Social Network Adoption in Businesses - Iloka Benneth Chiemelie, Vimala Tangavelu

1. INTRODUCTION

William et al (2008) stated that social networking involves creating and maintaining individual profiles in the internet sites, which will allow authors and other users to post contents, thus aid in creation of personal network. This definition was supported Mohmed and Azizah (2010), who defined it as the adoption of the internet to enable individuals to find other people of common interest and socialize with each other online.

Social networking has been around since the origin of internet itself, and since its inception, it has taken numerous forms such as bulletin board in the 1980s offered by Fido Net, CompuServe, Prodigy, and AOL, each of which developed forums for their members to interact with one another (Graham et al 2008).

The term interaction was changed in the 2000s with the birth of other giants such as Facebook, Hi5, Tagged, Linkedin, Myspace, Twitter etc., who redefined the idea of social network from friend interaction to company and customer interactions, company and company interaction and interaction of people with other people from other parts of the world.

Thus, this new edge has changed the ways by which Social Networking sites are adopted and have affected the business environment in both positive and negative ways. Such influence have resulted in companies adopting Facebook as a public relation tool, while some other companies are banning use of Facebook in their workplaces to ensure that productivity is increase within their workforce.

The figure (1) above, illustrates the huge adoption of Social Networking sites by number of unique visitors per annum to each of these sites. The effects of Social Networking in business will thus be discussed below.

1.0 EFFECTS OF SOCIAL NETWORKING IN BUSINESS

They are both positive and negative effects of Social Networking in businesses, and both will be considered in this investigation.

1.1 POSITIVE EFFECTS

1.1.1 Companies are gaining competitive advantages through Social Networking (Chase, 2011) – the new information age provides companies with the capabilities of integrating Social Networking the advantage over their competitors. Because Social Networking sites such as Facebook provides companies with a pool of customer they were not naturally used to as compared to the conventional system.

Marketing through their "Facebook Company Page," these companies will be able to reap the benefits of Social Networking by marketing their products in these pages, attracting new customers to like the pages and thus increasing both their revenue and customer relationship management system that will ensure improved repeat purchases and increased customer loyalty. For instance, if a company has 100,000 likes on Facebook, each contents posted on Facebook will be sent to these 100,000 people and this way they can promote new products for free as compared to companies who don't maintain presence in Social Networking sites.

1.1.2 Responding constructively to correct shortcomings (Chase, 2011) – business also adopt Social Networking sites such as Twitter and Facebook to respond to any shortcoming in their business offerings. This is currently a common paradigm in the shift of public relations, where businesses place official apologies to all sorts of criticism, shortcomings or poor services that customer complain about. In some circumstances, business can go up to a personal messaging system through e-mail marketing or mobile advertisement to send a personal apology to the customers that were affected.

1.1.3 Job recruitment (Chase, 2011) - with the advancement of technology, companies can now take the benefit of Social Networking to screen through huge pools of applicants as their future potential staffs. Compared to the traditional method of recruitment such as newspapers, the prices are expensive and the services is not guaranteed as companies and applicants must find a convenient time for each other to meet for an interview. However, Social Networking sites such as Skype and LinkedIn have changed the whole recruitment process whereby companies can screen through the pool of applicants in LinkedIn and invite potential applicants for an interview through Skype.

1.1.4 Innovation through customer interaction (Chase, 2011) - to businesses, Social Networking is more of creating a customer base where they can get to understand each customer's needs and find effective ways to provide such needs. Thus, Social Networking helps in improving the innovative system of companies are they can get an idea of what customer want and how these customer want it through their interactive forums. This strategy is commonly adopted by Google where customers are paid to create their needs and thus some of these needs are transformed into Google products. A good example is the Google Doodle competition that is held annually. Facebook also offers such innovative platform by paying customers who find any flaws in the Facebook system. This way they are able to ensure a more secured system, and virtually other businesses can apply such strategy.

1.1.5 Increase in business transparency (Chase, 2011) – one of the most outstanding benefits of Social Networking is its ability to increase business transparency. Compared to the ages when Social Networking was not in existence, business have full control of what they want customers to hear and know, but Social Networking have increased business transparency due to the rise of "Whistle Blowers". In this essence, businesses have no option but to maintain an open and integrated system in order to build more customer trust and loyalty. For instance, Social Networking pages of most businesses have links to their board of directors' interactive forums and customer can post any question to each board of director which the board of director can chose to answer privately or publicly.

1.2 NEGATIVE EFFECTS

1.2.1 Negatively affects work productivity – Nowadays, people spend hours with their friends browsing through profiles in Social Networking sites. Thus, this becomes a uncontrollable habit for people to visit these Social Networking sites to change their status, check friends updates and comment on other people's profiles. Thus, this will definitely divert the attention of employees out of their office work. A recent study conducted by Nucleus Research with 237 corporate employees showed 77% of Facebook users during office hours. In effect, it resulted in 1.5% drop in employee productivity for businesses that allow employee to use Facebook during office hours (Gaudin, 2009). Thus, it is inevitable to undermine the potential damage Social Networking sites can to the productive level of any business that adopts such sites within their system.

