Unlocking the potential: remote work, talent acquisition, and firm innovation in the era of the COVID-19 Pandemic

Abstract

The COVID-19 pandemic has increased uncertainties in the business environment and brought various changes to work practices. The main purpose of this study is to discuss the impact of remote work (or working-from-home) on firm’s talent acquisition and its consequential effects on firm performance, and also examined organizational flexibility as an underlying mechanism. We employed data from Burning Glass Technologies, Occupational Information Network, Compustat, and updated patent application data. A difference-in-differences framework with propensity score matching samples was employed for group comparisons before and after the pandemic. We find firms with remote work measured by pre-Covid WFH feasibility tend to hire skilled talent compared to those with low feasibility and it has a significant mediating effect on the correlation between working-from-home and innovation performance. This result indicates that the expansion of working-from-home should be considered in conjunction with talent acquisition to generate significant performance.