DON'T ABANDON THE WATER COOLER YET: FLEXIBLE WORK ARRANGEMENTS AND THE UNIQUE EFFECT OF FACE-TO-FACE INFORMAL COMMUNICATION ON IDEA GENERATION AND INNOVATION

Abstract

As many organizations have begun to scale back on flexible work arrangements out of concern for their potential negative impact on team coordination and innovation, there remains very limited scholarly research that tests the assumptions behind these decisions. The purpose of this research is to investigate the team dynamics associated with team flexibility in an effort to understand whether such concerns may be merited. Using data collected from 99 teams in a U.S.-based Fortune 500 company, I develop and test a model that examines the effects of team location flexibility on multiple forms of team communication and their subsequent impact on idea generation and innovation. Specifically, 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. Based on a series of team-level regression analyses supplemented by relative weights analyses, I find that teams with greater location flexibility reported engaging less frequently in two forms of face-to-face informal communication: face-to-face spontaneous work-related communication, and to a lesser extent, face-to-face non-work-related communication. However, teams did not engage less frequently in face-to-face formal 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 find that an important type of innovation-related communication is reduced when teams work more flexibly. Future research that builds on these findings is needed, as managers and organizations weigh the potential trade-offs between the benefits of flexible work arrangements for individual employees with the drawbacks of flexibility for teams—particularly on their ability to innovate in unexpected and unplanned ways at the office.