Flexible Work and The Effect of Informal Communication on Idea Generation and Innovation

Abstract

While research has established the important role that flexibility plays in attracting, engaging, and retaining a diverse talent pool, it has provided less insight into its impact on team processes and outcomes, particularly on key dimensions of performance. Using data collected from 99 teams in a Fortune 500 organization, I investigate whether informal ?water cooler? communication is a uniquely important predictor of idea generation and, critically, whether teams in which members work more flexibly are at a greater risk of missing out on these types of interactions. I find that teams with greater location flexibility reported engaging less frequently in face-to-face spontaneous work-related communication, and to a lesser extent, face-to-face non-work-related communication. Moreover, I find that the type of communication most affected by team location flexibility?face-to- face spontaneous work-related communication?is also the type that has the greatest impact on team idea generation and, consequently, team innovation. Finally, I find evidence that teams were unable to effectively compensate for the loss of face-to-face informal communication by using electronic media, such as email, instant message, or audio/visual communication tools. Taken together, I shed light on the important question of whether?and how?flexible work arrangements impact team communication and innovation at a time when many organizations have begun to scale back on flexibility out of concerns about possible negative effects.