Investigation into telecommuting and its impact on innovation in a high technology organisation

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 days each week has no discernibly negative impact on innovation, and may actually enhance innovation, provided systems to encourage and facilitate innovation are in place.  Implications for organisations entering the teleworking arena and the sector as a whole are followed by recommendations for high-tech companies and for future research.

2.  INTRODUCTION

Teleworking is a cultural trend in much of Europe and the Americas.  While it provides many plusses and a few minuses to the individual teleworkers, its impact on organisations and particularly innovation at those organisations has not been sufficiently explored.  This study seeks to consider the impact teleworking has on organisations, specifically high-technology organisations, and their ability 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 in general.  The focus of the study then narrows, addressing organisations that both use and produce high-tech products or services, and finally concentrating on innovation in the computer hardware and software sector.  Ideas and conclusions from these studies are then combined with information from Intel Corporation, a leading manufacturer of semi-conductors and similar computer products, to analyse the specific impact of teleworking at Intel. 
It is hoped the conclusions drawn from Intel’s experiences will be useful to other high-tech firms practicing or considering teleworking, as well as encourage others to pursue related research.

3.  SECTOR BACKGROUND

High-technology has evolved in the past thirty years from something out of a science fiction novel to part of the average Britain’s everyday life.  The UK contributes over 5% of the world’s research and development, although it has less than one percent of the world’s population.   The UK additionally has the larges software and computer services sector in the EU, and a significant semiconductor industry (Anon 2005).  From Bristol, at the end of the M4 hi-tech corridor, to Sheffield, where software has replaced steel, to the hi-tech centres in Cambridge and Hertfordshire, high-tech is replacing and revitalising the declining UK industrial sector.
It is important to note that the high-tech sector differs in several distinct ways from other sectors of the economy.  First, the speed at which technology changes is simply unmatched in other production sectors.  This requires not only constant innovation in product, but constant innovation in the process and administrative arenas as well (Edquist 2003).  Property rights considerations have starkly different applications in high-tech organisations.  If companies wait until their new ideas were licensed or patented before progressing into production, the market will likely pass by them and their product before it even moves into sale (Cohan 1997).  High-tech organisations are also more likely to share information and partner on products, particularly in their non-core technologies, and share the profits with another firm rather than miss a market entirely (Edquist 2003).
The local high-technology sector differs in some ways from that in other countries.  The UK has historically lagged behind the United States and Japan in its ability to move a product from idea to production in the high-tech arena.  UK firms, unless part of an international company who mandates certain practices, have not made as much effort to design intra-organisational systems to encourage innovation (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 of the role of user research in innovation” (Surrey 2004).  This is a concern 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.  On a more positive note, the UK government has launched a campaign to increase computer literacy and home computer use.  Intel, BT, and Microsoft are the three major organisations working with the OeE, DTI and DfES on this campaign (Intel 2004).
One of these leaders from the high-technology sector, the Intel Corporation, will be considered in greater detail.  Although a U.S.-headquartered firm, Intel has facilities in several places in the UK, as well as worldwide.  Intel is a major manufacturer of semi-conductors and computer processors, and will be used as an example in this research of how teleworking can contribute to innovation in the high-tech environment.

4.  LITERATURE REVIEW

As this study considers the topics of teleworking, innovation, and high-technology, it was felt necessary to define and set parameters for each.  The following literature is considered in the scope of this research, with specific delineations of the three main study components outlined in detail. 

4.1  BACKGROUND

We have recently entered an important new phase in the ongoing information technology revolution. It is difficult to pick up a business magazine or newspaper today without reading about an organisation offering teleworking and virtual offices for remote workers. There has been fair media coverage in how companies have embraced 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 national trade organisation, the International Telecommuting Advisory Council (ITAC).
Part of a general trend towards remote work, teleworking is a natural result of the information revolution, fuelled by the growth of knowledge work and the rapid advance in technology.  The trend is consistent with predictions made by futurist Alvin Toffler in his 1980 book The Third Wave, that the location of work would outgrow typical sites such as offices or factories, and begin to take place in all locations.
Teleworking is especially becoming popular in high-technology organisations.  During my work placement at Intel Corporation, I was also exposed to various team members teleworking from home one to two days per week. While this trend is popular with employees, it behoves today’s high-technology company to consider the impact of teleworking on innovation.  This sector of the business environment is particularly dependent on innovation to remain viable, and it is important, therefore, that the initiation and implementation of innovation not be sacrificed to worker preference.

4.2  DEFINITIONS OF TELEWORKING AND TELECOMMUTING

Examination of various sources reveals a lack of consensus as to the definition 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 American literature.  Unfortunately, this lack of a universally accepted definition of teleworking causes problems academically; as either term can be used to mean ‘home-working’, ‘working-at-a-distance’, ‘off-site workers’, or ‘remote-workers,’ it hinders the ability to compare findings from different sources. Therefore, it is necessary to choose and define a single term before proceeding.
The term ‘telework’ is generally preferred on this side of the Atlantic, and will be used here.  Huws, Korte, and Robinson (1990) define telework as work “which is independent of the location of the employer or contractor and can be changed according to the wishes of the individual teleworkers and/or the organisation for which he or she is working” (10).  Olson (1988) argues, “the term telework is used to refer to organisational work performed outside of the normal organisational confines of space and time, augmented by computer and communications technology. The work is not necessarily performed in the home (77).  The EU holds that ‘telework’ “covers a range of new ways of working, using the telecommunications as a tool and, for at least part of the time, outside a traditional office environment (European Commission, 1996, 11). 
Jack Nilles defined telecommuting as “an arrangement that entails working outside the conventional workplace and communication by way of telecommunications or computer-based technology" (Bailey and Kurkland, 2000).  According to The American Telecommuting Association, 2002, telecommuting is “ replacing or supplementing physical travel to the office by using modern telecommunications equipment to bring office resources to the employee. While computers serve to augment telecommuting, it is possible to telecommute with only paper, pencil and 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’s work performed by employees that is physically separated from the location of their employer using information technology (IT) for operation and communication.  

