Acute proximity and the acquisition of specialised financial knowledge: evidence from sell-side equity research and the impact of the COVID-19 pandemic

The importance of acute physical proximity in the transfer of tacit knowledge is vigorously debated within economic geography. On the one hand, the characteristics of tacit knowledge favour face-to-face transfer within localised settings. On the other hand, it is argued that technological advances have reduced this territorial fix and have elevated other forms of relational proximity in importance. This paper contributes to this debate by drawing upon 70 interviews with equity research analysts, as highly specialised, tacit knowledge-intensive financial professionals. We investigate their need for acute proximity when acquiring tacit knowledge, referencing evidence provided by the COVID-19 restrictions on physical proximity. Examining lived experiences, before and during the pandemic, we find that specialised and complex knowledge is acquired by junior team members primarily through intense interactions enabled by office working. The work-from-home policies interrupted this learning mechanism and degraded their development. But as analysts gain expertise, they become more autonomous, less dependent on the office as a source of knowledge, and more reliant on temporary and remote relationships. This suggests that physical, relational and temporal proximity function as alternative mechanisms in the acquisition of knowledge and that their relative importance evolves as individual tacit knowledge is accumulated.