Companies Benefit from Engaging in Social Networks

Companies can benefit from actively gathering feedback from social network users by improving and further developing their products and services based on this feedback. Taking a look at the contents of user comments on Facebook shows that negative user comments in particular can positively affect a company's innovation success. These are the findings of a recent study carried out by the Centre for European Economic Research (ZEW) in Mannheim.

Social media platforms such as Facebook or Twitter have lately been facing strong criticism over filter bubbles and the spread of fake news. From the perspective of the companies, however, the potential that lies in the knowledge of the user base should not be underestimated. Especially with regard to open innovation processes, in which the integration of customers is becoming increasingly important, customers' comments on Facebook can serve as a valuable source of information for companies, helping them to improve and develop products and services.

The analysis of a data set based on a ZEW survey among approximately 3,000 companies in the manufacturing and the services sector shows that social networks have become the most important social media channel for companies.  Around 21 per cent of the surveyed companies have a Facebook page. According to the survey, setting up a Facebook page is more prevalent in industries focused on end consumers such as retail traders. The empirical analysis of the relationship between innovation success and the companies' as well as their users' Facebook activity has shown the following results:

1. Companies that have a Facebook page as well as active Facebook users are more likely to introduce product innovations, i.e. new or significantly improved products and services.
2. Simply putting up a Facebook page is, however, not sufficient to guarantee company success. When it comes to innovation success, it is important for companies to actively seek feedback from Facebook users.
3. It is rather negative than positive user comments that are beneficial for companies’ innovation success.  

"When developing social media strategies, companies should not only focus on marketing aspects, but also consider the potential of social platforms for the company's innovation success. They can actively make use of Facebook to gather feedback from customers and users. Negative feedback should be regarded as an opportunity to identify problems. This information can then be used to improve products and services or even to develop new ones," explains Professor Irene Bertschek, head of the ZEW Research Department "Information and Communication Technologies" and co-author of the study.

For more information please contact:

Prof. Dr. Irene Bertschek, Phone +49 (0)621/1235-178, E-mail bertschek@zew.de