The Impact of Remote Work on Firm’s Profitability: Optimizing Virtual Employee Productivity and Operational Costs

Abstract

Remote working offers a series of benefits not only to the employees individually but importantly to the companies as a whole. This research discusses how altering business strategy to accommodate remote working may boost the profitability of a firm. More specifically, we proposed the RW (Remote -Work) led growth hypothesis.  We derived this hypothesis from two perspectives: the VEP (Virtual employee productivity) and VOC (Cost-cutting through the virtual office).  We argued that employee productivity increases through factors such as work-life balance and employee engagement. Additionally, a firm can reduce operational expenses by adopting a work-from-home model. Although working remotely can increase the profitability of a firm, certain hidden expenses must be evaluated.  This research also discusses these challenges that may cause the degrowth of a firm. We recommend that firms should resolve these issues to make a robust growth strategy that can achieve growth in the remote working model.  The remote work trend is a recent phenomenon and there is not enough empirically workable dataset from different firms.  Some post-pandemic surveys suggest that companies enjoyed profits to some extent but these surveys lack rigorous empirical models.