4,3  BENEFITS AND DRAWBACKS OF TELEWORK

Three groups are affected by teleworking:  the employers or organisations, the individual teleworkers, and society as a whole.  Benefits and drawbacks to individual teleworkers vary greatly from person to person, and are difficult to evaluate.  Benefits to society are primarily environmental, as reduced commuting decreases pollution and reduces transportation-related injury.  This study will therefore focus on the affect of teleworking on the employer or organisation.  Areas of benefit include increased productivity and financial advantages.  Drawbacks security concerns, management issues, and reduction in interaction and exchanged of ideas.  Each of these benefits and drawbacks will have impact on innovation in high-technology environments.

INCREASED PRODUCTIVITY

According to The American Telecommuting Association, various surveys have documented teleworking employees’ productivity gains of up to 60% (1992).  They claim that extra productivity is consistently clocked at 10-15% in nearly every study in the past two decades.  The Social Market Foundation (2004) argues that teleworking can increase productivity by up to 30%. They further claim that the more than two million UK workers now regularly telecommute with employees use the time 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 and work quality among teleworkers.
    The increase in employee productivity resulted from teleworking is also supported by G. E. Gordon, who claims there are a variety of reasons for increased productivity in employees who telework.  These include decreased time spent commuting to work, fewer distractions in the workplace, and giving telecommuters the opportunity to better match their work times with their peak productive periods.  He notes that productivity 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 that their employers have sufficient trust and faith in them to work independently.  It could also be argued that teleworkers in fact work harder than non-teleworking employees as they feel the need to prove to their office peers that they are not indolent as a result of working at home without supervision. Teleworkers may also feel the need to work harder to achieve promotions ().
However, various theorists argue that some employees find that because they have their work resources at home, they tend to work more. This could interfere with family life.  In addition, telework can be viewed as an intrusion of the workplace in the home. The office at home is a constant reminder of work.  There is the real problem of defining concrete working hours when the distraction of home life is a constant presence.  Working hours and social versus home time can become blurred.  Another form of intrusion is when family members or social interruptions constantly disrupt teleworkers from completing work.  This may add extra pressures and stress.  Teleworking employees who experience such disruption and time management issues may actually have decreased motivation and productivity due to these outside factors.  Therefore, it is important that employees exercising their option to telework draw strong boundaries that will enable them to work effectively.  Guidance from the organisation and possiblity some training in effective teleworking should be included by an organisation employing teleworkers.

Smith (1997) suggests telecommuting reduces absenteeism amongst employees.  For example, employees who may feel too ill to complete a full day and commute, may be well enough to work a partial day.  Individuals are more likely to continue working even when feeling unwell due to being in a more comfortable and relaxed work environment, i.e. their home.  Smith counters that teleworkers often have difficulty, especially at first, with separating home and work time.  This increases if children are in the teleworking location, most likely the home.  However, adjustments are usually successful in the long term.
Further, the Bureau of Labour Statistics reports that business productivity, the measure or output per work hour, has risen 2.8% since 1998.  This correlates positively and directly with an increase in teleworking. Teleworking has been perhaps, therefore, most effective in increasing productivity.
Clearly, these human resource managers are very satisfied with their programs and believe their telecommuters are satisfied as well.  If half of the firms included in the above research are reporting more work done at a better quality in comparison to the traditional work force, there must be considerable merit to teleworking increasing productivity.

FINANCIAL SAVINGS

Teleworking can also save firms money in a number of ways.  It provides the employer with an expanded pool of potential employees. The skills of employees with commuting difficulties, childcare conflict, disabilities and geographical barriers employees are all made available to the employer who adopts the telecommuting practice.  Smith (1997) supports this, claiming teleworking offers attractive working conditions, which aid in the recruitment and retention of skilled employees and help to reduce voluntary separation of key employees.  This represents considerable savings to the employer in terms of reduced hiring and training costs.
    Reduced overhead is another financial benefit.  Teleworking reduces time and travel costs for meetings, conferences and training thus minimising organisational overheads.  Individual teleworkers also benefit from reduced costs in transportation, clothing, childcare, and reduced absenteeism. 
Teleworking can also help firms remain in the same location and avoid future relocation to larger premises.  This particular cost saving is highly remunerative due to the increasing real estate prices in urban areas today and the substantial cost savings in office space.  People who telework do not use office space and do not create overheads.  Even in case of part-time teleworking space savings are generated.  This is evident at IBM, who is expected to save between 15 to 20 percent in space requirements by taking away the desks of more than five thousand of its employees and telling them to work at home, in their car, or at their clients’ offices (Swinton 2002).
The claim that teleworking reduces organisational overheads is also supported by BT who introduced its “Workstyle 2000 flexible working” programme ten years ago.  The claim that the programme has saved them 134m as a result of teleworking practices.  This includes reducing the number of employee desks in London from 10,000 to 3,000, saving £6,000 per desk per year.  There has also been a five% reduction in company car mileage, resulting in fuel savings of £9.7m this year alone.  BT also reports a 20% increase in productivity and that 75% of all telephone conferences are replacements of face-to-face meetings.
Opponents of teleworking argue there are often some initial increased costs due to outfitting the teleworkers and making adjustments to company computers to accommodate them.  Ford (1995) claims that telecommuting programs lead to extra costs. He claims that extra costs typically involve additional equipment requirements and funding the provision of human resource services, training, fringe benefits, and relocating. He continued to argue that the question of cost also includes the equipment and space costs associated with telecommuting program and that telephones and electronic equipment cost more for telecommuters than for traditional workers.
It is important that hardware and software provided to teleworkers starts out and remains uniform because this simplifies support immensely.  The required initial investment and length of time for payback will vary sharply from company to company, however, with the most technologically advanced incurring the least upfront costs.  Given that high-tech firms are those under consideration in this study and they have the most access to the latest and most efficient technology, it then follows that these expenditures do not detract from the savings for high-tech firms adopting or practicing teleworking.
Additionally, many companies report current pressures on their support desk and according to Classe (2000) this will intensify by the introduction of a remote workforce.  As teleworkers usually work non-standards hours, longer hours of support cover may be required, which will confer additional associated costs to the employer.  The cost factor for such support spread across a larger high-tech company will have little impact; the same costs spread across a smaller company may be significant and should be considered a potential drain on resources that could support innovation implementation.

