Impacts of Social Media on Business Value and Performance

Impacts of Social Media on Business Value and Performance

Valentina Della Corte, Krishnan Umachandran, Fabiana Sepe, Giuliana Nevola, Amuthalakshmi Periasamy
DOI: 10.4018/978-1-7998-1947-9.ch006
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The aim of this chapter is to study the main impacts of social media on business value and performance. ICT can be a resource in resource-based perspective, becoming itself a possible source of competitive advantage (in terms of performance and value creation). A proactively tailored organization strategy can drive the people, processes, and systems, harmoniously pulling all the stakeholders in unison. Social media can bring in the commitment of the workforce and ensure involved, flexible, innovative working practices, improving the quality of work. When properly used, they can build organizations to more flexible structures, sharing services, competitiveness and interdependencies. The business processes can be harmonized by standard operating procedures, automated systems of agreed quality, prime up the competency development and facilitate clear career paths. Refining suppleness to work in tune to market demands and supplementing employee satisfaction can foster the development of individual accountability leading to leadership evolution.
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In the last years, Internet and web services have contributed to improve business performance. Internet offers the opportunity to create social spaces where individuals can communicate and share information and knowledge through the social media (SM). Properly, the use of social exploded into its most decisive phase in 2004 with the arrival of Web 2.0. More specifically, this term was coined by Dale Dougherty of US publishing company O’Reilly Media and it was first used for the highly influential Web 2.0 conference run by the company in 2004 (Brown, 2009).

The term SM has a variety of definitions. Boyd & Ellison (2007) conceive the SM as “web-based services that allow individuals to build a public or semi-public profile in a social space where there are other users with whom they share a connection, and their list of connections and those made by others within the system”. According to Kaplan & Haenlein (2010), SM refers to a group of applications based on the on-line connection of Internet networks where users can create and exchange contents. Berthon, Pitt, Plangger, and Shapiro (2012), consider SM as a series of both hardware and software technological innovations (Web 2.0) that facilitate creative online users' in expensive content creation, interaction, and interoperability.

SM, thanks to the widespread coverage of the web, facilitates and accelerates conversations and exchange of information with respect to traditional media, which offers “read-only” contents to consumers, not allowing them to be active part of the promotional process.

The use of these channels encourages the online learning, the sharing information and cooperation. SM allows users to communicate and share contents without any need to be physically present. Specifically, the use of SM positively impacts on the internal organization and on the relationship between the company and its external scenario, as well. As for the stakeholders, a pivotal role is played by consumers involved in a process of value co-creation. In particular, the increasingly widespread of digital technologies, such as SM, have changed the consumer–producer relationship dramatically. The main reason is strictly tied to the fact that these technologies have empowered consumers to create, collaborate, produce and contribute to commercialization by considerably lowering the cost of value co-creation (Rayna, 2010). In the actual context of the sharing economy, the boundaries between consumers and firms have become very blurred (Lan, Ma, Zhu, Mangalagiu, & Thornton, 2017).

Companies are increasingly using SM for organizational purposes, such as gaining competitive advantage (Grafström & Falkman, 2017), and this type of use is attracting increasing numbers of leaders (Abrahamson, 1991; see also Spicer, 2018).

Companies use SM to increase their brand image and awareness. SM influences company brand by word of mouth that attracts consumers and influences their purchase decisions (Nisar & Whitehead, 2016).

SM favours firms to obtain information and to acquire new Technology Knowledge competence. Through SM, managers and employees communicate faster and they learn deeply (Ellison, Duggan, Ellison, Lampe, Lenhart, & Madden, 2015). Developing technology competencies favours the creation of a virtual learning community that improves firm performances. Technology knowledge can be improved by increasing the connection among firm stakeholders, as suppliers, customers, distributors and logistic providers. Huge connection enables firms to acquire new knowledge, innovative opportunities and to gain a competitive advantage.

In conclusion, SM is considered as resource used by a company in combination with other resources to develop a set of capabilities, processes and strategies to create value. SM affects business performance on innovation process and production, knowledge management process, communication and promotion, customer relationship management, brand awareness, sales growth, e-commerce and social commerce (Rapp, Beitelspacher, Grewal, & Hughes, 2013)

Key Terms in this Chapter

User Generated Content: Any type of content, such as text, video, pictures, blog, Wikipedia content, that is created by a user and promoted on Internet through Social Media. Through SM there is a shift from content owner to content contribution.

Social media: A set of web technologies aimed at favouring the connection within companies and with partners. It favours the knowledge management process and customer relation management.

Knowledge Sharing: Knowledge is the result of a sharing process. It is produced by users that distribute and exchange content (e.g. open platform as Wikipedia, blogs, WordPress).

Social Consumer Behaviour: Set of activities related no only to the transaction but related to the motivations that lead people to consume a specific brand.

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