The debate concerning Brexit, whether Britain should leave the EU, has well and truly begun. The Financial Times has published a short debate over the issue, between the Labour politican Peter Mandelson and Conservative MEP Daniel Hannan. During the debate, Daniel Hannan, arguing for Brexit, says that geographical proximity has never mattered less. There is, therefore, no reason why Britain should prioritise trading with those closest i.e. Europe; instead Britain should focus on trading with the rest of the world. With open global markets, rapid transportation and high speed communications, geography simply doesn’t matter that much anymore.
It might be true that geographical proximity has never mattered less but it is not the case that geographical proximity is unimportant. A recent study on ‘The Impact of Venture Capital Monitoring‘ shows just this. The authors show that venture capitalists’ “on-site involvement with their portfolio companies leads to an increase in both innovation and the likelihood of a successful exit”. Specifically, direct flights increase the interaction that venture capitalists have with their portfolio companies and management, helping them to better understand the companies’ activities.
So regular face to face communication between venture capitalists and their portfolio companies led to increased innovation. In an earlier blog we focused on cluster initiatives to show the link between face to face communication and innovation. The important point there, as in the case of the venture capitalists, is that the innovation is a result of the greater communication possible in face to face encounters.
The fact that direct flights increase interaction is clearly because of the reduced time it takes. It is also the case that the closer two countries are, the shorter the flight between the two. Therefore, geographical proximity is not irrelevant.
While open global markets, rapid transportation and high speed communications mean that it is easy to do business with anyone in the world, it is not true that physical distance is irrelevant or unimportant. Distance is still important because face to face communication is so important. Physical encounters lead to greater connectedness; high levels of directness lead to good quality communication. Whatever one’s views about Brexit, physical proximity still matters, because physical proximity affects relational proximity.
Joshua Hemmings works for the Relational Thinking Network in marketing and communications.
_cropped.svg: Ssolbergjderivative work: Dbachmann (talk) – Blank_map_of_Europe_(polar_stereographic_projection)
_cropped.svg, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=14871393