Investigation into Telecommuting and its Impact on Innovation | Business Dissertation

This study seeks to explore the relationship between high-tech firms, innovation, and the teleworking trend. Specifically, an examination of the high-technology sector in the UK is provided, followed by explanations of teleworking, innovation, and high-tech firms as they relate to the scope and focus of this study.  The above is based on published findings of empirical research and published reports.  This study then considers how teleworking has impacted innovation at the Intel Corporation, a leading manufacturer of semiconductors who allows employees in certain positions to telework part or all of their workweek.  Innovation and impact are considered at an overall corporate level, rather than at an individual level.

Findings of this research indicate that teleworking one to two dayseach week has no discernibly negative impact on innovation, and mayactually enhance innovation, provided systems to encourage andfacilitate innovation are in place.  Implications for organisationsentering the teleworking arena and the sector as a whole are followed by recommendations for high-tech companies and for future research.

Teleworking is a cultural trend in much of Europe and theAmericas.  While it provides many plusses and a few minuses to theindividual teleworkers, its impact on organisations and particularlyinnovation at those organisations has not been sufficiently explored. This study seeks to consider the impact teleworking has onorganisations, specifically high-technology organisations, and theirability to generate, initiate, and implement innovative products,processes and administrative ideas.

A review of previously published findings related to teleworking,innovation, and high-technology is provided, covering these topics ingeneral.  The focus of the study then narrows, addressing organisationsthat both use and produce high-tech products or services, and finallyconcentrating on innovation in the computer hardware and softwaresector.  Ideas and conclusions from these studies are then combinedwith information from Intel Corporation, a leading manufacturer ofsemi-conductors and similar computer products, to analyse the specificimpact of teleworking at Intel. 

It is hoped the conclusions drawn from Intel’s experiences will beuseful to other high-tech firms practicing or considering teleworking,as well as encourage others to pursue related research.

High-technology has evolved in the past thirty years from something outof a science fiction novel to part of the average Britain’s everydaylife.  The UK contributes over 5% of the world’s research anddevelopment, although it has less than one percent of the world’spopulation.   The UK additionally has the larges software and computerservices sector in the EU, and a significant semiconductor industry(Anon 2005).  From Bristol, at the end of the M4 hi-tech corridor, toSheffield, where software has replaced steel, to the hi-tech centres inCambridge and Hertfordshire, high-tech is replacing and revitalisingthe declining UK industrial sector.

It is important to note that the high-tech sector differs in severaldistinct ways from other sectors of the economy.  First, the speed atwhich technology changes is simply unmatched in other productionsectors.  This requires not only constant innovation in product, butconstant innovation in the process and administrative arenas as well(Edquist 2003).  Property rights considerations have starkly differentapplications in high-tech organisations.  If companies wait until theirnew ideas were licensed or patented before progressing into production,the market will likely pass by them and their product before it evenmoves into sale (Cohan 1997).  High-tech organisations are also morelikely to share information and partner on products, particularly intheir non-core technologies, and share the profits with another firmrather than miss a market entirely (Edquist 2003).

The local high-technology sector differs in some ways from that inother countries.  The UK has historically lagged behind the UnitedStates and Japan in its ability to move a product from idea toproduction in the high-tech arena.  UK firms, unless part of aninternational company who mandates certain practices, have not made asmuch effort to design intra-organisational systems to encourageinnovation (Surrey 2004).  In a study by the University of Surrey,Ellie Runcie stated that after studying UK and U.S. high-tech firms,she found UK organisations have “often no discussion at all is made ofthe role of user research in innovation” (Surrey 2004).  This is aconcern regarding the UK high-tech sector that needs to be considered.

The UK also has a lower per-capital computer literacy and computer use,particularly in the home sector, than most other high-tech nations.  Ona more positive note, the UK government has launched a campaign toincrease computer literacy and home computer use.  Intel, BT, andMicrosoft are the three major organisations working with the OeE, DTIand DfES on this campaign (Intel 2004).

One of these leaders from the high-technology sector, the IntelCorporation, will be considered in greater detail.  Although aU.S.-headquartered firm, Intel has facilities in several places in theUK, as well as worldwide.  Intel is a major manufacturer ofsemi-conductors and computer processors, and will be used as an examplein this research of how teleworking can contribute to innovation in thehigh-tech environment.

As this study considers the topics of teleworking, innovation, andhigh-technology, it was felt necessary to define and set parameters foreach.  The following literature is considered in the scope of thisresearch, with specific delineations of the three main study componentsoutlined in detail. 

We have recently entered an important new phase in the ongoinginformation technology revolution. It is difficult to pick up abusiness magazine or newspaper today without reading about anorganisation offering teleworking and virtual offices for remoteworkers. There has been fair media coverage in how companies haveembraced the idea of teleworking, including the likes of AT&T,Ernst and Young and IBM.  A monthly magazine is even devoted to“today’s flexible workplace,” Telecommute, published by the nationaltrade organisation, the International Telecommuting Advisory Council(ITAC).

Part of a general trend towards remote work, teleworking is a naturalresult of the information revolution, fuelled by the growth ofknowledge work and the rapid advance in technology.  The trend isconsistent with predictions made by futurist Alvin Toffler in his 1980book The Third Wave, that the location of work would outgrow typicalsites such as offices or factories, and begin to take place in alllocations.

Teleworking is especially becoming popular in high-technologyorganisations.  During my work placement at Intel Corporation, I wasalso exposed to various team members teleworking from home one to twodays per week. While this trend is popular with employees, it behovestoday’s high-technology company to consider the impact of teleworkingon innovation.  This sector of the business environment is particularlydependent on innovation to remain viable, and it is important,therefore, that the initiation and implementation of innovation not besacrificed to worker preference.

Examination of various sources reveals a lack of consensus as to thedefinition of teleworking, or as it is sometimes called,telecommuting.  ‘Teleworking’ is more common in European literature,while ‘telecommuting’ is more common in but not limited to Americanliterature.  Unfortunately, this lack of a universally accepteddefinition of teleworking causes problems academically; as either termcan be used to mean ‘home-working’, ‘working-at-a-distance’, ‘off-siteworkers’, or ‘remote-workers,’ it hinders the ability to comparefindings from different sources. Therefore, it is necessary to chooseand define a single term before proceeding.

