The effects of R&D team co-location on communication patterns among R&D, marketing, and manufacturing

Reducing the physical distance among R&D engineers and between R&D and mark eting is widely believed to result in more frequent communication, and henc e higher product development performance. However, the empirical evidence f or the effect of co-location on communication frequency is problematic for two reasons: (I)the evidence often features either little contextual realis m or doubtful internal validity, and (2) the analysis does not deal with th e 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) metho d for the statistical analysis of sequential network data. Our results show that communication among R&D teams was enhanced after co-locating these te ams. Surprisingly, communication frequency between R&D and marketing was no t affected by the increased physical distance. This may suggest that busine ss procedures accompanying the relocation prevented a widening gap between R&D and marketing. Alternatively, it may indicate that the effect of co-loc ation depends on the content and medium of the communication flows.