SECURITY

Security is a major concern for high-tech companies with teleworking employees.  Confidential information must be accessible to the teleworkers remotely, information that may range from a product in development to a change in production methods to sensitive profiles of future customer bases.  This makes the same information more accessible to hackers and competitors; it is highly unlikely a company could afford or an employee would want equal security measures on their professional facilities and residences. 
In addition, information used and generated by teleworkers will typically be uploaded to a server for accessibility.  Others within the company then have increased chance of access, compromising intra-company security.
Eric von Hippel, however, in his study of knowledge location and innovation solving, noted “conducting innovation-related problem solving at remote sites need not compromise an innovator’s ability to protect commercially important secrets” (1994).  While greater potential for security breaches exist, this in no way indicates security need be compromised by teleworkers.

MANAGEMENT

One of the biggest problems for managers and staff involved with telework is measuring and monitoring the work done by employees. Management recognise that it is easier to monitor the level of work done by employees when they are in the office and managers often worry that their staff will not work as hard from home.  Teleworking presents potential issues with the ability to discipline telecommuting employees, provide a career path, and provide promotional opportunities.  Those in supervisory positions often see difficulties in relation to mangers’ human resource management responsibilities (Werdigier and Neibuhr 2002).
Ford (1995) also raisies the issue of the telecommutting impact on the supervisor's span of control.  Due to the workers being so spread out, Ford claims that many companies will be forced to reduce the average span of supervisory and will not have sufficent control to accommodate the unique problems of telecommuters.  Ford suggests that another major aspect of the supervisory issue is the ability of the manager to control distractions in the work setting and to ensure that the employee does not become displaced from the informal help and advice available through interaction with a work group.
Clearly, managers of such programs need to be trained in remote supervision.  In addition, they should recognise the possibility that their teleworking employees may not have adequate access to training, career and promotional opportunities.  More importantly, these employees may miss the informal information sharing that occurs in a traditional work environment.  This will be shown to have a significant impact on innovation.
 

REDUCED SOCIAL INTERACTION AND POLITICAL INFLUENCE

Social isolation seems to be mostly acknowledged by scholars as the most significant potential or actual drawback of teleworking.   While some employees welcome the new freedom that comes with less supervision, others say they miss the camaraderie and social interaction 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 electronic contacts and networks; hence, less social isolation is experienced.
Video conferencing could help ease the psychological trauma that comes with social isolation, allowing multiple numbers of people to converse and perform work together in an electronic version of face-to-face communication.  This may allow teleworkers to increase the human emotion and communicational flexibility often lacking in electronic communication.  Social isolation also implies that for teleworkers there is minimal peer availability for informal work related discussions as one might get, for example, in a staff cafeteria at lunch times.
In addition, teleworkers may lack the political connections and clout to get innovations approved or funded.  With reduced opportunities to build relationships on the job, they are forced to propose or support innovation solely on the merits of the proposal (Werdigier and Neibuhr 2002).  While this theoretically could be a positive result of teleworking, in practice it reduces the chance of innovative input from teleworkers being initiated or implemented.

DECREASED KNOWLEDGE EXCHANGE

It could similarly be argued that the largest detraction of teleworking on innovation in high-technology organisations is the reduction of knowledge exchange from employee interaction.  Informal and proximity learning is an ongoing opportunity for training in the traditional office environment not available to teleworkers.  If both are in the same location, an inexperienced worker can observe another more experienced worker and learn from this observation.  This is a significant training tool for office-based or facility-based workers and one of the main ways knowledge is acquired and exchanged in an organisation (Classe 2000).

CASE STUDY - BT

The various benefits of telecommuting to the employer can be supported by the findings of a study conducted amongst 2000 BT employees (2002).  The study revealed that enabling staff to work from home resulted in increased company productivity and better employee health and quality of life.  BT claimed that telecommuting saved them £35m a year in accommodation, recruitment costs and absenteeism and that teleworkers were four times less likely to take sick days, averaging three days off a year compared with twelve for office-based staff.
The study also revealed that almost 80% of teleworkers claimed to be more productive thanks to reduced disruption, commuting time and stress, and greater flexibility about when and where to work.  According to Alison Garner, marketing manager for social responsibility at BT making staff feel part of the BT community was key to the scheme's success.
Although a small number of teleworkers complain about increased working hours, four out of five survey respondents claimed that teleworking is 'important' or 'very important' for their quality of life.  Almost three-quarters described their work/life balance as 'good' or 'very good'.  BT also maintained that its teleworking policies paid off in terms of staff recruitment and retention.

