Social networking site for social responsibility project

Case 18

Social Networking and Social Responsibility

The Beginnings of Social Networking

Early social- networking web sites started in the form of generalized online communities such as The WELL (1985), Theglobe .com (1994), Geocities (1994)

and Tripod .com (1995). The goal of these online communities was bringing people together to interact in virtual “chat rooms” to share personal information and ideas, which served as the start of the “blogging” phenomenon. These sites included Classmates .com (1995), focusing on ties with former peers, and SixDegrees .com (1997), which focused on indirect ties. The sites had the capabilities of creating user profi les; sending messages to users stored on a “friends list”; and searching for other members with similar interests in their profiles. Although some of these features predated these web sites, this was the first time such functions were available in one package.

Between 2002 and 2004, four social networking sites (SNSs) emerged as

the most pop u lar form of these sites in the world: Friendster in 2002 (which

Google tried to acquire in 2003), MySpace and LinkedIn a year later, and fi nally,

Bebo. By 2005, MySpace had emerged as the largest such site and was reportedly

getting more page views than Google. Facebook emerged in 2004 and grew

exponentially. In 2005, Facebook opened to the non- U.S. college community and

created externally developed applications that enabled graphing of a user’s own

social network and the capability of linking social networks and networking.

A Growing Global Trend

Social networking continues to be one of the fastest- growing global trends. According to Pew Research Center’s Internet and American Life Project, “the number of those using social networking sites has nearly doubled since 2008 and

the population of SNS users has gotten older.” Fifty- nine percent of Internet users

claim to use at least one SNS— 92% of SNS users use Facebook, 29% use

MySpace, 18% use LinkedIn, and 13% use Twitter. Most people in the world

today have either heard of or actively use Facebook, Twitter, MySpace, LinkedIn,

or one of the many other SNSs available to the public. Common uses for social

networking include: staying connected with fellow users, following world news

and gossip, and sharing opinions and life experiences. SNSs, however, are being

used for commercial purposes often unknown to the user.

Social Networking in the Corporate World

Businesses gravitated toward social networking as an innovative marketing

strategy around March 2005 when Yahoo launched Yahoo! 360°. Various SNSs

have since sprung up catering to different languages and countries. It is estimated

that there are now over 200 SNSs using these existing and emerging social networking technologies. This number does not include the niche social networks

made possible by ser vices such as Ning. Twitter, launched in 2006, has eclipsed many other social network ser vices, even though it lacks some features that were considered essential aspects of a SNS.

Social networking allows businesses to place their company information

within an online network to build contacts and relationships with individuals that

share the same interests and insights. It creates an outlet for interactive communication using online communities. The tools available also allow businesses to reach millions of people in a short amount of time, usually with no cost attached. Companies have found that SNSs such as Facebook and Twitter are great ways to build their brand image. According to Jody Nimetz, author of Marketing Jive, there are fi ve major uses for businesses and social media: 1) to create brand awareness; 2) as an online reputation management tool; 3) for recruiting; 4) to learn about new technologies and competitors; and 5) as a lead- generation tool to intercept potential prospects. These companies are able to drive traffic to their own online sites, while encouraging their consumers and clients to have discussions on how to improve or change products or ser vices.

Companies and advertising firms use the sites to analyze consumer trends,

opinions, and influence consumers to view their products favorably. Is this practice

of tracking user information without their knowledge ethical? Some companies

might state that they are simply trying to leverage social networking to create

a creative work environment for their employees and offer a better product to

consumers. IBM is a company that uses social networking in both ways. The

ethical implications of social networking and consumers as influencers are much

clearer when we take a closer look at how a company like IBM uses social networking in its daily operations.

Social Networking at IBM

International Business Machines, or IBM, is one of the most notable companies

operating in the world today. According to their company profi le, IBM was

founded in 1910 and currently employs over 440,885 full- time employees in 200

countries tasked with manufacturing and selling computer hardware and software,

as well as infrastructure, hosting, and consulting ser vices in areas ranging

from mainframe computers to nanotechnology. The company’s fi ve segments of

operations include: Global Technology Ser vices, Global Business Ser vices,

Software, Systems and Technology, and Global Financing. IBM, as a world leader

in computers and computer software, has a unique method for understanding and

applying new technologies for solving technical business problems and leveraging

new technologies in the technology sector. The use of social media and

social networking is no different. Companies continue to fi nd ways to use social

media sites like Facebook and Twitter to increase their bottom line. At IBM, social

networking has already been implemented to generate new ideas, increase employee morale, monitor consumer trends, and increase visibility and sales for the

company.

