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 marketing iswidely believed to result in more frequent communication, and hence higher product de-velopment performance. However, the empirical evidence for the effect of co-location on com-munication frequency is problematic for two reasons: (1) the evidence often features either little contextual realism or doubtful internal validity, and (2) the analysis does not deal with the statistical problems typical of network data. Our study avoids the first problem by using se-quential network data collected from a quasi-experiment at an industrial company that re-grouped its R&D teams into a new facility. We avoid the second problem by using Wasserman and Iacobucci’s (1988) method for the statistical analysis of sequential network data. Our results show that communication among R&D teams was enhanced after co-locating these teams. Sur-prisingly, communication frequency between R&D and marketing was not affected by the in-creased physical distance. This may suggest that business procedures accompanying the re-location prevented a widening gap between R&D and marketing. Alternatively, it may indicate that the effect of co-location depends on the content and medium of the communication flows. (New Product Development; Co-location; R&D–Marketing Interface; Social Networks) 1