What a difference an hour makes in the world of international trade, suggests a recent study of the impact of travel times on the performance of foreign subsidiaries. For the study, whose findings appear in the Journal of International Business Studies, Paul Beamish of the Richard Ivey School of Business at the University of Western Ontario and Kevin Boeh of the Pacific Lutheran University School of Business isolated a sample of multinational business professionals and totalled all their time spent in transit, from overseas flights to taxi rides to waits at airport baggage carousels.
Then, the researchers compared these times to the business results of the executives’ firms. They found that subsidiaries that take longer to travel to and fro are less profitable, are more likely to be relocated and exhibit higher levels of management stress and turnover. For instance, the addition of one hour of travel time between HQ and foreign office increased the likelihood of relocation by 11%. The researchers also found that the most successful multinationals tend to choose foreign sites close to major airports.