Social networking at IBM is publicly advertised as a creative and innovative

way to keep employees connected and keep the company in tune with consumer

demands. The framework for internal social networking among IBM employees is an employee- edited directory known as “Blue Pages.” This directory is used over 6 million times a day by 400,000 IBM employees to access information on

other employees and send them instant messages. Employees at IBM have control

over their profi les and can add photos, resumes, or other personal information

to foster a sense of community with other IBM employees. The company

points to the sharing of ideas or opinions on new technologies and developments

as one of the main advantages of such a site.

IBM also offers an internal network space where employees can post blogs

for other employees to read. Blog topics range from personal opinions on various

technologies to updates on work that is being done by different groups within the

company. The blogs offer a unique way for employees to communicate with each

other and keep current on company events.

Wikis

Another element of social networking within IBM is information- storing web sites

called wikis. The leaders of the various software production teams at IBM manage

these wikis and allow team members to share memos and other information

for the entire team to view. Each team member can share his or her progress with

the other team members through these wikis, allowing team leaders to monitor

the entire project without having to contact each team member directly. The major

advantage of this outlet is that IBM employees may work from home or other locations without having to travel to a single destination in order to complete a project. This is especially important for the 42% of IBM employees that regularly

work from locations other than IBM facilities.

IBM has a policy in place that strictly forbids any employee from joining the

company’s social- networking platforms anonymously. This ensures that every

comment or post made by an IBM employee is transparent to other employees

in the company. The onus is on the employees to police themselves and forward

any inappropriate comments or posts to upper management.

While these social- networking tools attempt to connect employees, IBM has

also leveraged social media to stay connected with customers. IBM developed a

social media monitoring software known as the SPSS Modeler, which the company

uses to search for customer comments, sentiments, and opinions on various

social- networking platforms like Twitter, Facebook, and online blogs. This tool

can mine through large piles of data searching for specifi c text, industry terms,

or developing technology that may be pertinent to IBM’s customers. IBM uses

this information to stay up- to- date with the latest trends and consumer behaviors.

If consumers have positive or negative opinions about IBM products, the company

can track the feedback and make changes accordingly.

IBM has also developed a software known as Cognos Consumer Insight,

which can perform predictive analytics on the text and data that the SPSS Modeler

can pull from Twitter, Facebook, etc. This technology takes the data collected

by the SPSS Modeler from the SNSs, analyzes the consumer sentiment, and

makes predictive analytical decisions based on the information it is viewing. In

essence, the computer software is a form of artificial intelligence that performs the job of marketing analysts. IBM uses this software internally, but also sells it to other large companies and retailers, along with the ser vices necessary for these companies to learn how to analyze the data. Some companies already using this IBM technology are Rosetta Stone, Navy Federal Credit Union, and Money Mailer.

The ingenuity and resourcefulness displayed by IBM leveraging social media

tools to enhance their business is a reminder that thinking creatively can benefi t

even the largest companies. The use of social networking within the company

helps to generate new ideas and develop a sense of camaraderie among the

employees at minimal cost to IBM. Employees are allowed to develop a personal

identity and share their stories and experiences through blogs and personal profi

les. For a company that thrives on creativity and new technology, social networking is the perfect way to share ideas and opinions without the limitations that come from simple e-mail correspondence.

Using Social Media for Consumer Data Collection

The ethical implications of using social networking to monitor consumer demands

are far more complex. Unlike using social networking internally to generate

discussion among employees bounded by rules and policies, external uses

of SNSs allow IBM to monitor what consumers are saying without consumers

knowing that they are being monitored. Although this is not an illegal practice

because the information is publically posted on social media platforms, the question must be asked, is it ethical? IBM is openly developing and selling their software to other companies so that they, too, can track consumer sentiment through social networking and make key business decisions based on information that consumers are sharing on the Internet. The term used by IBM’s vice president

for social business and collaboration solutions, Sandy Carter is “analytics.” Carter

