cross-  
functional groups and individually. Thirdly, knowledge management,  
which is about using the company’s ‘knowledge assets’ in the best  
possible way to foster innovation. Against this background, working  
from home brings challenges but also opportunities. Concerning the  
latter, the extensive use of videoconferencing facilitates the access  
to expert information. A variety of software applications also allows  
For the growth rate of productivity, innovations play an important role.  
Innovation can be defined as “a new or improved product or process (or  
combination thereof) that differs significantly from the unit’s previous  
products or processes and that has been made available to potential  
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users (product) or brought into use by the unit (process). ” Recent  
innovations have been instrumental in facilitating working from home  
by making the necessary technology available. There is also evidence  
that “suggests that COVID-19 is re-directing technical change in  
ways that will improve remote interactivity” whereas other research  
shows that “the extent of working from home is indeed responsive  
to innovations that facilitate remote work.” This means there is a  
fascinating reciprocal influence between technological innovation and  
working from home, the former being a facilitator and the latter acting  
as a push factor. Innovation has also changed the way of working in  
many professions. In certain countries, regulatory innovations have  
4.  
Innovation Enablers for Innovation Teams – A Review, Mikael Johnsson, Journal of  
Innovation Management, vol. 5, nr 3, 2017, pp. 75-121. The author analysed 211 academic  
articles. The twenty enablers were: Climate, culture, economy, management, strategy,  
time, collaboration, education, human resources, need, processes, awareness, capabilities,  
dedication, empowerment, entre-/intrapreneurship, incentives, knowledge, knowledge  
management, mind-set.  
WORKING FROM HOME, PRODUCTIVITY AND INNOVATION  
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allowed for virtual consultations by healthcare professionals .  
Although innovation has facilitated working from home, a key question  
is whether the capacity to innovate will benefit or suffer from this new  
way of working. The answer matters at the micro level through its  
influence on long-term productivity growth and the competitiveness of  
individual companies as well as the macro level, via economic activity  
and growth.  
?
Working from home  
Working on site  
Formal  
interaction interaction  
Informal  
Other  
drivers  
Technology  
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. Working from home and labour productivity, Ecoweek, BNP Paribas, 3 May 2021.  
Productivity  
level  
Productivity  
growth rate  
Innovation  
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. OECD/Eurostat (2018), Oslo Manual 2018: Guidelines for Collecꢀng, Reporꢀng and Using Data  
on Innovaꢀon, 4th Ediꢀon, The Measurement of Scienꢀfic, Technological and Innovaꢀon Acꢀviꢀes,  
OECD, Publishing, Paris/Eurostat, Luxembourg. hꢀps://doi.org/10.1787/9789264304604-en  
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.
Source, including of the quotes: Why Working From Home Will Stick, Jose Maria Barrero,  
SOURCE: BNP PARIBAS  
Nicholas Bloom and Steven J. Davis, NBER paper 28731, April 2021. The authors mention  
research showing that new patent applications that advance WFH technologies more than  
doubles from January to September of 2020  
A combination of working from home and onsite seems to  
be recommended to make sure that serendipity within and  
amongst teams is maintained, so as to foster a culture of  
innovation.  
The bank  
for a changing  
world  
Eco week 21-19 // 17 May 2021  
economic-research.bnpparibas.com  
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to easily organize the formal interaction between people which is  
key for idea generation and the exchange of information although  
the effectiveness may depend on the tool that is used. Research  
shows that communication via chat reduces the creativity of teams  
whereas there is “no significant difference between performances  
of groups that communicate via video conferences as compared to  
face-to-face.”5 Online interactions also “decrease the effectiveness  
whereby employees share “peripheral knowledge” – i.e., knowledge  
that is critical to a small audience but seemingly parenthetical to  
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other receivers.” A bigger issue is that working from home makes it  
difficult to have unscheduled, informal contacts and discussions, which  
are key for idea generation and to stimulate thinking. To make sure  
that serendipity within and amongst teams – and its importance for a  
culture of innovation – is maintained, it seems that a hybrid model is  
to be recommended. People would work from home part of the time –  
because of the efficiency and productivity that this brings – and onsite  
for the remainder. The onsite presence would have to be organized  
in such a way that those people who need to meet and chat for the  
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exchange of ideas are present the same days.  
William De Vijlder  
5. Innovation and Communication Media in Virtual Teams – An Experimental Study, Nicola  
Grözinger, Bernd Irlenbusch, Katharina Laske, Marina Schröder, IZA Institute of Labour  
Economics, DP No. 13218, May 2020.  
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.
Safeguarding Serendipitous Creativity During the COVID-19 Pandemic, Shiko Ben-  
Menahem and Zeynep Erden, California Management Review, Volume 63, Issue 2, Winter  
2021.  
This is also the conclusion from a survey of business leaders reported in Why Working From  
7.  
Home Will Sꢁck, Jose Maria Barrero, Nicholas Bloom and Steven J. Davis, NBER paper 28731, April  
021.  
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The bank  
for a changing  
world  
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