Work-from-Home Policies and Firm’s Characteristics: A Cross-Sectional Analysis

Exploiting a novel and rich dataset (the Flex Index) of work-from-home (WFH) policies of North-American firms, we study which firm-level characteristics are associated with the increasingly popular shift in work patterns, beyond the firm’s industry-specific and operational nature. Our results show that a firm’s location in a state with richer social capital and sense of trust, a corporate culture more focussed on innovation, and larger cash holdings are positively linked to more generous WFH policies. Furthermore, we find that firms with higher equity evaluation are more inclined towards allowing work-from-home, especially when they rely more on human capital and innovation and when they are more financially constrained. Growth-driven and innovative firms choose WFH to signal their work culture and attract talent, as well as a cost-saving tool.