Impacts of Globalization on the Adoption of Remote Work: Evidence from a survey in Japan during the COVID-19 pandemic

Global activities, such as international trade and foreign direct investment (FDI), require firms not only to attain high productivity but also to skillfully manage distant communications across different institutions and cultural backgrounds. As an experience of cross-border coordination may facilitate the adoption of remote work, this paper examines whether a firm adopted remote work during the COVID-19 pandemic if the firm had experience in global activities before the pandemic. We combine our unique survey on the responses of Japanese firms to the COVID-19 pandemic with firm-level data derived from official statistics. Firms engaged in international trade or FDI before the pandemic tend to actively adopt remote work during the pandemic even after controlling for various firm characteristics. Even if we consider high productivity of globalized firms by utilizing the two-step estimation procedure, we find that this positive impact of globalization on remote work remains statistically significant. This suggests an important role of non-technological, possibly organizational, barriers to remote work.