The term ‘telework’ is generally preferred on this side of theAtlantic, and will be used here.  Huws, Korte, and Robinson (1990)define telework as work “which is independent of the location of theemployer or contractor and can be changed according to the wishes ofthe individual teleworkers and/or the organisation for which he or sheis working” (10).  Olson (1988) argues, “the term telework is used torefer to organisational work performed outside of the normalorganisational confines of space and time, augmented by computer andcommunications technology. The work is not necessarily performed in thehome (77).  The EU holds that ‘telework’ “covers a range of new ways ofworking, using the telecommunications as a tool and, for at least partof the time, outside a traditional office environment (EuropeanCommission, 1996, 11). 
Jack Nilles defined telecommuting as “an arrangement that entailsworking outside the conventional workplace and communication by way oftelecommunications or computer-based technology" (Bailey and Kurkland,2000).  According to The American Telecommuting Association, 2002,telecommuting is “ replacing or supplementing physical travel to theoffice by using modern telecommunications equipment to bring officeresources to the employee. While computers serve to augmenttelecommuting, it is possible to telecommute with only paper, penciland telephone.”

Distilling the above into a workable definition, important elements of telework for the purpose of this study include:
▫    the person doing the telework is an employee of the organisation for which she or he works
▫    computers and communication technology are used
▫    it is not necessarily performed in the home, but does occur outside a traditional office environment

Telework is therefore defined as any substantial part of an employee’swork performed by employees that is physically separated from thelocation of their employer using information technology (IT) foroperation and communication.  

Three groups are affected by teleworking:  the employers ororganisations, the individual teleworkers, and society as a whole. Benefits and drawbacks to individual teleworkers vary greatly fromperson to person, and are difficult to evaluate.  Benefits to societyare primarily environmental, as reduced commuting decreases pollutionand reduces transportation-related injury.  This study will thereforefocus on the affect of teleworking on the employer or organisation. Areas of benefit include increased productivity and financialadvantages.  Drawbacks security concerns, management issues, andreduction in interaction and exchanged of ideas.  Each of thesebenefits and drawbacks will have impact on innovation inhigh-technology environments.

 

INCREASED PRODUCTIVITY

According to The American Telecommuting Association, various surveyshave documented teleworking employees’ productivity gains of up to 60%(1992).  They claim that extra productivity is consistently clocked at10-15% in nearly every study in the past two decades.  The SocialMarket Foundation (2004) argues that teleworking can increaseproductivity by up to 30%. They further claim that the more than twomillion UK workers now regularly telecommute with employees use thetime saved from commuting and meetings for extra work.  Huws (1992),Salmon and Shamir (1985), Caudron (1992), and Metzger and Von Glinow(1998) all report indications of improved productivity, reliability andwork quality among teleworkers.

The increase in employee productivity resulted from teleworking isalso supported by G. E. Gordon, who claims there are a variety ofreasons for increased productivity in employees who telework.  Theseinclude decreased time spent commuting to work, fewer distractions inthe workplace, and giving telecommuters the opportunity to better matchtheir work times with their peak productive periods.  He notes thatproductivity gains ranging from 15-30% are common with such programs(Gordon 1986).

Employee motivation is another cited reason for improved productivity. Employees perceive being the ability to telework as an indication thattheir employers have sufficient trust and faith in them to workindependently.  It could also be argued that teleworkers in fact workharder than non-teleworking employees as they feel the need to prove totheir office peers that they are not indolent as a result of working athome without supervision. Teleworkers may also feel the need to workharder to achieve promotions ().

However, various theorists argue that some employees find that becausethey have their work resources at home, they tend to work more. Thiscould interfere with family life.  In addition, telework can be viewedas an intrusion of the workplace in the home. The office at home is aconstant reminder of work.  There is the real problem of definingconcrete working hours when the distraction of home life is a constantpresence.  Working hours and social versus home time can becomeblurred.  Another form of intrusion is when family members or socialinterruptions constantly disrupt teleworkers from completing work. This may add extra pressures and stress.  Teleworking employees whoexperience such disruption and time management issues may actually havedecreased motivation and productivity due to these outside factors. Therefore, it is important that employees exercising their option totelework draw strong boundaries that will enable them to workeffectively.  Guidance from the organisation and possiblity sometraining in effective teleworking should be included by an organisationemploying teleworkers.

Smith (1997) suggests telecommuting reduces absenteeism amongstemployees.  For example, employees who may feel too ill to complete afull day and commute, may be well enough to work a partial day. Individuals are more likely to continue working even when feelingunwell due to being in a more comfortable and relaxed work environment,i.e. their home.  Smith counters that teleworkers often havedifficulty, especially at first, with separating home and work time. This increases if children are in the teleworking location, most likelythe home.  However, adjustments are usually successful in the long term.
Further, the Bureau of Labour Statistics reports that businessproductivity, the measure or output per work hour, has risen 2.8% since1998.  This correlates positively and directly with an increase inteleworking. Teleworking has been perhaps, therefore, most effective inincreasing productivity.
Clearly, these human resource managers are very satisfied with theirprograms and believe their telecommuters are satisfied as well.  Ifhalf of the firms included in the above research are reporting morework done at a better quality in comparison to the traditional workforce, there must be considerable merit to teleworking increasingproductivity.

 

FINANCIAL SAVINGS

Teleworking can also save firms money in a number of ways.  It providesthe employer with an expanded pool of potential employees. The skillsof employees with commuting difficulties, childcare conflict,disabilities and geographical barriers employees are all made availableto the employer who adopts the telecommuting practice.  Smith (1997)supports this, claiming teleworking offers attractive workingconditions, which aid in the recruitment and retention of skilledemployees and help to reduce voluntary separation of key employees. This represents considerable savings to the employer in terms ofreduced hiring and training costs.

Reduced overhead is another financial benefit.  Teleworking reducestime and travel costs for meetings, conferences and training thusminimising organisational overheads.  Individual teleworkers alsobenefit from reduced costs in transportation, clothing, childcare, andreduced absenteeism. 

Teleworking can also help firms remain in the same location and avoidfuture relocation to larger premises.  This particular cost saving ishighly remunerative due to the increasing real estate prices in urbanareas today and the substantial cost savings in office space.  Peoplewho telework do not use office space and do not create overheads.  Evenin case of part-time teleworking space savings are generated.  This isevident at IBM, who is expected to save between 15 to 20 percent inspace requirements by taking away the desks of more than five thousandof its employees and telling them to work at home, in their car, or attheir clients’ offices (Swinton 2002).