CASE STUDY – THE SUSTEL PROJECT

The Sustel Project, created in 2002 by the EU's Information Society Technologies programme, found that telework increases business resilience since it allows work to be done when building operations are disrupted by factors such as the weather.
The Project also showed that the influence of telework on human capital development, the personal competencies and skills needed to create wealth, was mostly positive.  Seven of the studies found that telework had a significantly positive effect on internal communication and knowledge sharing, often due to the conscious implementation of technological tools during telework program deployment.  At the individual level, the main financial benefit of telework was reduced commuting costs, which almost all respondents saw as being greater than the increased cost of energy in their home.

BENEFITS AND DRAWBACKS – CONCLUSION

At the present time there is a lot of controversy in both academic and practitioner literatures with respect to how telecommuting affects organisation employees.  At one extreme, telecommuting is considered a flexible work arrangement that will solve a multitude of problems.  At the other extreme, authors have implicated telecommuting causing a number of negative consequences including loneliness, isolation, exploitation and increased stress.  While there are a legitimate number of potentially negative effects of telework, these effects can be minimized by proper program management.
A balanced view is presented from Baruch and Nicholson (1997) and Goodrich (1990) who claim that the best output from telecommuting is achieved if it is conducted on a part-time basis. They argue, teleworking on a part-time basis can prevent or significantly reduce the social isolation of teleworkers.
There are a number of benefits and drawbacks that should be considered specifically by high-tech organisations implementing telework programmes.  From a broad organisational perspective, the positives of such a programme seem to outweigh the negatives.  However, the two drawbacks of teleworking with legitimate effect on innovation in the high-technology sector are reduced political influence, and knowledge availability and exchange.  As these have been identified as of greatest impact, these areas will be focused on in this study. 

4.4    DEFINING INNOVATION

As with teleworking, there are a number of different proposed definitions of innovation.  One of the most complete is offered by Damanpour (1996), who defines innovation as “the adoption of an idea or behaviour new to the adopting organisation,” which usually occurs as “a response to changes in the external environment or as a pre-emptive action to influence the environment” (694).  Innovation is “departing from existing norms and practices,” and “requires risk taking” (Damanpour 1996, 698).  Edquist (2003) defines innovation as “new creations of economic significance, primarily carried out by firms” (2). 
Depending on the researcher, innovation is held to require either two or four steps to implementation.  In the four-step model, the innovative idea is first discovered or created.  This usually happens with one individual or a small number of individuals working as a team.  The idea is then presented to and accepted by a decision-making leader or body.  Initial adoption of the innovative idea by the organisation is the next step, with the company allocating some resources to the development of the idea, such as pilots or test cases.  Implementation occurs when the innovative idea reaches broad acceptance within the organisation and becomes part of its regular product, process, or routine (Styles and Goddard 2004).  The two-step combines the first three steps of the four-step model under one heading, initiation (Damanpour 1996).
There are three types of innovation:  product innovation, process innovation and administrative innovation (Edquist 2003).  All companies, and small firms in particular, are more likely to innovate in the product arena, where results are tangible and measurable.  Larger firms will also innovate in process areas.  However, process innovation is more difficult to implement than product, as it requires change across multiple systems.  Administration innovation occurs most frequently in large, structurally complex companies, as it requires the most 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 of the organisation and represent a large departure from existing practices” (Damanpour 1996, 699).  Radial innovation requires a larger knowledge base and free resources.  Incremental innovation is adopted more slowly, and produces less pronounced changes to organisational systems and activities.
Innovation, therefore, is defined in this study as a change in the product, process or administration of an organisation; a new idea that departs from existing norms and practices to respond to the firm’s current or future environment. 

4.5    ENHANCEMENTS TO INNOVATION

Innovation implementation requires knowledge, creativity, political support (within the organisation), and adequate resources.  Increasing any of the above or making the systems that control them more effective, therefore, has a positive effect on innovation.  As innovation requires both change and risk, companies will only undertake innovation if it is perceived as necessary to their survival or can be shown to have financial incentives. 
Recognizing the forces driving the organisation to innovate is important.  For example, environmental uncertainty and environmental complexity both contribute to increased innovation.  Uncertainty about the future leads directly to a concerted effort to increase knowledge base and exchange.  This influx of information then leads to increased innovation (Damanpour 1996).  This is especially evident in high-technology firms, where a market leader product today may be completely obsolete by next year.  Definite, articulated identification of the need for and support of innovation within the organisation greatly enhances the chance of implementation of an innovative idea.
Similarly, development or adjusting organisational systems to encourage and support innovation increases the chance of innovative success.  Damanpour found that “large organisations can facilitate the implementation of innovations by adopting more flexible structures and organising themselves into smaller units” (1996, 700).  Creation of innovative ideas is more likely in complex organizations, where there is a larger knowledge base and an increase in knowledge exchange (Damanpour 1996).   However, larger organisations are less likely to move innovative ideas to implementation as they are typically more formalized, with lower managerial incentive to innovation (Hitt, Hoskisson and Ireland 1990). 
An example of this is IBM, which made a systemic change specifically designed to increase innovation.  Talented managers were placed in charge of emerging business opportunities, or EBOs.  They were given almost no staff, just as if they were beginning an entrepreneurial venture, but significant financial and other resources.  A system was designed within the company to specifically encourage innovation and development of new business ideas to the full implementation stage (Deutschman 2005).  Interestingly enough, the stimulus for this radical changed in organisation systems occurred while a senior executive was teleworking, considering quarterly reports from a number of departments (Deutschman 2005).
These were not small undertakings; each EBO project was for a product or service line with at least a potential of one billion US dollars in revenue.  IBM had traditionally had difficulty turning their R&D developments into viable businesses.  Instead, they saw others capitalizing on their research.  Twenty-two successful EBOs had been launched by the end of 2004; three unsuccessful ones had failed.  EBOs now account for $15 billion US in annual revenue, and are growing at a rate of 40% (Deutschman 2005).
This is reinforced by Damanpour, who in synthesising a number of research initiatives concluded that increased bureaucratic control negatively influences innovation (1996).  However, large organisations that strategically plan systems to encourage innovation or who streamline and simplify their systems related to innovation are the best poised to create an innovative environment (Deutschman 2005). 

