Social Media Adoption by Corporations: An Examination by Platform, Industry, Size, and Financial Performance

INTRODUCTION Today's marketplace is experiencing a torrent of online communications being transmitted through social media. Business managers are adapting to the reality that consumers are using social media platforms to spread information concerning companies and products. More than ever, companies are joining in on tweeting, posting, blogging, and generally using social networks to communicate with their consumers, employees, and other stakeholders. According to one study, over three-fourths of businesses are using social media to accomplish their business objectives (Alexander, 2011, September). Researchers predict that this trend of increasing social media adoption will continue (Barnes, 2010; Harris & Rae, 2009; Weinberg & Pehlivan, 2011). For some companies, social media may become the primary communication channel to connect with customers (Baird & Parasnis, 2011). While firms cannot control the information that consumers disseminate through social media, it is essential for businesses to have a presence in the social media arena. Many researchers support the idea that social media should be part of a firm's marketing mix and included in standard marketing management practices (Li & Bernoff, 2008; Mangold & Faulds, 2009). Many corporations are following this advice by increasingly using social media as a marketing tool. In 2010, 69% of Fortune 2000 companies were using social media (McCorkindale, 2010). A study of Inc. 500 and Fortune 500 companies that same year showed that social media was becoming a vital part of a company's marketing strategy. With the emergence of new social networking sites, this study found a shift in which social media platforms are preferred by businesses (Barnes, 2010). Public relations practitioners considered Facebook to be the most important new communications venue in 2010. Next in line were Twitter, LinkedIn, and YouTube (Wright & Hinson, 2010). In a study of Fortune 50 companies, most companies were utilizing social media, but not to its full extent. Some companies were not on Facebook, being uncertain how this platform fits into the marketing strategy. Companies were incorporating customer relationship management into their Web sites and blogs, but neglected the social networking sites (McCorkindale, 2010). Measuring the effectiveness or return on investment (ROI) of social media remains a challenge. There is not an industry standard for measuring the value of social media. Public relations experts are making recommendations on how to measure to the effectiveness of social media campaigns, but studies indicate that practitioners are not actively tracking social media ROI (Briones, Kucha, Liua, & Jinb, 2011; Fisher, 2009; Solis & Breakenridge, 2009; Taylor & Kent, 2010). Many marketers do not measure social media campaigns because they do not have the personnel or financial resources to track and analyze coverage. Some marketers say that social media has value by simply engaging the public and providing the company with an online presence (Fitch, 2009, p. 11). Many researchers agree that businesses are still in the process of determining the best way to utilize social media (Fitch, 2009; Stelzner, 2010; Taylor & Kent, 2010). Even though research suggests that large companies use mainstream social media channels, the adoption of social media is not universal. Further, there is little evidence about the extent to which social media has been adopted by business-to-business firms (Brennan & Croft, 2012). The purpose of this study is to empirically examine which social media platforms are being used by the Fortune 500 and to determine if there is a significant relationship between higher use of social media and superior financial performance. This study also examines differences in social media adoption by industry type and firm size. WHO'S USING SOCIAL MEDIA? Every day billions of people are engaged with social media, creating trillions of connections (Hansen, Shneiderman, & Smith, 2011). …

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