Factors Affecting the Business Performance of Firms Utilizing Social Media

A company can experience various benefits and effects on business performance from advertising on a social networking site, including an increase in its number of fans and advertisement views and/or an increase in sales and return on investment (ROI). While some companies find Facebook an effective platform for social networking advertisements, others deem it ineffective. These mixed results of the impact of social networking services on business performance, in addition to the fact that many companies are expected to be influenced by social media in this social economy due to its growth and popularity among consumers, have motivated this research in progress. This study aims to address and understand the reasons for such differing results on business performance and identify the factors affecting the outcomes of organizations’ social media projects. A multiple case study is adopted to meet these aims. First, a thorough review of literature and content analysis of several prior and publicly available case studies on firms that were either successful or unsuccessful with social media advertising are conducted. These steps are done to identify the underlying factors that contribute to the impact of social media on business performance. Next, the multiple case study method is adopted to identify and explain the behaviors of the contextual factors that cause differing impacts of social media on business performance. To understand the varying effects of social media on business performance, institutional theory, transaction costs theory and symbolic interactionism are applied in this study. The expected outcomes from this study include: (1) proposing a conceptual model of factors affecting the performance of businesses utilizing social media, and (2) producing a better understanding of the issues and factors impacting the performance of businesses utilizing social