The claim that teleworking reduces organisational overheads is alsosupported by BT who introduced its “Workstyle 2000 flexible working”programme ten years ago.  The claim that the programme has saved them134m as a result of teleworking practices.  This includes reducing thenumber of employee desks in London from 10,000 to 3,000, saving £6,000per desk per year.  There has also been a five% reduction in companycar mileage, resulting in fuel savings of £9.7m this year alone.  BTalso reports a 20% increase in productivity and that 75% of alltelephone conferences are replacements of face-to-face meetings.
Opponents of teleworking argue there are often some initial increasedcosts due to outfitting the teleworkers and making adjustments tocompany computers to accommodate them.  Ford (1995) claims thattelecommuting programs lead to extra costs. He claims that extra coststypically involve additional equipment requirements and funding theprovision of human resource services, training, fringe benefits, andrelocating. He continued to argue that the question of cost alsoincludes the equipment and space costs associated with telecommutingprogram and that telephones and electronic equipment cost more fortelecommuters than for traditional workers.

It is important that hardware and software provided to teleworkersstarts out and remains uniform because this simplifies supportimmensely.  The required initial investment and length of time forpayback will vary sharply from company to company, however, with themost technologically advanced incurring the least upfront costs.  Giventhat high-tech firms are those under consideration in this study andthey have the most access to the latest and most efficient technology,it then follows that these expenditures do not detract from the savingsfor high-tech firms adopting or practicing teleworking.
Additionally, many companies report current pressures on their supportdesk and according to Classe (2000) this will intensify by theintroduction of a remote workforce.  As teleworkers usually worknon-standards hours, longer hours of support cover may be required,which will confer additional associated costs to the employer.  Thecost factor for such support spread across a larger high-tech companywill have little impact; the same costs spread across a smaller companymay be significant and should be considered a potential drain onresources that could support innovation implementation.

 

SECURITY

Security is a major concern for high-tech companies with teleworkingemployees.  Confidential information must be accessible to theteleworkers remotely, information that may range from a product indevelopment to a change in production methods to sensitive profiles offuture customer bases.  This makes the same information more accessibleto hackers and competitors; it is highly unlikely a company couldafford or an employee would want equal security measures on theirprofessional facilities and residences. 

In addition, information used and generated by teleworkers willtypically be uploaded to a server for accessibility.  Others within thecompany then have increased chance of access, compromisingintra-company security.

Eric von Hippel, however, in his study of knowledge location andinnovation solving, noted “conducting innovation-related problemsolving at remote sites need not compromise an innovator’s ability toprotect commercially important secrets” (1994).  While greaterpotential for security breaches exist, this in no way indicatessecurity need be compromised by teleworkers.

 

MANAGEMENT

One of the biggest problems for managers and staff involved withtelework is measuring and monitoring the work done by employees.Management recognise that it is easier to monitor the level of workdone by employees when they are in the office and managers often worrythat their staff will not work as hard from home.  Teleworking presentspotential issues with the ability to discipline telecommutingemployees, provide a career path, and provide promotionalopportunities.  Those in supervisory positions often see difficultiesin relation to mangers’ human resource management responsibilities(Werdigier and Neibuhr 2002).
Ford (1995) also raisies the issue of the telecommutting impact on thesupervisor's span of control.  Due to the workers being so spread out,Ford claims that many companies will be forced to reduce the averagespan of supervisory and will not have sufficent control to accommodatethe unique problems of telecommuters.  Ford suggests that another majoraspect of the supervisory issue is the ability of the manager tocontrol distractions in the work setting and to ensure that theemployee does not become displaced from the informal help and adviceavailable through interaction with a work group.

Clearly, managers of such programs need to be trained in remotesupervision.  In addition, they should recognise the possibility thattheir teleworking employees may not have adequate access to training,career and promotional opportunities.  More importantly, theseemployees may miss the informal information sharing that occurs in atraditional work environment.  This will be shown to have a significantimpact on innovation.
 

REDUCED SOCIAL INTERACTION AND POLITICAL INFLUENCE

Social isolation seems to be mostly acknowledged by scholars as themost significant potential or actual drawback of teleworking.   Whilesome employees welcome the new freedom that comes with lesssupervision, others say they miss the camaraderie and socialinteraction that comes with face-to-face office operations.  However,this usually depends on the professional level of the employee.  Smith(1997) argues that the higher the level, then the more electroniccontacts and networks; hence, less social isolation is experienced.

Video conferencing could help ease the psychological trauma that comeswith social isolation, allowing multiple numbers of people to converseand perform work together in an electronic version of face-to-facecommunication.  This may allow teleworkers to increase the humanemotion and communicational flexibility often lacking in electroniccommunication.  Social isolation also implies that for teleworkersthere is minimal peer availability for informal work relateddiscussions as one might get, for example, in a staff cafeteria atlunch times.

In addition, teleworkers may lack the political connections and cloutto get innovations approved or funded.  With reduced opportunities tobuild relationships on the job, they are forced to propose or supportinnovation solely on the merits of the proposal (Werdigier and Neibuhr2002).  While this theoretically could be a positive result ofteleworking, in practice it reduces the chance of innovative input fromteleworkers being initiated or implemented.

 

DECREASED KNOWLEDGE EXCHANGE

It could similarly be argued that the largest detraction of teleworkingon innovation in high-technology organisations is the reduction ofknowledge exchange from employee interaction.  Informal and proximitylearning is an ongoing opportunity for training in the traditionaloffice environment not available to teleworkers.  If both are in thesame location, an inexperienced worker can observe another moreexperienced worker and learn from this observation.  This is asignificant training tool for office-based or facility-based workersand one of the main ways knowledge is acquired and exchanged in anorganisation (Classe 2000).

 

CASE STUDY - BT

The various benefits of telecommuting to the employer can be supportedby the findings of a study conducted amongst 2000 BT employees (2002). The study revealed that enabling staff to work from home resulted inincreased company productivity and better employee health and qualityof life.  BT claimed that telecommuting saved them £35m a year inaccommodation, recruitment costs and absenteeism and that teleworkerswere four times less likely to take sick days, averaging three days offa year compared with twelve for office-based staff.

The study also revealed that almost 80% of teleworkers claimed to bemore productive thanks to reduced disruption, commuting time andstress, and greater flexibility about when and where to work. According to Alison Garner, marketing manager for social responsibilityat BT making staff feel part of the BT community was key to thescheme's success.

