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The Effects of R&D Team Co-location on Communication Patterns among R&D, Marketing, and Manufacturing

The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104-6371
Faculty of Economics and Business, University of Ghent, Hoveniersberg 4, 9000 Ghent, Belgium

Reducing the physical distance among R&D engineers and between R&D and marketing is widely believed to result in more frequent communication, and hence higher product development performance. However, the empirical evidence for the effect of co-location on communication frequency is problematic for two reasons: (1) the evidence often features either little contextual realism or doubtful internal validity, and (2) the analysis does not deal with the statistical problems typical of network data. Our study avoids the first problem by using sequential network data collected from a quasi-experiment at an industrial company that regrouped its R&D teams into a new facility. We avoid the second problem by using Wasserman and Iacobucci's (1988) method for the statistical analysis of sequential network data. Our results show that communication among R&D teams was enhanced after co-locating these teams. Surprisingly, communication frequency between R&D and marketing was not affected by the increased physical distance. This may suggest that business procedures accompanying the relocation prevented a widening gap between R&D and marketing. Alternatively, it may indicate that the effect of co-location depends on the content and medium of the communication flows.

Key Words: New Product Development; Co-location; R&D–Marketing Interface; Social Networks

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