Social media utilization in business-to-business relationships of technology industry firms

Highlights

• New understanding about use, potential and challenges of social media in B2Bs external use.

• Better understanding of special challenges and features of B2B-related social media.

• Discovered social media use between different company sizes and turnover similar.

• Found a number of external social media uses that were seen as important by B2Bs.

• Found statistically significant correlations between social media use and potential.

Abstract

Even today, it is a fairly common argument in business-to-business companies, especially in traditional industrial companies, that social media is only useful in the business-to-consumer sector. The perceived challenges, opportunities and social media use cases in business-to-business sector have received little attention in the literature. Therefore, this paper focuses on bridging this gap with a survey of social media use cases, opportunities and challenges in industrial business-to-business companies. The study also examines the essential differences between business-to-consumer and business-to-business in these respects. The paper starts by defining social media and Web 2.0, and then characterizes social media in business, and social media in business-to-business. Finally, we present and analyze the results of our empirical survey of 125 business-to-business companies in the Finnish technology industry sector. This paper suggests that there is a significant gap between the perceived potential of social media and social media use with customers and partners in business-to-business companies, and identifies potentially effective ways to reduce the gap.

Introduction

Social media utilization in enterprises is a current and popular research topic. Despite the popularity of the topic, social media research is limited, and focuses largely on the consumer in a business-to-consumer (B2C) domain (Michaelidou, Siamagka, & Christodoulides, 2011). Even though anecdotal evidence about the importance of social media for B2B companies exist (e.g., Shih, 2009, Safko, 2010, Wollan and Smith, 2010, Barlow and Thomas, 2011, Hinchcliffe and Kim, 2012), the interest in and adoption of social media by B2B organizations has been slow compared to B2C organizations (Michaelidou et al., 2011). Both the theoretical and empirical research is quite fragmented and the empirical research is mainly based on individual, often not too systematically andanalytically reported cases. Furthermore, the use of social media in companies that operate wholly in business-to-business sector and develop products for other companies is not well understood. The aim of this research is to illustrate both the current state and potential of social media use and challenges as perceived by Finnish industrial companies that operate wholly in business-to-business markets.

Despite the relative novelty of social media in business and lack of academic research, social media has already been demonstrated to open many new opportunities for the B2B sector due to its features that can enhance communication, interaction, learning and collaboration (see e.g., Jahn and Nielsen, 2011, García-Peñalvo et al., 2012), which can bring significant benefits to organizations. For instance, according to a study by McKinsey consultants (Bughin, Manyika, & Miller, 2009) “69 percent of respondents report that their companies have gained measurable business benefits, including more innovative products and services, more effective marketing, better access to knowledge, lower cost of doing business, and higher revenues.” According to a recent McKinsey study (McKinsey,2013) the social media benefits from customer use include for example average improvement of 20% in increasing number of successful innovations, 20% in reducing time to market, and 15% increase in revenue, and average improvement in partner use include e.g., 30% in increasing speed to access external knowledge and experts, 20% in increasing number of successful innovations, reducing time to market, reducing product development costs and in increasing revenue.

Further, social media can be utilized to identify new business opportunities and new product ideas, to deepen relationships with customers and to enhance collaboration not only inside but also between companies and other parties (Barker, 2008, Lehtimäki et al., 2009, Hoffman and Fodor, 2010, Gillin and Schwartzman, 2011).

On the basis of available literature, it can be presumed that the challenges and useful approaches of social media in B2B sector are at least somewhat different from those of business-to-consumer (B2C) companies (Lehtimäki et al., 2009, Gillin and Schwartzman, 2011, Geehan, 2011). Even though social media challenges and approaches may be rather similar in internal use between B2B and B2C companies, especially the external use with customers and partners has supposedly important differences due to many special characteristics of B2B markets and products, and should be studied separately. It has been a relatively common assumption (e.g., Eskelinen, 2009, Lehtimäki et al., 2009) that it is much more difficult to utilize social media in business-to-business relationships for instance because of the many significant differences in thebusiness-to-business products, markets and product development. Concerning the above reasoning, thus, we find a clear need for empirical research of social media in the specific context of companies that operate wholly in B2B markets, even if some practices might be transferrable from B2C markets to B2B markets. Although B2B companies have been studied in previous survey studies (Helfenstein and Penttilä, 2008, Bughin et al., 2009, Coleman, 2009, Kärkkäinen et al., 2013, McKinsey, 2013) of social media in enterprises, the previous studies do not either specify or address business-to-business relationships in companies that operate wholly in B2B markets.