Although a small number of teleworkers complain about increased workinghours, four out of five survey respondents claimed that teleworking is'important' or 'very important' for their quality of life.  Almostthree-quarters described their work/life balance as 'good' or 'verygood'.  BT also maintained that its teleworking policies paid off interms of staff recruitment and retention.

 

CASE STUDY – THE SUSTEL PROJECT

The Sustel Project, created in 2002 by the EU's Information SocietyTechnologies programme, found that telework increases businessresilience since it allows work to be done when building operations aredisrupted by factors such as the weather.

The Project also showed that the influence of telework on human capitaldevelopment, the personal competencies and skills needed to createwealth, was mostly positive.  Seven of the studies found that teleworkhad a significantly positive effect on internal communication andknowledge sharing, often due to the conscious implementation oftechnological tools during telework program deployment.  At theindividual level, the main financial benefit of telework was reducedcommuting costs, which almost all respondents saw as being greater thanthe increased cost of energy in their home.

 

BENEFITS AND DRAWBACKS – CONCLUSION

At the present time there is a lot of controversy in both academic andpractitioner literatures with respect to how telecommuting affectsorganisation employees.  At one extreme, telecommuting is considered aflexible work arrangement that will solve a multitude of problems.  Atthe other extreme, authors have implicated telecommuting causing anumber of negative consequences including loneliness, isolation,exploitation and increased stress.  While there are a legitimate numberof potentially negative effects of telework, these effects can beminimized by proper program management.

A balanced view is presented from Baruch and Nicholson (1997) andGoodrich (1990) who claim that the best output from telecommuting isachieved if it is conducted on a part-time basis. They argue,teleworking on a part-time basis can prevent or significantly reducethe social isolation of teleworkers.

There are a number of benefits and drawbacks that should be consideredspecifically by high-tech organisations implementing teleworkprogrammes.  From a broad organisational perspective, the positives ofsuch a programme seem to outweigh the negatives.  However, the twodrawbacks of teleworking with legitimate effect on innovation in thehigh-technology sector are reduced political influence, and knowledgeavailability and exchange.  As these have been identified as ofgreatest impact, these areas will be focused on in this study. 

As with teleworking, there are a number of different proposeddefinitions of innovation.  One of the most complete is offered byDamanpour (1996), who defines innovation as “the adoption of an idea orbehaviour new to the adopting organisation,” which usually occurs as “aresponse to changes in the external environment or as a pre-emptiveaction to influence the environment” (694).  Innovation is “departingfrom existing norms and practices,” and “requires risk taking”(Damanpour 1996, 698).  Edquist (2003) defines innovation as “newcreations of economic significance, primarily carried out by firms”(2). 
Depending on the researcher, innovation is held to require either twoor four steps to implementation.  In the four-step model, theinnovative idea is first discovered or created.  This usually happenswith one individual or a small number of individuals working as ateam.  The idea is then presented to and accepted by a decision-makingleader or body.  Initial adoption of the innovative idea by theorganisation is the next step, with the company allocating someresources to the development of the idea, such as pilots or testcases.  Implementation occurs when the innovative idea reaches broadacceptance within the organisation and becomes part of its regularproduct, process, or routine (Styles and Goddard 2004).  The two-stepcombines the first three steps of the four-step model under oneheading, initiation (Damanpour 1996).

There are three types of innovation:  product innovation, processinnovation and administrative innovation (Edquist 2003).  Allcompanies, and small firms in particular, are more likely to innovatein the product arena, where results are tangible and measurable. Larger firms will also innovate in process areas.  However, processinnovation is more difficult to implement than product, as it requireschange across multiple systems.  Administration innovation occurs mostfrequently in large, structurally complex companies, as it requires themost widespread changes to the organisation (Damanpour 1996).  
Innovation within these three areas can be radical or incremental. Radical innovation “produces fundamental changes in the activities ofthe organisation and represent a large departure from existingpractices” (Damanpour 1996, 699).  Radial innovation requires a largerknowledge base and free resources.  Incremental innovation is adoptedmore slowly, and produces less pronounced changes to organisationalsystems and activities.

Innovation, therefore, is defined in this study as a change in theproduct, process or administration of an organisation; a new idea thatdeparts from existing norms and practices to respond to the firm’scurrent or future environment. 

Innovation implementation requires knowledge, creativity, politicalsupport (within the organisation), and adequate resources.  Increasingany of the above or making the systems that control them moreeffective, therefore, has a positive effect on innovation.  Asinnovation requires both change and risk, companies will only undertakeinnovation if it is perceived as necessary to their survival or can beshown to have financial incentives. 

Recognizing the forces driving the organisation to innovate isimportant.  For example, environmental uncertainty and environmentalcomplexity both contribute to increased innovation.  Uncertainty aboutthe future leads directly to a concerted effort to increase knowledgebase and exchange.  This influx of information then leads to increasedinnovation (Damanpour 1996).  This is especially evident inhigh-technology firms, where a market leader product today may becompletely obsolete by next year.  Definite, articulated identificationof the need for and support of innovation within the organisationgreatly enhances the chance of implementation of an innovative idea.

Similarly, development or adjusting organisational systems to encourageand support innovation increases the chance of innovative success. Damanpour found that “large organisations can facilitate theimplementation of innovations by adopting more flexible structures andorganising themselves into smaller units” (1996, 700).  Creation ofinnovative ideas is more likely in complex organizations, where thereis a larger knowledge base and an increase in knowledge exchange(Damanpour 1996).   However, larger organisations are less likely tomove innovative ideas to implementation as they are typically moreformalized, with lower managerial incentive to innovation (Hitt,Hoskisson and Ireland 1990). 

An example of this is IBM, which made a systemic change specificallydesigned to increase innovation.  Talented managers were placed incharge of emerging business opportunities, or EBOs.  They were givenalmost no staff, just as if they were beginning an entrepreneurialventure, but significant financial and other resources.  A system wasdesigned within the company to specifically encourage innovation anddevelopment of new business ideas to the full implementation stage(Deutschman 2005).  Interestingly enough, the stimulus for this radicalchanged in organisation systems occurred while a senior executive wasteleworking, considering quarterly reports from a number of departments(Deutschman 2005).

