Cindy Novelo

Mrs. Lisa Ramirez

BADM 350
March 15, 2015

The Realization of Face-to-Face Knowledge Transferability- Travelling is Costly

In the article entitled, International business travel: an engine of

innovation? authors Nune Hovhannisyan and Wolfgang Keller, economics
professor at Loyola University and economics professor at the University of
Colorado respectively, explain the importance of business travel for the
successful transfer of technology and innovation across country borders.
Although technological advancements have facilitated the transfer of
blueprints and ideas through the internet and internet based video calls, the
authors state that it is not the same as discussing ideas face-to-face.
However, business travelling might aid in facilitating the transfer of
technology but it is important to have a plan and necessary resources to
realize it.
Hovhannisyan and Keller (2014) present the concept of prioritizing in
person meetings for the demonstration of technological innovation ideas in
person. They state that On average, a 10% increase in business travel leads
to an increase in patenting by about 0.2%, and inward business travel is
about one fourth as potent for innovation as domestic R&D spending
(Hovhannisyan & Keller, 2014). Their research focuses on firms that develop
the idea of a product in their home country but wish to assemble it in a
foreign country. Thus, the technological knowledge of the product has to be
sent to another country where it is bound to face potential changes through
other channels of communication which do not require a face-to-face
meeting, such as video conferencing.

The researchers support their theory by focusing on business travelers

coming out from the United States to 34 countries during the year 19932003 and the level of patenting in 37 industries. Transferring technological
ideas brings potential increase in patenting and learning growth in host
countries. They take into consideration various variables such as the level of
innovative ideas and reason for travel. The effect on innovation growth that
traveling imposes depends on the type of knowledge being carried across
countries as well. In the end, the results indicated that business traveling
from the U.S to other countries did have a great effect on patenting and
innovation in host countries as opposed to domestic spending on research
and development.
Hovhannisyan and Keller establish many well-supported points through
the research conducted. They analyzed that the home countries of many
international companies are unable to provide the adequate resources to be
fully efficient and successful, thus the reason they adapt a global strategy in
order to establish product operations in these markets. Companies may even
go to the extent of creating joint ventures and alliances with other foreign
companies in order to operate more efficiently (Wagoner, 2015). These types
of alliances do require meeting sessions which is where the transfer of
technological ideas take place.
Hovhannisyan and Keller strongly support their claim that face-to face
meetings do have a substantial effect on innovation. Meeting in person
allows for persons to receive the immediate reaction of the audience and
develop quick responses.. However, the power of business travelling can be
very costly to companies as opposed to conducting meeting sessions via
internet communication applications. Meeting in person involves a great
investment of time and money and it is dependent on the amount of persons
travelling. Research conducted in the United Kingdom has shown that due to
these reasons 60 per cent of businesses opt for conference calls over faceto-face meetings as the global nature of most industries push firms to opt

out of traditional meetings (Hinks, 2014). Recent economic downturn and

the rise in travelling costs have driven companies to cut down on their travel
budgets as well.
Although face-to-face meetings can be beneficial, technology has
matured to a point where web-conferencing delivers an almost fully lifelike
experience. It has proved to save companies a substantial amount of money
that can be invested in other resources or sectors of the company. Global esustainability initiative, a group of technology companies, and Climate group
have estimated that up to 20 percent of business travel worldwide could be
replaced by Web-based and conventional videoconferencing technology
(Lohr, 2008). A technology consulting firm, Accenture, has stated that
through virtual meetings they have been able to avoid 240 international
trips and 120 domestic flights in May alone, for an annual savings of millions
of dollars and countless hours of wearying travel for its workers (Lohr,
2008).
In conclusion, this study provides evidence that international business
travel can be an important channel of knowledge transfer. It provides the
opportunity to deliver ideas efficiently however, it is becoming very costly for
companies. As the days go by, technology is improving at a very alarming
rate right in front of our eyes, thus providing us with more life-like business
experiences. Even though web-conferencing seems more reasonable in time
and price, this does not mean that face-to-face meetings will become
obsolete. However, overtime the percentage of companies doing so can
continue reducing. Technological ideas can still be transferred and lead to
higher innovate growth and patenting.

References

Hinks, J. (2014). High costs and time constraints push 60% of companies to choose conference
calls over face-to-face meetings. Retrieved March 17, 2015 from
http://www.itproportal.com/2014/08/19/high-costs-and-time-constraints-push-60companies-choose-conference-calls-over-face-face-meetings/
Hovhannisyan, N. & Wolfgang, K. (2014). International business travel: an engine of
innovation?Retrieved March 16, 2015 from http://web.b.ebscohost.com/ehost
/detail/detail?vid=9&sid=3f5f773f-7244-4f46-8311 71f401110ce3%40
sessionmgr110&hid=116&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d
%3d#db=buh&AN=101114875
Lohr, S. (2008). As travel costs rise, more meetings go virtual. Retrieved March 19, 2015 from
http://www.nytimes.com/2008/07/22/technology/22meet.html?_r=0
Wagoner, D. (2015). Joint ventures and strategic alliances. Retrieved March 17, 2015 from
http://www.referenceforbusiness.com/management/Int-Loc/Joint-Ventures-and-StrategicAlliances.html