1.2.2 Damage to company's reputation – another area of concern to businesses is the potentials of Social Networking damaging the reputation of businesses by posting offensive contents. This is also a common occurrence in businesses today. For instance, if an employee is angry or having a bad day, he might be inclined to take his anger out online. And this sort of behavior has been known to damage online reputation of businesses. Breslin (2009) however, suggested that companies should hold the employee responsibility for such conducts if the posting are used to attack the company or harass co-workers.

Figure (2): 74% of employees say it is easy to damage company's reputation online

Source as Adapted from: Deloitte (2009)

The figure (2) above, further illustrates the whole idea of a hug threat Social Networking pose to company's image as employees themselves agree that it is possible for them to damage the reputation of their employer and company online anytime they fell like doing so.

1.2.3 Exposure to virus and hacking systems – another way companies can be influence by Social Networking is the exposure of their computer system to viruses and hacking system. Hackers often use a popular form of hacking known as "Phishing", which basically involves creating a replica of a website for customer to enter their details while thinking it was the actual website. Through this means, they can gain accesses to the company's Social Networking account and steal all potential customer information available in the company's database.

A good example of such case is the hacking of Sony's online PlayStation (BBC, 2011), where the system was taken offline in claims of maintenance and customers' information stolen during the period the system was offline. Thus, social networking poses a big threat companies that adopt such system, as it has the power to bankrupt unprotected company systems, while the cost of protection on the other hand is expensive.

1.2.4 Businesses can face lawsuit, bad publicity, and decreased employee morale – this is absolutely correct as Greenwald (2005) found that 55 percent of employees visit a Social Networking site at least once a week. This increases the possibility of company liability in sexual harassment, bullying, and threats of workplace violence, all potentially occurring during such visits. Sexual harassment occurs when an employee or supervisor and sometimes the employer makes continued, unwelcomed sexual approached, request for sexual favors, and other verbal or physical conduct of sexual nature, to another employee (normally under their control), against his or her wishes. Such behaviors can, and do, happen online. When such behaviors occur, it can lead to the company being sued, result in bad publicity of decreased the moral of victimized employees.

1.2.5 Exposure of company's competitive edges to competitors – before the advancement of internet technology and the Social Networking system, businesses were mainly based on trade secrets where every element of the company is considered a vital tool towards success and only few employees are exposed such trade secrets. However, the Social Networking system required that companies demonstrate how their products and services function, and in so doing they are also exposing their trade secret to their customers and potential new entrants. This has resulted in an increase number of imitations. For instance, social networking sites such as YouTube offer visual image of how to make anything you want, thus exposing company's trade secret as illustrated in figure (3) below.

2.0 TYPES AND FORMS OF BUSINESSES THAT CAN DEPLOY SOCIAL NETWORKING SITES TO ACHIEVE COMPETITIVE ADVANTAGE

Virtually, Social Networking sites can be deployed by all firms ranging from private to public and government sector as a way of increasing competitive advantage. This is possible due to the rapid increase and influence globalization has on the global market presently, and a company that is lacking in sales domestically and easily increases its profit by gaining online presence through Social Networking sites. However, Social Networking sites are mainly adopted as a source of competitive advantage by Small and Medium firms (Moses, 2010) and some of these firms are s discussed below.

2.1 Traditional Agencies looking to leap through Social Networking

Although the services offered by most agencies such as travel and insurance agencies can still be considered as being in its traditional state, it can still be said that integration of Social Networking into their business system is becoming a new trend that is competitively imperative. Since their business depends on the skills and knowledge of workers, access to information, and expertise as their primary source of competitive advantage, these industries are not looking to leverage social interactions into order to gather collective action on critical business interactions (Forrester, 2010).

For instance, these companies can adopt the Social Networking as a means of competitive advantage by using it to enhance their customer pool through interaction with customers from all over the world, and they can also increase their brand image as most customers will fell a seems of respect to have all their questions answered. Thus, by so doing, they will attract and attend to more customer than their competitors who don't adopt the Social Networking.

2.2 Government agencies looking to get social

The advancement of internet technology is the perfect solution governments have been looking for years as they seek a medium to get opinions from as much possible number of their citizens they can. Social Networking sites such as Facebook offer both political parties and government agencies the opportunity to interact with every single citizen of their state or country that is registered in the site. On the business part, these government agencies also increase their revenues by offering their services to more customers. A good example is MyEG.com.my a government forum for interacting and paying government related bills.

A good example of how these government agencies adopt Social Networking as a means of gaining competitive advantage can be demonstrated with the Tourism industry. Governments can increase the number of tourists visiting their country by adopting Social Networking websites as a means of interacting with foreigners and potential tourist. Through this means they can display all tourist attractions in their country as a means of persuading tourists to visit their country.

The figure (4) above, illustrated how government agencies are adopting Social Networking sites as a form of competitive advantage.

2.3 Professional service firms looking to leverage broader learning

In the world of professional services, knowledge is the biggest business differentiator. When knowledge is generated and lost, or trapped in inaccessible silos, it needs to recreated and often comes with high price and lower quality. Access point to content is critical when attempting to win or deliver business for the organization, and customers questions will become more difficult to answer without these access points (Forrester, 2010).

However, Social Networking sites offer them the stream of information they need at low cost and sometimes no cost as people are eager to share their ideas. The lack of boundary of the sites also ensures that they can tap into international business information in order to enhance their local performance.

3.0 BIBLIOGRAPHY

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