prefers to focus on the positive results that social networking has within the company, but also admits that analytics has become a key component of “tracking

sentiments, and fi nding out how the community is feeling about an issue.” She

goes on to say that IBM uses “deep analytic capability to fi nd out what is being

said. Then we look at affinities.” IBM can track users tweeting about the company,

users that are the most influential tweeters, and so on. Tracking these types

of postings allows the company to make decisions based on consumer feedback

without the consumers ever knowing that they influenced the decision. Carter

does not condemn the company’s decision to use social media to analyze consumer

decisions, and justifies the practice by making the argument that whether

or not your company participates in social media or monitors consumer sentiment,

most brands are already openly discussed by consumers, so you might as

well monitor what they are saying.

Legality of Social Networking

As social networking grows rapidly, the debate over legal implications of using

various social- networking tools continues. IBM is using social networking to support internal innovation and form a closer bond among its various departments.

At the same time, the company is attempting to deflect the focus from its other uses of social networking that include developing and using software to track customer sentiments and infl uence consumer behaviors. From a legal standpoint, IBM is not violating any existing laws, but social networking is an area in which laws are constantly evolving. Most of the laws in existence today protect socialnetworking companies from lawsuits brought on because of information that users have posted on their pages. These types of lawsuits would be relevant to companies like Facebook and MySpace, where users share their opinions and ideas to a larger community. Although IBM encourages their employees to write blogs and share information on their personal profi les, any content that is displayed by employees must adhere to the IBM code of conduct.

The major hurdle for IBM regarding their external data analytics practice

revolves around the privacy issues that SNSs now face on a regular basis. Sites

such as Tagged and Facebook have come under legal scrutiny for using members’

e-mail address books to solicit new members, or for broadcasting members’ transactions with affi liated web sites on their Facebook pages. The lawsuits these

SNSs faced were based on the premise that the consumer or user has certain

rights to privacy that these companies violated. If companies like Facebook are

coming under fi re for breach of privacy, how does IBM get away with monitoring

user information and using it to infl uence consumer decisions without their

knowledge? Although no laws currently exist to prevent IBM from continuing this

practice, changes are being made by the government and SNSs themselves to

slowly limit intrusion into personal information. Companies that participate on

SNSs have the same potential liabilities as any one of us has, including copyright

infringement, trademark infringement, and defamation. Analyzing information that

users openly disclose on their profi le pages to infl uence business decisions is

not considered illegal because it is the users’ job to withhold any information that

they do not want companies to see.

A person who has a Facebook page and openly shares opinions or personal

information on that page is giving Facebook own ership of his/her photos and postings; and, accepts the fact that information is publically viewable. Monitoring practices have come under scrutiny by individual users and consumer rights groups, but few lawsuits have challenged this type of data collection. Any lawsuits that have challenged it are usually directed at the SNSs themselves for failing to maintain certain levels of user privacy. Because social networking is a relatively new trend whose potential is not fully understood, the legislation governing this type of technology is not yet up to pace with its rapid growth and expanding capabilities.

It is feasible that within the next 10 years, Sandy Carter and executives at

other companies will not be able to rely on social media for consumer analytics.

In 2010, the Federal Trade Commission (FTC) made it clear that federal regulation

may be necessary to protect the private information of consumers if self-regulation

fails. At the same time, the U.S. Judiciary Committee has passed the

Personal Data Privacy and Security Act and the Data Breach Notification Act,

which broaden consumer privacy rights regarding information collected and distributed by “commercial data brokers.” These data brokers are the types of companies to which IBM sells its analytic software. IBM uses social networking both internally and externally, and the ethical implications of those uses are significant. The company openly promotes its usage of internal fi le sharing and blogging, but all employee actions are guided by IBM’s ethics codes and value statements. IBM’s use of analytics to monitor consumers is technically legal, but ethically questionable.

Ethical Implications

IBM is one of many large fi rms that uses analytics in its day- to- day operations and continues to develop analytic software for other companies. The company also

promotes the use of social- networking tools to share ideas and connect with different groups operating in the company. A question still remains about whether

or not this and other practices are ethical.

Ethical implications may be considered from two angles: the internal and

external or gan i za tion al uses of social networking. A company’s use of social

networking to pass along ideas and share personal information internally may

be ethical and morally acceptable if no harm is done to any user or the company.

