The Effects of Temporal Distance on Intra-Firm Communication: Evidence from Daylight Saving Time

Abstract

Cross-border communication costs have plummeted and enabled the global distribution of work, but frictions attributable to distance persist. We estimate the causal effects of temporal distance, i.e., time zone separation between employees, on intra-firm communication, a critical means of coordination and knowledge transfer. We argue that temporal distance creates frictions for synchronous communication, which could be especially harmful for collaboration among employees engaged in non-routine tasks. Exploiting Daylight Saving Time (DST) as a natural experiment and detailed data from a large multinational firm, we show that among collaborators who experience an increase in temporal distance, total communication volumes drop by 9.4 percent on average, an effect fully driven by reductions in richer, synchronous communication. Further, we show that these declines are concentrated among employees in routine tasks. Employees in non-routine tasks, meanwhile, react to increased temporal distance by shifting synchronous communication across the boundary of their workday into leisure time. Additional tests show that workers’ propensity to employ this adjustment mechanism is only partly explained by differences in their ability to work from home. Overall, our findings provide evidence that employees collaborating on non-routine tasks place a high premium on synchronous communication even at the cost of personal leisure. We present additional evidence and draw implications for how temporal distance relates to strategic considerations such as worker mobility, co-production of patents, and temporal boundaries of the firm.