4.6    CHARACTERISTICS OF HIGH-TECH COMPANIES AND THEIR SUCCESS

DEFINITION

The high-tech sector is relatively new to the business community, having only come into prominence in the last thirty years.  A broad definition would include not only organisations that produce advanced electronic- or computer-related products or services, but also firms that use such equipment (Hirsch, Kett and Trefil 2002).  This includes a variety of industries, including biotechnology, pharmaceuticals, financial services, banking, and more.  As this is too large and diverse a group of businesses to consider in this research, this study will focus on companies that both use and produce high-tech products or services. 
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 an organisation that both produces and heavily uses advanced technology products and services, particularly those related to the computer industry.

HIGH-TECH CHARACTERISTICS

The characteristics of high-tech companies also differ sharply from their counterparts in other production and service sectors.  Two major differences are the typical amount of change and the speed at which this change occurs.  “By the time a patent is approved, the state of the market may be several generations beyond the technology being patented” (Cohan 1997, 4).  This requires high-tech firms to act quickly and decisively on any innovative ideas, and continually strive to meet future, rather than present, market demands.
High-tech companies are more likely than firms in other sectors to develop products horizontally, where customers have opportunities to try out and comment on products as they are being developed (Cohan 1997).  End-user product testing, providing prototypes to customers, and involving potential customers in pilot activities are all typical in high-tech innovation (Edquist 2003).  This requires increased contact and relationship with customers.

HIGH-TECH SUCCESS

The success of high-tech organisations rests on their ability to produce for a future market.  Effective high-tech companies are “keenly aware 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 future projections of the market and environment (Edquist 2003).
Also integral to the success of high-tech companies is managed cash flow.  Monies invested in research and development or initiating a new product innovation must be balanced against the projected revenue and market share for that innovation.  In the case of process and administrative innovations, the cost savings must equal or exceed the expenditures required for full implementation (Cohan 1997).
Achieving the above requires the creation of teams from the various function areas within the organisation.  For example, instead of engineering creating a design, which is then passed to production, and later to sales, representatives from all these areas would be involved in the entire implementation process for a given innovative idea.

