The new industrial revolution: the optimal choice for flexible work companies

Abstract

The mandatory shift to remote work during the COVID-19 pandemic has made employers and employees increasingly aware of the productivity benefits that may arise from the digital revolution. To explore the characteristics of these gains, we build a model that enables companies to choose from three types of relationship inputs: face-to-face, remote synchronous, and remote asynchronous. Once remote interactions are included, five factors influencing job satisfaction and therefore worker productivity can be identified: (i) reduced mobility, (ii) interaction frequency, (iii) optimal time/place, (iv) work-life balance, and (v) relationship decay effects. We compute the optimal distribution of the three relationship types that maximize corporate profits, conditioning on reasonable parametric assumptions on these five effects. Additionally, we evaluate the potential productivity growth for companies employing only face-to-face interactions when introducing remote interactions. We test our theoretical predictions with a Structural Equation Model, revealing that remote work enhances worker satisfaction and willingness to contribute additional effort at the same wage. Our empirical findings have relevant implications for industrial and environmental policies at both national and supranational levels.