These were not small undertakings; each EBO project was for a productor service line with at least a potential of one billion US dollars inrevenue.  IBM had traditionally had difficulty turning their R&Ddevelopments into viable businesses.  Instead, they saw otherscapitalizing on their research.  Twenty-two successful EBOs had beenlaunched by the end of 2004; three unsuccessful ones had failed.  EBOsnow account for $15 billion US in annual revenue, and are growing at arate of 40% (Deutschman 2005).

This is reinforced by Damanpour, who in synthesising a number ofresearch initiatives concluded that increased bureaucratic controlnegatively influences innovation (1996).  However, large organisationsthat strategically plan systems to encourage innovation or whostreamline and simplify their systems related to innovation are thebest poised to create an innovative environment (Deutschman 2005). 

DEFINITION

The high-tech sector is relatively new to the business community,having only come into prominence in the last thirty years.  A broaddefinition would include not only organisations that produce advancedelectronic- or computer-related products or services, but also firmsthat use such equipment (Hirsch, Kett and Trefil 2002).  This includesa variety of industries, including biotechnology, pharmaceuticals,financial services, banking, and more.  As this is too large anddiverse a group of businesses to consider in this research, this studywill focus on companies that both use and produce high-tech products orservices. 

High-tech companies, to be considered for inclusion in this study, must:
▫    Produce products or services related to advanced electronics, computers, or digital media.
▫    Be themselves avid users of the above products and services.
A high-tech organisation, as defined in this research, is anorganisation that both produces and heavily uses advanced technologyproducts and services, particularly those related to the computerindustry.

 

HIGH-TECH CHARACTERISTICS

The characteristics of high-tech companies also differ sharply fromtheir counterparts in other production and service sectors.  Two majordifferences are the typical amount of change and the speed at whichthis change occurs.  “By the time a patent is approved, the state ofthe market may be several generations beyond the technology beingpatented” (Cohan 1997, 4).  This requires high-tech firms to actquickly and decisively on any innovative ideas, and continually striveto meet future, rather than present, market demands.

High-tech companies are more likely than firms in other sectors todevelop products horizontally, where customers have opportunities totry out and comment on products as they are being developed (Cohan1997).  End-user product testing, providing prototypes to customers,and involving potential customers in pilot activities are all typicalin high-tech innovation (Edquist 2003).  This requires increasedcontact and relationship with customers.

 

HIGH-TECH SUCCESS

The success of high-tech organisations rests on their ability toproduce for a future market.  Effective high-tech companies are “keenlyaware of how quickly their markets can change” and therefore“constantly search for information that helps them reinvent themselves”(Cohan 1997, 3).  These firms must constantly initiate new,cutting-edge products that meet customers current and future needs. Planning is strategic, focused on innovation, and based on futureprojections of the market and environment (Edquist 2003).

Also integral to the success of high-tech companies is managed cashflow.  Monies invested in research and development or initiating a newproduct innovation must be balanced against the projected revenue andmarket share for that innovation.  In the case of process andadministrative innovations, the cost savings must equal or exceed theexpenditures required for full implementation (Cohan 1997).
Achieving the above requires the creation of teams from the variousfunction areas within the organisation.  For example, instead ofengineering creating a design, which is then passed to production, andlater to sales, representatives from all these areas would be involvedin the entire implementation process for a given innovative idea.

Cohan (1997) describes four significant requirements for innovation inhigh-tech organisations:  entrepreneurial leadership, opentechnologies, boundary-less product development, and disciplinedresource allocation.  In addition, the individual incidents ofinnovation themselves require a sufficient knowledge base combined withan innovative stimulus of some kind (von Hippel 1994).  Each of theseis impacted by teleworking.
Leaders promote vision, which excites smart, innovative employees andmotivates them to create and succeed.  Teleworking can enhance ordetract from entrepreneurial leadership and vision in an organisation. Teleworking requires a tolerance in HR management for low controltypical of the “find the best employee and let him or her work”mentality of many entrepreneurial leaders.  It was mentioned earlierthat teleworking is often used as a perk in hiring, increasing thelikelihood a firm will be able to recruit a desired individual(Werdigier and Neibuhr 2002). 

Teleworkers also may require clearerinstructions and overall direction, as they have reduced opportunitiesfor feedback from supervisors.  Forcing leadership to clearlyarticulate vision may be another benefit of teleworking (Werdigier andNeibuhr 2002).  Leadership is also responsible for creating andpromoting strategies for innovation at the organisational level.  Thesestrategies should result in systems encouraging to innovationthroughout the organisation (Zangwill 1993).

Open technology refers to leadership’s willingness to buy, borrow from,or partner with other organisations to bring in the needed technologyor knowledge for innovation creation and implementation (Edquist2003).  There is a possibility these firms with whom the primary firmis partnering or exchanging information will have security issues withteleworking.  If so, security concerns may limit partnerships andknowledge sharing.  Not being as informed as to the needs ofteleworkers, particularly in partnering firms, may also be an issue(Damanpour 1996).

The isolation potential in teleworking may impact negatively on theboundary-less development typical of high-tech firms.  Due to the speednecessary to bring a product to market or implement processes oradministrative innovations, most firms have moved to a structure formedaround cross-functional teams.  This allows simultaneous development ofthe innovative idea in departments across the organisation (Cohan1997). 

Teleworkers may not have as many opportunities for interaction withteam members, limiting the effectiveness of both them and the rest ofthe team.  In addition, purposeful communication will be necessary tokeep teleworkers abreast of the changing knowledge base of aninnovative idea as it progresses through the development process.  Lackof such purposeful communication threatens the innovation’s success(Werdigier and Neibuhr 2002).  Rosell (1996) argues that innovationneeds require not only inclusion but social and intellectual cohesion. Social cohesion includes shared values, ethics, and goals for both theorganisation and individual employees.

As all organisations have limited resources and a responsibility to usethem in the best interest of the firm, disciplined resource allocationis imperative.  This includes providing sufficient initial and ongoingresources to develop the innovation, and stopping a project if it is nolonger the best possibility for the organisation as a whole (Cohan1997).

Once these four requirements for an innovative environment are inplace, a sufficient knowledge base must be developed, and an adequatesystem for knowledge exchange implemented.  The stimulus required to“spark” innovation, however, is often serendipitous and unique to theindividual discovering an innovative idea (Styles and Goddard 2004).