4.7    DETERMINANTS OF INNOVATION – HOW DOES TELEWORKING RELATE?

Cohan (1997) describes four significant requirements for innovation in high-tech organisations:  entrepreneurial leadership, open technologies, boundary-less product development, and disciplined resource allocation.  In addition, the individual incidents of innovation themselves require a sufficient knowledge base combined with an innovative stimulus of some kind (von Hippel 1994).  Each of these is impacted by teleworking.
Leaders promote vision, which excites smart, innovative employees and motivates them to create and succeed.  Teleworking can enhance or detract from entrepreneurial leadership and vision in an organisation.  Teleworking requires a tolerance in HR management for low control typical of the “find the best employee and let him or her work” mentality of many entrepreneurial leaders.  It was mentioned earlier that teleworking is often used as a perk in hiring, increasing the likelihood a firm will be able to recruit a desired individual (Werdigier and Neibuhr 2002).  Teleworkers also may require clearer instructions and overall direction, as they have reduced opportunities for feedback from supervisors.  Forcing leadership to clearly articulate vision may be another benefit of teleworking (Werdigier and Neibuhr 2002).  Leadership is also responsible for creating and promoting strategies for innovation at the organisational level.  These strategies should result in systems encouraging to innovation throughout 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 technology or knowledge for innovation creation and implementation (Edquist 2003).  There is a possibility these firms with whom the primary firm is partnering or exchanging information will have security issues with teleworking.  If so, security concerns may limit partnerships and knowledge sharing.  Not being as informed as to the needs of teleworkers, particularly in partnering firms, may also be an issue (Damanpour 1996).
The isolation potential in teleworking may impact negatively on the boundary-less development typical of high-tech firms.  Due to the speed necessary to bring a product to market or implement processes or administrative innovations, most firms have moved to a structure formed around cross-functional teams.  This allows simultaneous development of the innovative idea in departments across the organisation (Cohan 1997). 
Teleworkers may not have as many opportunities for interaction with team members, limiting the effectiveness of both them and the rest of the team.  In addition, purposeful communication will be necessary to keep teleworkers abreast of the changing knowledge base of an innovative idea as it progresses through the development process.  Lack of such purposeful communication threatens the innovation’s success (Werdigier and Neibuhr 2002).  Rosell (1996) argues that innovation needs require not only inclusion but social and intellectual cohesion.  Social cohesion includes shared values, ethics, and goals for both the organisation and individual employees.
As all organisations have limited resources and a responsibility to use them in the best interest of the firm, disciplined resource allocation is imperative.  This includes providing sufficient initial and ongoing resources to develop the innovation, and stopping a project if it is no longer the best possibility for the organisation as a whole (Cohan 1997).
Once these four requirements for an innovative environment are in place, a sufficient knowledge base must be developed, and an adequate system for knowledge exchange implemented.  The stimulus required to “spark” innovation, however, is often serendipitous and unique to the individual discovering an innovative idea (Styles and Goddard 2004).
Innovation requires a thorough knowledge base, particularly when innovation is occurring at the organisational level (Endquist 2003).  This does not necessarily require new data, but a gathering and synthesizing of available data on a subject or product.  When Intel launched their latest initiative to use computer chips in mobile technology, communications, and entertainment electronics, they were not necessarily creating new products, but reorganizing existing data in a new way to create a new use for their existing products (Edwards 2004).  If one or more players on a team do not have full access to the required knowledge base for a product, process, or administrative system, innovation is hindered.  This is a concern for teams where teleworkers do not have full access to organisational information.
It follows that development of a system for knowledge exchange is therefore imperative to innovation.  When information is difficult or costly to move from one physical location to another, what von Hippel (1994) calls “sticky information,” innovation sharply decreases.  It is possible that teleworkers may not have access to all the formal information they need for maximum innovation.  It is more likely that the organisation supplies them with formal information, but they lose some or all of the informal information exchange typical of a work environment.  Their co-workers cannot “bounce ideas” off the teleworkers as easily.  Teleworkers are not exposed to the conversations of others in the next office or at the water cooler.  Their physical distance from others on the team may therefore limit exchange, hindering the innovation possibilities for others on the team as well (von Hippel 1994).
This can be somewhat combated by access to a comprehensive knowledge base for all workers on a project.  This usually takes the form of a database of some kind, combined with some form of e-communication to post immediate findings and ideas.  This type of communication requires training to use effectively, and such training should be provided for teleworkers expected to use it for information and knowledge exchange.  In addition, a worker unable to access information or communicate due to technical breakdowns is not able to contribute to innovation, perhaps even at critical times in the innovation generation or implementation process.  The need for effective training and available support is vital for teleworkers’ maximum inclusion in the innovative process.
Classe (2000) argues that remote workers sometimes miss out on training.  The problem is heightened because more often than not they are working in isolation away from technicians and more experienced users. Hence, one could argue they need more training not less.  Classe (2000), reports that most teleworkers spend at least some time in the office and suggests that “these occasions should be taken as an opportunity for formal and informal training.” 
Incorporation of on-line training is another possibility for the teleworker.   The advantage of on-line training is that it can be delivered in short chunks, and possibly on a need-to-know basis.  For example, a support desk encountering a recurring user-error problem could produce on-line training material to address the problem.  This material would then be accessible to both current and future teleworkers, enhancing their training opportunities (Classe 2000).  However, as timing is a critical component of innovation and proper ability to use technology can greatly affect the timing of communication and access of the teleworkers, on-line training should be viewed as an addition to rather than replacement of traditional training for teleworking members of an innovative team.
The most difficult component of innovation to study is the innovative stimulus.  Even if a sufficient knowledge base is available, with new information added regularly, innovation still requires a novel approach or new idea from one or more team members.  As April and Wolfe (2005) state, “behind every disruptive technology, every performance breakthrough, every Web-calibre paradigm shift is a human being or group of human beings who made the achievement possible.”  Innovation is created by “agile technology thinkers who revel in tackling problems, who wee opportunity where others do not” (April and Wolfe 2005).  The difficulty in measuring stimulus is differs from person to person and group to group.
The classic picture of innovative stimulus is Sir Isaac Newton, sitting under a tree considering a body of scientific data, when he was hit in the head with a falling apple.  Hewlett-Packard provides a more modern example.  Hewlett-Packard realised the need to move from a mass production process to a mass customization process in building computers for the home and small business market in the 1990s.  The stimulus for this innovation in process was consumer complaints.  The person in charge of analyzing consumer complaints realized the potential of customization to reduce these dissatisfactions, and was powerful 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 to decision-makers, accepted by these leaders, and initiated.  Successful initiation of the innovation then leads to its full implementation.  This study will show teleworkers often experience reduced power and social inclusion in the workplace, potentially limiting their ability to have innovative ideas accepted, initiated, and implemented.

4.8    TELEWORKING IN CONTEXT

This study seeks to examine teleworking in the context of high-technology organisations, focusing on its impact on innovation in these firms.  The questions are, therefore, if any substantial part of an employee’s work performed by employees physically separated from the location of their employer using information technology (IT) for operation and communication contributes to or detracts from their participation in changes in the product, process or administration of an organisation; does this work method enhance new ideas that depart from existing norms and practices to respond to the firm’s current or future environment, specifically in the case of organisations that both produce and heavily use advanced technology products and services?
Few positions allow full-time teleworking; most high-tech firms examined in this study allowed one to three days of teleworking.  Some employees used teleworking to continue work projects outside their official workday (Anon 2004, Baruch 2001, Werdigier and Neibuhr 2002, Zell 1997).  For example, at AT&T, 29% of managers telecommute at least once a week (up from 8% in 1994) and weekly work an average of five more hours at home than at the office.  The typical context of teleworking in high-tech organisations, therefore, is on a part-time basis. 
It is important also to consider the types of positions usually offered teleworking opportunities.  With one exception, managers and office-based personnel are more likely to be allowed to work remotely than production or laboratory staff (Werdigier and Neibuhr 2002).  The exception to this trend is the developer or designer who works remotely from client locations as part of testing of new technological products and processes (Edquist 2003).
Ford (1995) cites that according to Business Horizons, a survey conducted amongst 6,000 human resource managers across the United States regarding teleworking, several organizational characteristics are important for the success of teleworking programmes.  The strongest point of agreement was having the support of top management for the program.  This was followed closely by having the program in organizations that encourage innovation, which is noteworthy because it represents the importance of a firm's culture in facilitating innovation and change. 
As telecommuting is a relatively innovative idea in itself, this characteristic may be critical for successful telecommuting programmes.  It is easy to argue that a company that does not endorse innovation is unlikely to find good people who are willing to take the chance on participating in an innovative program such as teleworking.   This in reverse would increase the likelihood of an organisation offering teleworking retaining qualified employees in the high-tech sector.
The questionnaire also sought to identify the characteristics of the task that the respondents felt were important for the success of the programme.  The most important characteristic, reported by three-fourths of the managers, was having tasks or jobs with measurable output.  This was reinforced by agreement on having jobs that are easily monitored.  Teleworkers are viewed by their production and results, therefore, rather than the hours they contribute to an organisation.  This supports previous findings that teleworkers are more productive than traditional employees.  
Training for telecommuters was also seen as very important in the Business Horizons survey.  The emphasis on training as a key ingredient to telecommuting program success is reinforced by the level of agreement for a related item of training for supervisors.  However, when asked in another section of the questionnaire if they actually trained 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 the importance of training, surprisingly few actually do it.  This could strongly influence the detractors of teleworking, cited previously in literature reviewed, who contend teleworkers feel isolated, disconnected from the organisational culture, and not well-trained.
    Other characteristics noted in the literature on telecommuting as important for programme success include requiring a minimum time for the telecommuter to spend at the primary work site, requiring a separate work space in the home, and having a formal written policy on telecommuting.  Company policy and guidance, combined with training regarding these recommendations, will go a long way to establishing a more effective teleworking programme. 
Ford (1995) also cites that certain supervisory characteristics were associated with success in telecommuting programs. By far, the characteristic found to be most important is the supervisor's ability to establish good communication with the telecommuter. No other item in the entire study scored as high as communication. If a telecommuter is not directly available to manage, the supervisor must establish and maintain the kind of smooth communication that allows effective oversight of the worker and the job being performed.

