Is telecommuting cheaper than travel? An examination of interaction costs in a business setting

Ilan Salomon*, Helen Nancy Schneider, Joseph Schofer

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

This paper presents an analysis of telecommunications and travel costs for typical business meetings. It is contribution to the debate on the substitutability of telecommunications for travel. An underlying assumption which supports the substitution hypothesis is that the cost of traversing distance through the use of telecommunication is lower than the cost of travelling. This paper addresses the relative cost of telecommunications and travel in conducting interactions. Three factors are assumed to determine these costs: distance, duration of interaction and number of participants. The analysis assumes that cost alone affects choice, and ignores other communication qualities. The relationship between telecommunication and travel costs was tested quantitatively through a case study of typical business meetings in the U.S., based on data from 1988. The results show that travel costs are lower than telecommunication costs for shorter distances, and that the relationship between telecommunications and travel costs differs substantially as a function of number of participants and meeting duration. Because of ongoing rapid changes in the costs of both of these interaction modes, the complex competition between them will continue. The implications of the findings for location decisions and policy-making are discussed.

Original languageEnglish (US)
Pages (from-to)291-318
Number of pages28
JournalTransportation
Volume18
Issue number4
DOIs
StatePublished - Dec 1 1991

Keywords

  • Interaction costs
  • business setting
  • substitution
  • teleconference
  • telephone
  • video conference

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Development
  • Transportation

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