Impacts of Inter-firm Transaction and Ownership Relationships on the Adoption of Remote Work: Evidence from a survey in Japan during the COVID-19 pandemic

The adoption of remote work requires coordination across firm boundaries. While the COVID-19 pandemic pressures firms to introduce remote work, firms differ in their responses. This paper focuses on inter-firm transaction networks and ownership linkages, as the costs of introducing remote work are likely to vary depending on the firms’ experiences in coordination with other firms. We combine our unique survey on the responses of Japanese firms to the COVID-19 pandemic with Japanese inter-firm transaction relationship data and with world-wide ownership data. We find that firms that had been sourcing their inputs from many suppliers before the pandemic, on average, more frequently adopt remote work during the pandemic, even after controlling for firm size. Firms owned by other firms and firms that own shares of other firms tend to introduce remote work. No such relationship was detected before the pandemic. We also find that the operation of a manufacturing plant makes the firm inactive in adopting remote work.