5.  METHODOLOGY

    This study examines the effect of teleworking on innovation in the high-tech sector.  Methods used in completing this research included thorough review of relevant studies completed in teleworking and innovation, particularly those that involved high-tech firms, and use of standard statistical and analytical methods to process and present the above data.
    Research findings were combed from library and company sources in the UK, with additional information accessed online, particularly information provided by organisations outside the UK, such as the American Telecommuting Association.  Careful study was made to discern which data was relevant and addressed this research topic.   Comparisons and relationships were drawn between various studies and data, and their results presented in as cohesive a way as possible.
    Specific case studies were then compiled regarding innovations at the Intel Corporation and their use of teleworking.  Information regarding these innovations was derived from public reports by and about the company, with a plan to synthesize data and innovative situations, resulting in useable overall conclusions.  These conclusions then form the foundation for implications and recommendations, for Intel, other high-technology organisations, and further research.
     

6.  ANALYSIS AND DISCUSSION

In analysing the relationship between telework, innovation, and high-technology, a concrete example can facilitate study.  This research will be using information from or about the Intel Corporation in analysing and discussing telework’s impact on innovation in high-tech organisations in general and Intel specifically.  It is important to note that most statistics provided by Intel address the corporation globally, with no specific breakout for company operations in the UK.
As a leader in the computer component and semi-conductor industries, Intel relies heavily on innovation to create products.  The corporation began in the United States in 1968, and produced its first RAM chip in 1969 and its first microprocessor in 1971.  Other 1970s inventions include Multibus technology, the first single-board computer.  Major growth for the company occurred in the 1980s through a partnership with IBM, who selected Intel’s 8080 processor for its first PC.  This made Intel the chip of choice for most of the computer market, introducing the 286, 386, and 486 central processing units during the decade.  By the 1990s, Intel was launching the first Ethernet card and the Pentium family of central processing units; its chips powered 85% of desktop computers worldwide.  Intel co-authored PCMCIA mobile connection technology during this period.  Since then Intel has introduced  Pentium 4 and Xeon processors, and most recently announced the creation of a multi-core silicon processor (Intel 2003, Intel 2005).  Their latest innovations include various novel uses of processors outside the traditional computer product group.

The above make Intel one of the most innovative organisations in the world.  Some of Intel’s best-known innovations occurred before its widespread implementation of teleworking in the 1990s.  However, since telework began in a significant proportion in the company, Intel has seen an acceleration of innovative ideas fully implemented.  Intel models the planning strategy of high-tech companies discussed earlier, typically is designing products for a market three to five years in advance, and spends significant portions of its budget on research and development (Cohan 1997). 
Equally important, the firm has moved beyond innovation in the product arena only, and has introduced innovative systems in its production and other process areas (Intel 2005).  The company also encourages innovative ideas related to its administration, implementing a number of intra-organisation changes.  Coursey (2005) comments, “if you don’t like Intel’s latest reorganisation, don’t worry.  Based on the company’s history, the next reorganisation is never far away.”  They are constantly innovating and improving their process and administrative systems.
Intel has made teleworking a widespread option amongst its employees since the early 1990s.  Intra-corporate studies have shown teleworkers at Intel appreciate reduced travel time and greater flexibility, while the company cites reduced overhead costs (up to 40% savings), the ability to recruit and keep top talent, and more productive employees (Anon 2003).  Over 25% of Intel employees worldwide telework at least one day a week (Anon 2003).
From the literature presented earlier, the main concerns with teleworking are isolated, unmotivated employees, and reduction of the teleworker’s contribution and access to the knowledge needed for innovation.  The first is not an issue at Intel, which reports its employees value the opportunity to telework and see it as a perk to their employment (Anon, 2003).  I had the opportunity to informally discuss teleworking with several employees who telework one or two days per week during my internship at Intel.  Most felt that teleworking actually improved their ability to develop fresh ideas.  One man stated that being in a quiet place twice a week, with no one around, no noise, and no conversations, actually helped him to concentrate on and process the information he received via his computer and at work during the other three days of the week. 

