International air travel has undoubtedly shrunk the world, with nonstop flights facilitating travel to all corners of the world. Research from INSEAD suggests that it might also be helping grease the wheels of innovation as it eases connectivity between international companies and their subsidiaries.
The researchers explore not only whether nonstop flights support innovation within companies but also how they might do so. The researchers analyzed data from global air routes between 2005 and 2015. Collectively this data covered flights from over 5,000 airports around the world.
Each of these airports was geomatched with the addresses of all inventors listed on any patents filed during this period to provide the researchers with an understanding of both global citations and collaboration between firms and inventors who were located near to each of the airports.
Impacting innovation
The researchers reveal that flights under 6,000 miles are more likely to be serviced by direct journeys, with the flight data suggesting that journeys under this threshold typically have up to 550 more nonstop flights than longer journeys.
The data shows that for flights in the region of this 6,000-mile threshold, each 10% increase in the number of nonstop flights was linked to a 3.4% increase in citations and a 1.4% increase in collaborations. What’s more, this increase is primarily driven by companies rather than universities.
This phenomenon was especially prominent among firms with a greater innovation mass, which was defined as the level of R&D expenditure and the number of inventors who had filed patents while at the company. For instance, something as simple as a 10% increase in nonstop flights between two firms might result in a nearly 18% increase in citations and a nearly 5% increase in collaboration when the two locations are in so-called “leader” countries.
Building the bridge
The researchers believe that nonstop flights can help innovative firms build crucial bridges between people who might otherwise struggle to catch up and share knowledge face-to-face. This wasn’t found to be the case for less innovative firms, who didn’t see any boost from the connectivity on offer. The researchers believe this is likely to be because such firms have less intellectual raw material to share.
According to the researchers, nonstop flights can be highly effective in promoting innovation between firms and firm locations that are separated by temporal and cultural differences. The researchers utilized time zone differences to measure temporal distance, while cultural distance was determined using the ethnic makeup of inventors at firms and their subsidiaries, as well as metrics from the World Values Survey.
The findings indicate that nonstop flights can increase citations and collaborations for firms located in temporally distant locations. Specifically, the researchers estimate that a 10-percent increase in flights for airport pairs with less than 1.5 hours of working hour overlap results in a 5.25-percent increase in citations between firms and a 1.87-percent increase in collaborations between subsidiaries within a firm. However, nonstop flights do not appear to enable knowledge spillovers and collaborations between inventors that are temporally close to one another.
Moreover, the researchers discovered that nonstop flights can boost citations and collaborations between firms situated in locations characterized by a high degree of cultural distance, such as when one location is immigrant-friendly and another is not. Interestingly, nonstop flights do not facilitate innovation when both locations are unfriendly to immigrants.
Cultural differences can lead to variations in communication styles and working habits, causing information flow difficulties, uncertainty in relationships, and higher communication and collaboration costs. By allowing individuals to interact with each other in person, direct flights can help overcome the challenges of working with culturally dissimilar individuals.
Overcoming borders
While firms continue to benefit from knowledge diffusion and the production of global collaborative patents, national borders remain a significant impediment. Nonetheless, the research shows that in the global context, nonstop flights can enhance mobility and, consequently, the dissemination of knowledge through citations and collaborations among inventors.
If international flights do not recover quickly after pandemics and economic downturns, cross-border knowledge spillovers and collaborations at certain firms could be negatively impacted. For decades, airports and policymakers have provided incentives to airlines to initiate nonstop flights. Our study provides valuable evidence for policymakers to design incentives to entice airlines to launch these direct flights.
The researchers contend that flight connectivity is a vital facilitator for firms to bridge gaps to distant contexts, but the effectiveness of these bridges hinges on the characteristics of the companies and contexts being connected. As the study indicates, business travel to culturally and temporally distant places may be beneficial for innovation outcomes at firms with substantial innovation masses, particularly when the travel connects two innovation hubs.
The Covid-19 pandemic has resulted in the proliferation of tools that make communication easier despite geographical distance, but direct flights can still play a crucial role in bridging cultural and temporal gaps, particularly when synchronous work is required. While these interactions could commence virtually, future collaborative work and the strengthening of initial connections may necessitate innovators being in the same location or time zone, which nonstop flights can help achieve.