Innovation requires a thorough knowledge base, particularly wheninnovation is occurring at the organisational level (Endquist 2003). This does not necessarily require new data, but a gathering andsynthesizing of available data on a subject or product.  When Intellaunched their latest initiative to use computer chips in mobiletechnology, communications, and entertainment electronics, they werenot necessarily creating new products, but reorganizing existing datain a new way to create a new use for their existing products (Edwards2004).  If one or more players on a team do not have full access to therequired knowledge base for a product, process, or administrativesystem, innovation is hindered.  This is a concern for teams whereteleworkers do not have full access to organisational information.

It follows that development of a system for knowledge exchange istherefore imperative to innovation.  When information is difficult orcostly to move from one physical location to another, what von Hippel(1994) calls “sticky information,” innovation sharply decreases.  It ispossible that teleworkers may not have access to all the formalinformation they need for maximum innovation.  It is more likely thatthe organisation supplies them with formal information, but they losesome or all of the informal information exchange typical of a workenvironment.  Their co-workers cannot “bounce ideas” off theteleworkers as easily.  Teleworkers are not exposed to theconversations of others in the next office or at the water cooler. Their physical distance from others on the team may therefore limitexchange, hindering the innovation possibilities for others on the teamas well (von Hippel 1994).

This can be somewhat combated by access to a comprehensive knowledgebase for all workers on a project.  This usually takes the form of adatabase of some kind, combined with some form of e-communication topost immediate findings and ideas.  This type of communication requirestraining to use effectively, and such training should be provided forteleworkers expected to use it for information and knowledge exchange. In addition, a worker unable to access information or communicate dueto technical breakdowns is not able to contribute to innovation,perhaps even at critical times in the innovation generation orimplementation process.  The need for effective training and availablesupport is vital for teleworkers’ maximum inclusion in the innovativeprocess.

Classe (2000) argues that remote workers sometimes miss out ontraining.  The problem is heightened because more often than not theyare working in isolation away from technicians and more experiencedusers. Hence, one could argue they need more training not less.  Classe(2000), reports that most teleworkers spend at least some time in theoffice and suggests that “these occasions should be taken as anopportunity for formal and informal training.” 

Incorporation of on-line training is another possibility for theteleworker.   The advantage of on-line training is that it can bedelivered in short chunks, and possibly on a need-to-know basis.  Forexample, a support desk encountering a recurring user-error problemcould produce on-line training material to address the problem.  Thismaterial would then be accessible to both current and futureteleworkers, enhancing their training opportunities (Classe 2000). However, as timing is a critical component of innovation and properability to use technology can greatly affect the timing ofcommunication and access of the teleworkers, on-line training should beviewed as an addition to rather than replacement of traditionaltraining for teleworking members of an innovative team.

The most difficult component of innovation to study is the innovativestimulus.  Even if a sufficient knowledge base is available, with newinformation added regularly, innovation still requires a novel approachor new idea from one or more team members.  As April and Wolfe (2005)state, “behind every disruptive technology, every performancebreakthrough, every Web-calibre paradigm shift is a human being orgroup of human beings who made the achievement possible.”  Innovationis created by “agile technology thinkers who revel in tacklingproblems, who wee opportunity where others do not” (April and Wolfe2005).  The difficulty in measuring stimulus is differs from person toperson and group to group.

The classic picture of innovative stimulus is Sir Isaac Newton, sittingunder a tree considering a body of scientific data, when he was hit inthe head with a falling apple.  Hewlett-Packard provides a more modernexample.  Hewlett-Packard realised the need to move from a massproduction process to a mass customization process in buildingcomputers for the home and small business market in the 1990s.  Thestimulus for this innovation in process was consumer complaints.  Theperson in charge of analyzing consumer complaints realized thepotential of customization to reduce these dissatisfactions, and waspowerful enough within the organisation to be heard (Zell 1997).

Finally, innovation only becomes true innovation if it is implemented. Prior to implementation, innovation must be presented todecision-makers, accepted by these leaders, and initiated.  Successfulinitiation of the innovation then leads to its full implementation. This study will show teleworkers often experience reduced power andsocial inclusion in the workplace, potentially limiting their abilityto have innovative ideas accepted, initiated, and implemented.

This study seeks to examine teleworking in the context ofhigh-technology organisations, focusing on its impact on innovation inthese firms.  The questions are, therefore, if any substantial part ofan employee’s work performed by employees physically separated from thelocation of their employer using information technology (IT) foroperation and communication contributes to or detracts from theirparticipation in changes in the product, process or administration ofan organisation; does this work method enhance new ideas that departfrom existing norms and practices to respond to the firm’s current orfuture environment, specifically in the case of organisations that bothproduce and heavily use advanced technology products and services?

Few positions allow full-time teleworking; most high-tech firmsexamined in this study allowed one to three days of teleworking.  Someemployees used teleworking to continue work projects outside theirofficial workday (Anon 2004, Baruch 2001, Werdigier and Neibuhr 2002,Zell 1997).  For example, at AT&T, 29% of managers telecommute atleast once a week (up from 8% in 1994) and weekly work an average offive more hours at home than at the office.  The typical context ofteleworking in high-tech organisations, therefore, is on a part-timebasis. 

It is important also to consider the types of positions usually offeredteleworking opportunities.  With one exception, managers andoffice-based personnel are more likely to be allowed to work remotelythan production or laboratory staff (Werdigier and Neibuhr 2002).  Theexception to this trend is the developer or designer who works remotelyfrom client locations as part of testing of new technological productsand processes (Edquist 2003).

Ford (1995) cites that according to Business Horizons, a surveyconducted amongst 6,000 human resource managers across the UnitedStates regarding teleworking, several organizational characteristicsare important for the success of teleworking programmes.  The strongestpoint of agreement was having the support of top management for theprogram.  This was followed closely by having the program inorganizations that encourage innovation, which is noteworthy because itrepresents the importance of a firm's culture in facilitatinginnovation and change. 

As telecommuting is a relatively innovative idea in itself, thischaracteristic may be critical for successful telecommutingprogrammes.  It is easy to argue that a company that does not endorseinnovation is unlikely to find good people who are willing to take thechance on participating in an innovative program such as teleworking.  This in reverse would increase the likelihood of an organisationoffering teleworking retaining qualified employees in the high-techsector.

