Thursday, 31 May 2012

Can Facebook be an effective mechanism for generating growth and value in small businesses?

an article by John L. Hopkins, (School of Management and Information Systems, Institute for Supply Chain and Logistics, Victoria University, Melbourne, Australia) published in Journal of Systems and Information Technology Volume 14 Issue 2 (2012)


Online social networks (OSNs) offer organisations direct access to a plethora of information about their networks of connections and provide the means by which to create two-way, business-to-consumer (B2C), information channels. Instead of traditional impersonal and one-direction advertising, organisations can establish a personal and two-way communication medium, by accepting members and having friends on these platforms. This paper aims to discuss the phenomenon of OSNs, and in particular Facebook, and examine whether they can be employed by small businesses as a resource for growth and adding value.
A case study is presented that examines how a small business in New Zealand, specialising in the distribution of products that help babies and toddlers sleep through the night, has adopted Facebook as a tool for engaging with its largely stay-at-home customer base. This examination of The Sleep Store is an impartial study based on findings collected over a period of several months, via a series of interviews supplemented by telephone conversations and e-mail exchanges, with representatives from the case organisation.
The Sleep Store’s adoption of Facebook was found to offer the business both direct and indirect value. That is direct value, based on the value of transactions, quantified by the increase in turnover experienced through connecting with new customers, and organisational growth; and the indirect value of word-of-mouth, positive recommendations and the relative influence that Facebook community members exert on each other, which enable valuable new insights to be made into their business ecosystem.
Research limitations/implications
While the adoption of Facebook in this instance has been found to be an undoubted success it does not, however, suggest that such impressive results would necessarily be expected by all small businesses adopting Facebook in this way. The nature of this business, and their customer base, are an important contributing factor to the overall success of this project.
Practical implications
The findings of this study highlight potential opportunities for small businesses adopting Facebook as an additional sales channel or tool for leveraging new information about their market.
This is original academic research, designed to make a valuable contribution to the growing body of literature, on how small businesses are benefiting from the availability of OSNs.

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