Using a mixed-methods approach, we develop the concept of perceived proximity, which is created through communication, shared identity, and the symbolic aspects thereof. Building on previous theoretical work, we create and validate measures of perceived proximity. Then, we compare how perceived proximity and objective distance relate to relationship quality for collocated and geographically dispersed work colleagues. Our results show that perceived proximity (i.e., a cognitive and affective sense of relational closeness) and not physical proximity (i.e., geographic closeness measured in miles or kilometers) affects relationship quality in an international survey of more than 600 people and 1,300 dyadic work relationships. We also find that people’s perceptions of proximity mediate the effects of communication and identification on relationship quality. Using qualitative data (2,289 comments from 1,188 respondents coded into 9 themes), we explore the symbolic meaning of perceived proximity. We show how people can form strong bonds despite being separated by large distances and continue to shift the emphasis from information systems as “pipes” or channels to information systems as vehicles for conveying shared meaning and symbolic value. Our findings have important implications for scholars, managers, systems designers, and members of virtual teams, teleworkers, and other geographically dispersed contexts.

According to the consensus view in growth and development economics, cross country differences in per-capita income largely reflect differences in countries’ total factor productivity. We argue that this view has powerful implications for patterns of capital flows: everything else equal, countries with faster productivity growth should invest more, and attract more foreign capital. We then show that the pattern of net capital flows across developing countries is not consistent with this prediction. If anything, capital seems to flow more to countries that invest and grow less. We argue that this result —which we call the allocation puzzle — constitutes an important challenge for

Policy-makers often justify their choice of fixed exchange rate regimes as a shelter against nonfundamental influences in the foreign exchange market. This paper proposes a framework, based on endogenous noise trading, which makes sense of the policy-makers' view. We show that as a result of multiple equilibria, the model violates Mundell's “Incompatible Trinity:” under some conditions, it is possible to reduce the volatility of the exchange rate without any sacrifice in terms of monetary autonomy. We provide empirical evidence supportive of the existence of a nonfundamental channel in the link between exchange rate regimes and exchange rate volatility. If … markets come to believe exchange rate stability is not itself a significant policy objective, we should not be surprised that snowballing cumulative movements can develop that appear widely out of keeping with current balance-of-payments prospects or domestic price movements. At that point, freely floating exchange rates, instead of delivering on the promise of money autonomy for domestic monetary or other policies, can greatly complicate domestic economic management [Paul Volcker 1978–79, p. 9].