Employee stakeholders interested in developing new ideas and increasing wages

and benefi ts may help the company with their contributions using social media.

Customers and customer advocacy groups may also be interested in purchasing

a product that lives up to its stated advertised online purpose and that functions at

or above the promised level. Those government, po liti cal groups, and competitors

that are interested in ensuring that organizations operate in fair and legal ways

would be observant of the ways social media methods are used with external

groups, including consumers. Stockholders, suppliers, vendors, and companies

also have a stake, not only in maximizing their profi ts through using social media,

but also in acting socially responsible toward each other to ensure business

growth, while protecting consumers and the environment.

Using social networking to share ideas and information with other employees

or departments internally also aligns with the responsibilities and moral obligations

a company has to its various stakeholders. Sharing new thoughts and ideas with

others through social- networking software can potentially increase opportunities

for successful innovation and product development. Additionally, as employees

connect with each other at human and communal levels, morale and motivation

to act ethically increase.

Darker Sides of Social Networking

Using social networking to monitor consumers and analyze trends without their

knowledge is a different matter, one that is ethically questionable. Legally, using

data collected by consumers to analyze and infl uence certain business decisions

is permitted, but the legislation protecting consumers is constantly changing

and evolving with technology. As quickly as the legal system is working to catch

up with technology, it could be a practice that is illegal in a matter of years.

Corporations have an ethical responsibility to inform consumers; not misrepresent

or withhold information from consumers; not force or take undue advantage of

consumers; and take “due care” to prevent any mishaps. Based on this framework, companies like IBM are acting unethically by using social networking to perform customer analytics. First and foremost, the very nature of collecting data from Facebook and MySpace without letting the customer know that they are doing so

breaks the first rule of informing the customer. If customers are aware that they

are being monitored and permit companies to collect data from their accounts,

then there may be no legal or ethical issues. An alleged argument about some

data- collection methods used in analytics to collect unbiased information, is that

this process can occur without consumers’ awareness. Corporations also have

a responsibility to not misrepresent or withhold information about a product

or ser vice that would hinder a consumer’s free choice. By setting up corporate

SNSs and then luring consumers to view the pages through daily deals, games,

and prizes, the corporation would be withholding information from the consumer.

A person without specific marketing knowledge might think that playing a game

or leaving a comment on the Facebook page of a company is of little or no consequence. Meanwhile, the company is collecting and analyzing such activity

while strategizing how to translate a product or brand into a consumer need and

choice.

A major aim of ethical reasoning is to gain a clear focus on problems to facilitate

acting in morally responsible ways. In this case, the company that is knowingly

collecting information from consumers without their knowledge is morally

responsible for the harmful effects of their actions when they knowingly and freely

acted or caused the act to happen and knew that the act was morally wrong, or

if they knowingly and freely failed to act or prevent a harmful act, and they knew it

would be morally wrong for a person to do this. Companies like IBM that choose

to monitor Facebook, Twitter, and MySpace for data may walk a thin line between

providing consumers with desirable products and violating consumer rights.

Government agencies such as the FTC work towards protecting consumers from

certain acts by providing laws to promote consumer choice, and protecting consumer privacy. Specifically, the FTC has certain guidelines represented in the

FTC Act that allows it to work towards preventing deceptive acts. In Section 5 of

the act, the term “deceptive” is defined as a practice that is misleading to consumers, or one that affects consumers’ behavior or decisions about the product

or service.

Advancements in technology have certainly blurred the lines between what

is right and wrong, ethical and unethical. A major issue with regard to the ethical

implications surrounding the use of technology in the business world is that technology seems to advance much more quickly than related legislation.

Questions for Discussion

1. What are the benefi ts and risks associated with a company’s use of social

networking?

2. Are there any signifi cant differences between a company’s use of social

networking technologies and an individual use?

3. As a social media user, are you concerned that your information is tracked for

“advertising” purposes? Why or why not?

4. Compare IBM’s private social network Blue Pages with a public

social- networking site like Twitter or Facebook. Do you think user information

is any safer on Blue Pages? Why or why not?

5. What responsibilities do companies have regarding private company

social- networking sites?

6. Do you think it’s right for companies to collect and analyze user data from

social- networking sites in order to infl uence consumers? Why or why not?

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