Access to knowledge base is not an issue for Intel employees, who benefit from an efficient system of knowledge availability.  Teleworkers have access to up-to-date computer equipment in their homes or on the road, as applicable, and as one would expect Intel provides fast servers, clear access lines, and regularly updated information.  Applying this area more broadly, however, many smaller high-tech firms are unable to provide this body of data at both organisation and remote locations.  This makes teleworking less viable for these companies as far as innovation possibilities are concerned.
Intel also places high priority on communication, not just between teleworkers and the office, but also between employees in all areas of its organisation and with current and potential customers.  The organisation has developed efficient e-communication systems to allow easy communication.  The importance of such communication is regularly stressed at all levels in the company.  Intel also strongly seeks customer input, designing ways to solicit such information from its customers and potential customers and providing this information to applicable employees throughout the firm (Edwards 2004).
Despite all its efforts, however, the problem of teleworkers’ restricted access to informal knowledge exchange cannot be solved by planned systems.  If the teleworker is not physically present, some opportunities for knowledge exchange will be compromised.  For example, when interning at Intel, I had the opportunity to observe a number of occasions where someone walking past a conversation would be spontaneously asked to join in, or just join in on his or her own.  Many times this person had information or ideas useful to progress on the subject being discussed, but seeing him or her triggered inclusion in the discussion.  The cliché “out of sight, out of mind,” speaks to such situations.  The best designed system of telework and knowledge exchange still does not allow for such input opportunities.

However, the organisation must view the gains it receives in the form of motivated, productive workers, an increased talent pool, and reduced costs as outweighing any minor hindrances caused by teleworking.  Intel has launched an impressive number of innovative initiatives in the last four years.  Most importantly, the organisation is now seeking to use its chips beyond the computer industry.  As entertainment and communication become digital products, a market is emerging for chips to power electronic products in these sectors.  Intel properly projected this trend several years ago, and has been developing products and marketing schemes to address this opportunity (Edwards 2004).  Teams generating and implementing both the improved chips and the novel uses for them have included teleworkers (Anon 2003).
In addition, the teams that produce innovative ideas in the Intel culture are also those that employ teleworking.  As the organisation is a manufacturing business, a large proportion of its workers are employed building or assembling product.  Almost none of these production workers have the option to telework, as their positions require them to be physically present and the manufacturing facility.  The majority of these workers are also not included in the teams responsible for innovation.  If these workers are removed from statistic calculation, and the 25% teleworking of the total employee population is applied only to non-production workers, the actual number of non-production workers at Intel who telework at least one day a week easily exceeds 60%.
Combining the timing and positions required for these teams with overall Intel statistics, therefore, it can be conservatively argued that at least over 50% of the employees on these cross-function teams teleworked at least one day each week.  This is very high support of teleworking amongst those responsible for innovation from an organisation that depends on innovation for its very survival.  It is difficult to image an organisation as competitive and innovative as Intel allowing such a high percentage of employees to telework if doing so impeded innovation.

7.  IMPLICATIONS AND RECOMMENDATIONS

High-technology firms in the UK are not as effective in creating innovative ideas and brining them to full implementation, compared with companies in the United States and Japan.  “Senior management in US busiensses understand that innovation is critical to the mid-term and long-term success of their organisations” and are both willing to make large investments in research and development and wiling to implement systems that encourage innovation in their employees (Surrey 2004).  One of these systems is arguably teleworking.
Implications of this study for high-tech organisations, particularly those in the UK, is that there are several areas in which improvement should lead to increased innovation, and equally as important, implementation of innovation.  Specific strategies at the corporate level, resulting systems designed to encourage innovation, adequate knowledge 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 drastically improve their products almost continuously.  The specific organisational strategy should reflect this, communicating the need for innovation throughout the company, including to teleworkers.  This strategy then results in the design of systems to reach strategic goals.  If teleworking is properly considered and accounted for in these systems’ design, there are no indications that teleworking detracts from companies ability to innovate products, processes, or administrative services. 
This design should include training and inclusion components.  Employees must be guided by company policy regarding their remote work environments, setting appropriate balance with others in their remote environments who may be less respectful of a worker outside a traditional location, and effective time management in a relatively unsupervised work situation.  Proper training and support for the individual teleworkers will greatly enhance the overall effectiveness of an organisation’s teleworking programme.
It has been shown in this study that a high percentage of mid-level and upper-level executives telework for part of their workweek.  Incorporating teleworking into the overall corporate system, rather than offering it as a case-by-case perk for those who desire it, allows these important players in the innovation process to have full access to the data and contacts necessary for full implementation of innovative projects.
Organisations offering teleworking opportunities have access to a wider talent pool.  An employee who may not be willing to commute two hours everyday may agree to make the trip three days a week and work from home the other two.  It has been shown above, however, that full-time teleworking has a strong potential to hinder innovation, while part-time teleworking has either no effect or the possibility to enhance innovation, mostly due to reduced interaction and information exchange.  This should be strongly considered by companies seeking the brightest and most productive in a given talent pool, regardless of their location.
The above recommendations can assist firms in developing and implementing teleworking programmes.  These options provide tangible benefits to employees and the organisations for which they work.
This study also has implications for the academic arena.  Further research, examining the major innovations in the high-tech sector in a given time period and empirically measuring the number of teleworkers and their contributions, would produce a more scientific evaluation of the impact of teleworking on innovation in the high-tech arena.   This type of research is obviously far beyond the scope of this study, but would be of benefit to both businesses and employees considering teleworking. 
Another possible study would be the types of stimulus leading to an innovative idea in the high-technology fields.  While there are some broad studies of new idea creation in general, one tailored to the high-tech industry could reveal important data to facilitate future innovation.

8.  CONCLUSION

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