The questionnaire also sought to identify the characteristics of thetask that the respondents felt were important for the success of theprogramme.  The most important characteristic, reported bythree-fourths of the managers, was having tasks or jobs with measurableoutput.  This was reinforced by agreement on having jobs that areeasily monitored.  Teleworkers are viewed by their production andresults, therefore, rather than the hours they contribute to anorganisation.  This supports previous findings that teleworkers aremore productive than traditional employees.  

Training for telecommuters was also seen as very important in theBusiness Horizons survey.  The emphasis on training as a key ingredientto telecommuting program success is reinforced by the level ofagreement for a related item of training for supervisors.  However,when asked in another section of the questionnaire if they actuallytrained their telecommuters, only one-fourth stated that they did. Even more interesting, only one in six also train their supervisors. Despite the data showing that these respondents believe in theimportance of training, surprisingly few actually do it.  This couldstrongly influence the detractors of teleworking, cited previously inliterature reviewed, who contend teleworkers feel isolated,disconnected from the organisational culture, and not well-trained.

Other characteristics noted in the literature on telecommuting asimportant for programme success include requiring a minimum time forthe telecommuter to spend at the primary work site, requiring aseparate work space in the home, and having a formal written policy ontelecommuting.  Company policy and guidance, combined with trainingregarding these recommendations, will go a long way to establishing amore effective teleworking programme. 

Ford (1995) also cites that certain supervisory characteristics wereassociated with success in telecommuting programs. By far, thecharacteristic found to be most important is the supervisor's abilityto establish good communication with the telecommuter. No other item inthe entire study scored as high as communication. If a telecommuter isnot directly available to manage, the supervisor must establish andmaintain the kind of smooth communication that allows effectiveoversight of the worker and the job being performed.

This study examines the effect of teleworking on innovation in thehigh-tech sector.  Methods used in completing this research includedthorough review of relevant studies completed in teleworking andinnovation, particularly those that involved high-tech firms, and useof standard statistical and analytical methods to process and presentthe above data.

Research findings were combed from library and company sources inthe UK, with additional information accessed online, particularlyinformation provided by organisations outside the UK, such as theAmerican Telecommuting Association.  Careful study was made to discernwhich data was relevant and addressed this research topic.  Comparisons and relationships were drawn between various studies anddata, and their results presented in as cohesive a way as possible.

Specific case studies were then compiled regarding innovations atthe Intel Corporation and their use of teleworking.  Informationregarding these innovations was derived from public reports by andabout the company, with a plan to synthesize data and innovativesituations, resulting in useable overall conclusions.  Theseconclusions then form the foundation for implications andrecommendations, for Intel, other high-technology organisations, andfurther research.
     

In analysing the relationship between telework, innovation, andhigh-technology, a concrete example can facilitate study.  Thisresearch will be using information from or about the Intel Corporationin analysing and discussing telework’s impact on innovation inhigh-tech organisations in general and Intel specifically.  It isimportant to note that most statistics provided by Intel address thecorporation globally, with no specific breakout for company operationsin the UK.

As a leader in the computer component and semi-conductor industries,Intel relies heavily on innovation to create products.  The corporationbegan in the United States in 1968, and produced its first RAM chip in1969 and its first microprocessor in 1971.  Other 1970s inventionsinclude Multibus technology, the first single-board computer.  Majorgrowth for the company occurred in the 1980s through a partnership withIBM, who selected Intel’s 8080 processor for its first PC.  This madeIntel the chip of choice for most of the computer market, introducingthe 286, 386, and 486 central processing units during the decade.  Bythe 1990s, Intel was launching the first Ethernet card and the Pentiumfamily of central processing units; its chips powered 85% of desktopcomputers worldwide.  Intel co-authored PCMCIA mobile connectiontechnology during this period.  Since then Intel has introduced Pentium 4 and Xeon processors, and most recently announced the creationof a multi-core silicon processor (Intel 2003, Intel 2005).  Theirlatest innovations include various novel uses of processors outside thetraditional computer product group.

The above make Intel one of the most innovative organisations in theworld.  Some of Intel’s best-known innovations occurred before itswidespread implementation of teleworking in the 1990s.  However, sincetelework began in a significant proportion in the company, Intel hasseen an acceleration of innovative ideas fully implemented.  Intelmodels the planning strategy of high-tech companies discussed earlier,typically is designing products for a market three to five years inadvance, and spends significant portions of its budget on research anddevelopment (Cohan 1997). 

Equally important, the firm has moved beyond innovation in the productarena only, and has introduced innovative systems in its production andother process areas (Intel 2005).  The company also encouragesinnovative ideas related to its administration, implementing a numberof intra-organisation changes.  Coursey (2005) comments, “if you don’tlike Intel’s latest reorganisation, don’t worry.  Based on thecompany’s history, the next reorganisation is never far away.”  Theyare constantly innovating and improving their process andadministrative systems.

Intel has made teleworking a widespread option amongst its employeessince the early 1990s.  Intra-corporate studies have shown teleworkersat Intel appreciate reduced travel time and greater flexibility, whilethe company cites reduced overhead costs (up to 40% savings), theability to recruit and keep top talent, and more productive employees(Anon 2003).  Over 25% of Intel employees worldwide telework at leastone day a week (Anon 2003).

From the literature presented earlier, the main concerns withteleworking are isolated, unmotivated employees, and reduction of theteleworker’s contribution and access to the knowledge needed forinnovation.  The first is not an issue at Intel, which reports itsemployees value the opportunity to telework and see it as a perk totheir employment (Anon, 2003).  I had the opportunity to informallydiscuss teleworking with several employees who telework one or two daysper week during my internship at Intel.  Most felt that teleworkingactually improved their ability to develop fresh ideas.  One man statedthat being in a quiet place twice a week, with no one around, no noise,and no conversations, actually helped him to concentrate on and processthe information he received via his computer and at work during theother three days of the week. 

Access to knowledge base is not an issue for Intel employees, whobenefit from an efficient system of knowledge availability. Teleworkers have access to up-to-date computer equipment in their homesor on the road, as applicable, and as one would expect Intel providesfast servers, clear access lines, and regularly updated information. Applying this area more broadly, however, many smaller high-tech firmsare unable to provide this body of data at both organisation and remotelocations.  This makes teleworking less viable for these companies asfar as innovation possibilities are concerned.

