Advantages and Disadvantages of Using Social Networks in Business

This article discusses the advantages and disadvantages of using social networks in business. It covers topics such as marketing, recruitment, customer service, and feedback, as well as the negative aspects of social media usage such as poor execution, negative publicity, and hacking.

Running head: ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN BUSINESS
ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN BUSINESS
Name of the student
Name of the university
Author note

1ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
Table of Contents
4. Literature review................................................................................................................................2
4.1 Explaining social networks..........................................................................................................2
4.2 Significance and relevance of social networks in business.........................................................3
4.3 Advantages of using social networks in business........................................................................5
4.4 Disadvantages of using social networks in business...................................................................7
References:............................................................................................................................................9

2ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
4. Literature review
Introduction
Social networks have both negative and positive effects on business. On the one hand, it has
given a boost to the customer-business interactions and relationships while on the other, it has
increased risks. These risks include bullying and harassment amongst others. This section would
perform a review of literature to analyze the arguments for and against the use of social networks in
business.
4.1 Explaining social networks
The simple definition of social networking is the use of the social media sites to connect with
friends, families and relatives. While the social networks provide great opportunities for people to
make new friends and connect with old friends, in business, it helps market products and services.
The traditional definition of social networks in business is however, different from its present
connotation. Wang and Wang (2013) in fact state that the social networking, which referred to the
“practice of expanding one’s business or social contacts”, has received greater impetus through the
social networks used today. The social networks that include social media sites like Twitter,
Facebook, LinkedIn and Instagram amongst others help business persons connect with individuals
and expand their ‘social networks’. The traditional definition of social network has been given a
boost by the creators of social media. The authors explain that the process of social networking that
included making connections by inviting people is now done on a wider and much bigger platform.
Businesspersons can now connect with people and have both social and formal interactions and
exchanges. While Facebook is a platform to have social interactions, LinkedIn is a business network
allowing for more business conversations.

3ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
The explanation of social networks further extends to the views expressed by the founders of
social media sites and applications. Mark Zuckerberg, the founder of Facebook, in his first television
interview back in 2004, explained Facebook as “an online directory that connects people through
universities and colleges through their social networks there” (Cnbc.com 2018). It is clear from his
explanation that the social media sites have taken social networking to a new level. Reid Hoffman,
cofounder of LinkedIn, had similar explanation regarding the social site except that he defined it as
the “only platform where smart work and not hard work pays off” (Youtube.com 2018). Social
networks thus can also be defined as ways to reduce to the excessive burden on businesses and make
work easy and effective. Jack Dorsey, one of the founders of the micro-blogging site Twitter
explains social networks indirectly by distinguishing his site from other social networks. Twitter,
explains Dorsey, unlike other social sites, provides real time news on events that happen around the
globe. Social networks involve inviting people, sending friend requests and connecting with them. In
Twitter, people could follow someone, may be some celebrities even.
According to Vojtovic, Ditkus and Navickas (2017), “the internet reduces many distance-
related frictions” causing problem for businesses, but it does not assist in strengthening the
relationship between employees and employers or customers and businesses. The following sections
shall further elaborate this discussion on the significance and relevance of social networking in
business.
4.2 Significance and relevance of social networks in business
In the world of business, any innovation and new idea is examined closely and checked
whether it would benefit the business or not. The contemporary social networks were also examined
prior to integrating those in business. It was found that the changing business landscape had the need
for such an innovation. The importance of social networks in business could be judged from the

4ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
level of its use in large corporations. Many scholars opine that the social networks are extremely
important for businesses especially in the age of globalization when businesses are rapidly
integrating. Chua and Banerjee (2013) opine that the social network use has leveraged businesses
greatly providing them with assistance to connect with customers across countries. Malthouse et al.
(2013) however, view that using social networks in business is important but businesses should
know the best way to use it. They confide that a single wrong move in the social media could cost
heavy for the businesses. The significance of using social networks in business could also be
observed from the number of people using the social sites today. In the past, businesses that had
more advertisements on television and newspapers used to have more profits and revenues as it they
could reach out to more customers. However, it required investment in a much higher scale and that
is the reason small businesses could not profit back then. The social networks have provided a boon
to small businesses which have used to the greatest extent in the past few years. According to a study
conducted by Taneja and Toombs (2014), more than 60 percent small business owners have utilized
social media tools in their business. Apart from that, the study also found that 67 percent of the self-
employed also preferred the social networks to other platforms to boost their startups.
These facts reveal the significance of social networks in business. However, many over the
past years have raised questions regarding its relevance in business. Relevance is similar to
importance but it has some different aspects. Social networks are important for and in business but
its relevance could be measured by the kind and place of business one does. To give an instance,
businesses that want to reach out to people in areas where social networking has not emerged as in
other areas, then using social networks would be futile. Very little research however, has been done
in this area because hardly any business is there where social networking is not relevant. The reason

5ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
is the remarkably low investment business has to make to promote its brand, its product or services.
This exemplifies the benefits social networks present to the business.
4.3 Advantages of using social networks in business
Scholars over the years have pointed out numerous benefits of using social networks in
businesses. Numerous studies and researches have been performed over the years identifying the
advantages of social media usage in business.
Marketing is one of the most important departments that benefit from the use of social
networks in business. Social media, as Hudson and Thal (2013) have observed, marketing has been
one of the best advantages of social networks for businesses. The authors mention the pages created
on social media platforms like Facebook to “keep customers on the loop about important brand
updates” are fascinating examples of social networking benefits. Apart from that, managers could
also create interesting videos and develop a series that could be uploaded on YouTube, the popular
video uploading and viewing site. The Blendtec Company using the site for uploading a series of
videos and receiving over 150 million views in 2011 is an apt example of social media usage
advantage in business (Teixeira 2013). Other examples of brands using social networks for
marketing abound in the business world. One prominent example, as listed by Hansson, Wrangmo
and Solberg Søilen (2013) is the fashion brand H&M using social media to market its new and
upcoming collections. The company predominantly uses the Twitter platform to let its consumers
watch and read interviews of designers and backstage pictures of new arrivals. Gamboa and
Gonçalves (2014) however argue, “Most firms still do not see social networks as a vehicle for
cultivating and winning customer loyalty, but rather as a resource for creating brand awareness”.

6ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
Previous studies have found recruitment to be the second biggest advantage of using social
networks in business. Inception of sites like LinkedIn has greatly helped companies to recruit
talented professionals for their various posts. Gibbs, MacDonald and MacKay (2015) have found in
the research on North American hotels that more than half of the hotels utilize social networks for
conducting Human Resource activities such as recruitment. Their research also reveals that social
networking usage in HR activities is focused more on recruitment than even in marketing.
Melanthiou, Pavlou and Constantinou (2015) on the other hand conducted a study on the use of
social networks as a tool of e-recruitment. The authors focused on three important elements that
guided their research. These included, attracting and screening applicants through social media
usage; legal repercussion of social network e-recruitment and screening; the “possibility of using e-
recruitment as the main hiring strategy”. The findings of their research revealed that using social
networks for recruitment had great benefits as it reduced time and money needed for the recruitment
process.
Social networks also prove advantageous in terms of customer service and feedbacks in
business, as many scholars have found. Customer feedback is probably one of the best features that
businesses have been benefitted with by using social networks. Parveen, Jaafar and Ainin (2015)
while studying the performance of organizations in Malaysia, found that social network usage has
had a great impact on the performances. The findings of their study revealed that social media has
huge influence of organizational performance in terms of “forming customer relations and customer
service activities” (Parveen, Jaafar and Ainin 2015). The organizations that used social networks for
customer services and feedback witnessed an enhancement in their performance due to better
accessibility to information and cost reduction.

7ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
4.4 Disadvantages of using social networks in business
While social network usage has many advantages in business, it has several disadvantages as
well. Scholarly researches on the disadvantages of social media have mostly focused on the usage of
social networks to communicate within business organizations. Leonardi, Huysman and Steinfield
(2013) have focused their study on social media as communication tools used in work organizations.
The findings of their study indicated that social media usage both enables and constrains
communication activities.
Moorhead et al. (2013) did a research on the absence or lack face-to-face communication
skills in business organizations due to growing use of social networks in business. Their research
chiefly focused on health organizations where they found several restrictions of social media in
health communication including lack of reliability, privacy and confidentiality. They stated that
these lacks occur due to the absence of face-to-face communications that result in misinterpretation
and poor quality.
Braojos-Gomez et al. (2015) on the other hand found that poor execution of social
networking in business is the biggest disadvantage. According to the authors, many businesses fail to
acknowledge the need to monitor the posts in social networks on daily basis, which results in lost
opportunities and bad reputation.
Further, scholars have also highlighted the negative publicity as a disadvantage that
businesses have to face using social networking sites. They argue that since the social media
platform is open to all, customers are free to give their opinions and others view those as well. This
spreads negativity about the business making it suffer. Gensler et al. (2013) state that the wrong
usage of social networks in business exerts a negative influence on brand management. They argue,

8ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
“Customers are becoming pivotal authors of brand stories and hence, firms need to pay attention to
such customer-generated brand stories” (Gensler et al. 2013).
Research studies in the last decade suggest that hacking is one of the major issues that
businesses face using social media. Hackers around the globe find access to the social media pages
of big companies and put false information. This puts the business in a vulnerable position from
where it becomes difficult to come back. Rival companies also employ hackers to steal confidential
information of the company to go ahead in competition. These give rise to unethical practices in
business.
Previous studies, as could be seen from the review, have encompassed nearly all the issues
regarding social networks usage in business. However, these studies have failed to consider one
important issue, which is the demographical aspect of social media use. When businesses use social
networks, they mostly target the age demographics of their consumers. It is important to note that in
the contemporary world, bulk of social media users fall under 18-35 years age category. Therefore,
those above 40 to 50 years of age do not consider using social media. To companies that focus on
products that target this set of customers may face trouble reaching them through the social media.

9ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
References:
Braojos-Gomez, J., Benitez-Amado, J. and Llorens-Montes, F.J., 2015. How do small firms learn to
develop a social media competence?. International Journal of Information Management, 35(4),
pp.443-458.
Chua, A.Y. and Banerjee, S., 2013. Customer knowledge management via social media: the case of
Starbucks. Journal of Knowledge Management, 17(2), pp.237-249.
Cnbc.com 2018. Here's how 19-year-old Mark Zuckerberg described 'The Facebook' in his first TV
interview. [online] CNBC. Available at: https://www.cnbc.com/2018/04/16/how-mark-zuckerberg-
described-the-facebook-in-his-first-tv-interview.html [Accessed 30 Aug. 2018].
Gamboa, A.M. and Gonçalves, H.M., 2014. Customer loyalty through social networks: Lessons from
Zara on Facebook. Business Horizons, 57(6), pp.709-717.
Gensler, S., Völckner, F., Liu-Thompkins, Y. and Wiertz, C., 2013. Managing brands in the social
media environment. Journal of interactive marketing, 27(4), pp.242-256.
Gibbs, C., MacDonald, F. and MacKay, K., 2015. Social media usage in hotel human resources:
recruitment, hiring and communication. International Journal of Contemporary Hospitality
Management, 27(2), pp.170-184.
Hansson, L., Wrangmo, A. and Solberg Søilen, K., 2013. Optimal ways for companies to use
Facebook as a marketing channel. Journal of Information, Communication and Ethics in Society,
11(2), pp.112-126.
Hudson, S. and Thal, K., 2013. The impact of social media on the consumer decision process:
Implications for tourism marketing. Journal of Travel & Tourism Marketing, 30(1-2), pp.156-160.

10ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
Leonardi, P.M., Huysman, M. and Steinfield, C., 2013. Enterprise social media: Definition, history,
and prospects for the study of social technologies in organizations. Journal of Computer-Mediated
Communication, 19(1), pp.1-19.
Malthouse, E.C., Haenlein, M., Skiera, B., Wege, E. and Zhang, M., 2013. Managing customer
relationships in the social media era: Introducing the social CRM house. Journal of Interactive
Marketing, 27(4), pp.270-280.
Melanthiou, Y., Pavlou, F. and Constantinou, E., 2015. The use of social network sites as an e-
recruitment tool. Journal of Transnational Management, 20(1), pp.31-49.
Moorhead, S.A., Hazlett, D.E., Harrison, L., Carroll, J.K., Irwin, A. and Hoving, C., 2013. A new
dimension of health care: systematic review of the uses, benefits, and limitations of social media for
health communication. Journal of medical Internet research, 15(4).
Parveen, F., Jaafar, N.I. and Ainin, S., 2015. Social media usage and organizational performance:
Reflections of Malaysian social media managers. Telematics and Informatics, 32(1), pp.67-78.
Taneja, S. and Toombs, L., 2014. Putting a face on small businesses: Visibility, viability, and
sustainability the impact of social media on small business marketing. Academy of marketing studies
journal, 18(1), p.249.
Teixeira, T., 2013. How to profit from “lean advertising”. Harvard Business Review, 91(6), pp.23-
25.
Vojtovic, S., Ditkus, D. and Navickas, V., 2017. Real estate investment and financing:
Crowdfunding. In Trends and Issues in Interdisciplinary Behavior and Social Science (pp. 37-40).
CRC Press.

11ADVANTAGES AND DISADVANTAGES OF USING SOCIAL NETWORKS IN
BUSINESS
Wang, E.S.T. and Wang, M.C.H., 2013. Social support and social interaction ties on Internet
addiction: Integrating online and offline contexts. Cyberpsychology, Behavior, and Social
Networking, 16(11), pp.843-849.
Youtube.com 2018. Reid Hoffman on Social Networking & Edmodo. [online] YouTube. Available
at: https://www.youtube.com/watch?v=ymx_MI5mPPE [Accessed 30 Aug. 2018].