Office localization and the impact of remote work: A case study of a KIBS

Abstract: The COVID-19 pandemic has induced society to conduct work more remotely and therefore created challenges in adapting to this change. Remote work has created new opportunities of being less geographically bound when conducting work which therefore evokes the questions of what considerations are of importance when implementing remote work and how it has affected the choice of physical location. The choice of a physical office location is a strategic decision which can give competitive advantage in the form of access to new knowledge, workforce, suppliers and customers. This study focuses on understanding how knowledge intensive business services (KIBS) could choose both the type of office and its location through a case study with a KIBS.  Gaining tacit knowledge through communication is at the center for a KIBS to stay competitive and is gained through building relationships and acquiring competencies. The regional outlook affects the competitive advantage the KIBS has in their industry and KIBS that focus on new industries can compete better in urbanized regions or regions with a high industrial mix. KIBS that already have a competitive advantage in an industry can gain more tacit knowledge through networking in a region where there is a high concentration of companies in the same industry. Although remote work has increased productivity and work-life balance for employees, it cannot compete with the beneficial communication that is achieved through relationships built through physical presence as digital tools cannot provide the same personal connection. Therefore, physical presence is preferred when building relationships, working with tangible objects and building a company culture. Another finding is that when KIBS strategize their next office location, they can choose different offices when implementing remote or hybrid work based on the given requirements for the assignments of the company. Depending if the objective of the company is to build cultural bonds between the employer and the employee, or to maximize the chances to take part in informal knowledge spillovers, a satellite office or a neighborhood office is recommended.