Intel also places high priority on communication, not just betweenteleworkers and the office, but also between employees in all areas ofits organisation and with current and potential customers.  Theorganisation has developed efficient e-communication systems to alloweasy communication.  The importance of such communication is regularlystressed at all levels in the company.  Intel also strongly seekscustomer input, designing ways to solicit such information from itscustomers and potential customers and providing this information toapplicable employees throughout the firm (Edwards 2004).

Despite all its efforts, however, the problem of teleworkers’restricted access to informal knowledge exchange cannot be solved byplanned systems.  If the teleworker is not physically present, someopportunities for knowledge exchange will be compromised.  For example,when interning at Intel, I had the opportunity to observe a number ofoccasions where someone walking past a conversation would bespontaneously asked to join in, or just join in on his or her own. Many times this person had information or ideas useful to progress onthe subject being discussed, but seeing him or her triggered inclusionin the discussion.  The cliché “out of sight, out of mind,” speaks tosuch situations.  The best designed system of telework and knowledgeexchange still does not allow for such input opportunities.

However, the organisation must view the gains it receives in theform of motivated, productive workers, an increased talent pool, andreduced costs as outweighing any minor hindrances caused byteleworking.  Intel has launched an impressive number of innovativeinitiatives in the last four years.  Most importantly, the organisationis now seeking to use its chips beyond the computer industry.  Asentertainment and communication become digital products, a market isemerging for chips to power electronic products in these sectors. Intel properly projected this trend several years ago, and has beendeveloping products and marketing schemes to address this opportunity(Edwards 2004).  Teams generating and implementing both the improvedchips and the novel uses for them have included teleworkers (Anon2003).
In addition, the teams that produce innovative ideas in the Intelculture are also those that employ teleworking.  As the organisation isa manufacturing business, a large proportion of its workers areemployed building or assembling product.  Almost none of theseproduction workers have the option to telework, as their positionsrequire them to be physically present and the manufacturing facility. The majority of these workers are also not included in the teamsresponsible for innovation.  If these workers are removed fromstatistic calculation, and the 25% teleworking of the total employeepopulation is applied only to non-production workers, the actual numberof non-production workers at Intel who telework at least one day a weekeasily exceeds 60%.

Combining the timing and positions required for these teams withoverall Intel statistics, therefore, it can be conservatively arguedthat at least over 50% of the employees on these cross-function teamsteleworked at least one day each week.  This is very high support ofteleworking amongst those responsible for innovation from anorganisation that depends on innovation for its very survival.  It isdifficult to image an organisation as competitive and innovative asIntel allowing such a high percentage of employees to telework if doingso impeded innovation.

High-technology firms in the UK are not as effective in creatinginnovative ideas and brining them to full implementation, compared withcompanies in the United States and Japan.  “Senior management in USbusiensses understand that innovation is critical to the mid-term andlong-term success of their organisations” and are both willing to makelarge investments in research and development and wiling to implementsystems that encourage innovation in their employees (Surrey 2004). One of these systems is arguably teleworking.

Implications of this study for high-tech organisations, particularlythose in the UK, is that there are several areas in which improvementshould lead to increased innovation, and equally as important,implementation of innovation.  Specific strategies at the corporatelevel, resulting systems designed to encourage innovation, adequateknowledge base and exchange for teleworkers and others on their teams,and a wider pool of human talent should be consciously implemented.

Strategically, high-tech organisations must reinvent or drasticallyimprove their products almost continuously.  The specificorganisational strategy should reflect this, communicating the need forinnovation throughout the company, including to teleworkers.  Thisstrategy then results in the design of systems to reach strategicgoals.  If teleworking is properly considered and accounted for inthese systems’ design, there are no indications that teleworkingdetracts from companies ability to innovate products, processes, oradministrative services. 

This design should include training and inclusion components. Employees must be guided by company policy regarding their remote workenvironments, setting appropriate balance with others in their remoteenvironments who may be less respectful of a worker outside atraditional location, and effective time management in a relativelyunsupervised work situation.  Proper training and support for theindividual teleworkers will greatly enhance the overall effectivenessof an organisation’s teleworking programme.

It has been shown in this study that a high percentage of mid-level andupper-level executives telework for part of their workweek. Incorporating teleworking into the overall corporate system, ratherthan offering it as a case-by-case perk for those who desire it, allowsthese important players in the innovation process to have full accessto the data and contacts necessary for full implementation ofinnovative projects.
Organisations offering teleworking opportunities have access to a widertalent pool.  An employee who may not be willing to commute two hourseveryday may agree to make the trip three days a week and work fromhome the other two.  It has been shown above, however, that full-timeteleworking has a strong potential to hinder innovation, whilepart-time teleworking has either no effect or the possibility toenhance innovation, mostly due to reduced interaction and informationexchange.  This should be strongly considered by companies seeking thebrightest and most productive in a given talent pool, regardless oftheir location.

The above recommendations can assist firms in developing andimplementing teleworking programmes.  These options provide tangiblebenefits to employees and the organisations for which they work.
This study also has implications for the academic arena.  Furtherresearch, examining the major innovations in the high-tech sector in agiven time period and empirically measuring the number of teleworkersand their contributions, would produce a more scientific evaluation ofthe impact of teleworking on innovation in the high-tech arena.   Thistype of research is obviously far beyond the scope of this study, butwould be of benefit to both businesses and employees consideringteleworking. 

Another possible study would be the types of stimulus leading to aninnovative idea in the high-technology fields.  While there are somebroad studies of new idea creation in general, one tailored to thehigh-tech industry could reveal important data to facilitate futureinnovation.

In conclusion, this research examined the resultof synthesising the practice of teleworking and the process ofinnovation in the context of a high-technology environment.  Literaturein each of these three areas, teleworking, innovation, andhigh-technology, were reviewed and summarized in relation to theoverall focus of the study.  The effect each has on the other was thenexamined in the context of one successful high-technology organisationthat strongly emphasises both teleworking and innovation, IntelCorporation.  Analysing the effects of one on the other led to inferredimplications and recommendations, both for high-technologyorganisations and the academic community.

It was concluded from the above study that part-time teleworking couldenhance innovation in a high-technology organisation, if properlyimplemented.  Teleworking programmes must be undertaken deliberately,with appropriate systems for communication and support in place.  Firmsthat fail to undertake such planning may find telework negativelyimpacts their innovative efforts.  Firms that provide and continue toimprove such systems find that both they and their employees benefitfrom teleworking, not only in the area of innovation but in other areasas well.

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