Work from home arrangements and organizational performance in Italian SMEs: evidence from the COVID-19 pandemic

Abstract

We use survey data on Italian small- and medium-sized enterprises collected during the COVID-19 pandemic to explore the relationship between the adoption of work from home (WFH) practices and organizational performance. In so doing, we investigate several dimensions of organizational performance, including measures of labor productivity and workers’ concentration and motivation, the level of absenteeism, the organization of work through management by objectives (MBO), and the presence of coordination and communication costs. We obtain several results. First, we find a significantly enhanced capability of firms that adopted WFH during the pandemic to sustain the overall organizational performance, particularly when such a work practice is used intensively. Less deteriorated labor productivity and workers’ concentration and motivation, decreased absenteeism, and a substantial rise in the adoption of MBO practices seem to be important aspects behind the detected benefits related to WFH. Third, when WFH is used at medium levels of intensity, it is associated with augmented coordination and communication costs, which nonetheless do not appear to overcome the benefits associated with WFH.