linkedin inter-firm relationships: collaborative asset or competitive risk

34 www.scip.org Competitive Intelligence

LinkedIn, a massive online professional network that ‘links’ together individuals around the world, has grown to include over 120 million members. In our study we wanted to determine how much their participation in the LinkedIn network had increased the number of social connections they have outside their own organization (including competitors), and at what level they communicated with these new connections. To that end, we surveyed a broad cross-section of over 500 LinkedIn users in numerous countries and conducted in-depth interviews with twelve mid-to-CEO level managers, in organizations ranging in size from 7 to 180,000 employees.

The overall aim of the study was to determine if people who use LinkedIn had an increase in inter-firm relationships, and if their use of LinkedIn led to improved collaborative innovation and problem solving through these inter-firm connections. The research propositions tested and confirmed by the research were that usage of LinkedIn results in:

•An increased number of inter-firm connections.•An improved ability to communicate across inter-

firm boundaries.•Greater access to problem solving or innovation

collaborators.• Increased organizational problem solving or

innovation ability.

Although our study was broader in nature and touched on many different areas, a subset of our data is directly relevant to competitive intelligence practitioners, and we focus on that portion in this article.

STUDY BACKGROUNDFor the survey portion of the study, we extended an

invitation to participate through LinkedIn itself, using various means including emails, referrals, status updates, and posting in LinkedIn’s Q&A section. In all, just over 500 respondents completed the survey. Note that this was not intended to be a representative sample and the respondents were self-selecting. Accordingly, we cannot generalize our findings to the entire LinkedIn universe. This being said, we took care to not systematically exclude any respondent who was a LinkedIn user, and the resulting data in terms of demographics suggests a similar pattern to LinkedIn’s own statistics on its entire user base.

For the in-depth interviews, we sought respondents who were at a mid-to-senior level in their organization, had responsibility for the activities of numerous staff, and had experience with the use of online social networks in their organizations. These in-depth interview respondents were sourced through a question posted in LinkedIn’s Q&A section as well as through referrals. We conducted twelve in-depth interviews with these respondents, who ranged from mid-management to CEOs and worked in companies that had 7 to 180,000 employees. In part, the

Inter-firm Relationships: Collaborative Asset or Competitive Risk?Robert Duncan, Anthos Yannakou, and Rene Erasmus, University of South Africa

Volume 14 • Number 3 • July/September 2011 www.scip.org 35

purpose of the interviews was to assess each respondent’s experience with implementing the use of online social networks in their organization as well as obtaining suggestions for best practices in this area.

From a competitive intelligence practitioner point-of-view, the implications of our study are substantial. If LinkedIn creates increased connections to competitors and increases the potential for information sharing, then this could create potential risks at an organizational level. Further, if organizations are shown to have a lack of guidelines, policies and training around information sharing via online social networks, then this presents an opportunity to tighten some potential sources of unwanted information leakage to competitors.

INTER-FIRM CONNECTEDNESSThe survey results showed that the respondents were

highly connected on LinkedIn and over half (57.9%) had over 500 LinkedIn connections. We explored the composition of these connections further through a series of questions. One question asked whether respondents increased their professional connections overall since using LinkedIn, and over half strongly felt that they had (See Table 1).

The next question tested whether participation in LinkedIn increased their level of professional connections with people outside their organization. The respondents strongly supported that statement, with 82% indicating they strongly or somewhat agree. For them, their use of

LinkedIn resulted in a greater number of professional connections that span inter-firm boundaries.

We also asked if they had more connections with individuals in competitor organizations as a result of using LinkedIn. The majority of respondents somewhat or strongly agreed with this statement (See Table 2). This not only supports the finding that people using LinkedIn have more connections outside their organizations, but also that they are forming more connections with people in the competitor organizations. This behavior might lead to a need to more consciously educate staff on the appropriate sharing of information with competitors.

USAGE AND COLLABORATIVE BENEFITSGiven that LinkedIn users are more connected with

competitors than they were before, we explored the specific ways that members used their LinkedIn networks. Most leveraged their networks to draw upon the expertise of others to answer questions and solve problems. A large majority of users indicated that they have asked for help, advice, referrals or other assistance from their network. Respondents also agreed strongly (40.2%) or somewhat (36.5%) that they had provided help, advice, referrals or other assistance to other members of their network.

In terms of the effect that LinkedIn has had on their work, individuals reported that their network has allowed them to become more innovative in their work (See Table 3). It has also given them improved access to innovation collaborators (66% strongly or somewhat agreeing) and has allowed them to solve problems faster (54% strongly

Since using LinkedIn, I have more professional connections than I did previously.

Response Percent

Response Count

Strongly disagree 3.1 16

Somewhat disagree 2.9 15

Somewhat agree 26.0 134

Strongly agree 54.4 260

TABLE 1: INCREASE IN pROFESSIONAL CONNECTIONS OVERALL ThROUGh LINKEDIN

I have more connections with people in competitor organizations as a result of using LinkedIn.

Response Percent

Response count





TABLE 2: INCREASE IN COMpETITOR CONNECTIONS ThROUGh LINKEDIN

LinkedIn inter-firm relationships


or somewhat agreeing). Taken together, the results confirm that using LinkedIn provides collaborative benefits, including improved access to innovation collaborators, and improved speed in solving problems.

ORGANIZATIONAL CONTROL OF ONLINE SOCIAL NETWORKS

To explore the organizational context around the use of online social networks (OSNs), we asked a series of questions about guidelines, practices and policies. Few of the respondents reported that their organizations had

formal policies or guidelines on the appropriate usage of OSNs (See Table 4).

Relatively few people said their organizations had formal policies or guidelines concerning what information can and cannot be distributed via online social networks (See Table 5). The results of these questions suggest that the policy landscape around the organizational use of online social networks is fairly unstructured, and presents opportunities for greater control and education about appropriate information sharing habits.

To understand the degree of centralized control, we asked whether or not they agree that their organizations keep strong central control of outbound messaging on online social networks. Respondents indicated very strongly that their organizations do not (See Table 6). The use of OSNs in many organizations is a decentralized activity, relatively unbounded by formal policies or guidelines on the sharing of information. This may pose risks to organization due to accidental sharing of sensitive information, especially given the connections users report having with individuals in competing organizations.

To determine the availability of training in organizations concerning the appropriate use of online social networks, we asked whether their organizations provide such training. The results show that most organizations do not (See Table 7). To some extent, the lack of formal policies and guidelines around the use of OSNs could have been mitigated by the presence of strong and pervasive training on appropriate usage. It is clear,

Interacting with my LinkedIn network has allowed me to be more innovative in my work.

Response Percent

Response count





TABLE 3: ENhANCED INNOVATION ABILITY ThROUGh LINKEDIN NETWORK

My organization has formal policies or guidelines on the appropriate usage of online social networks.

Response Percent

Response count





TABLE 4: FORMAL pOLICIES ON USAGE

My organization has formal policies or guidelines about what kinds of information can and cannot be distributed via online social networks.

Response Percent

Response Ccount





TABLE 5: FORMAL pOLICIES ON ShARING INFORMATION



however, that this training is not sufficiently in place, and organizations are currently exposed to competitive risks through online social networks.

MANAGING ThE RISKS OF INFORMATION ShARING: GUIDELINES AND TRAINING

The majority of the managers interviewed in the qualitative in-depth interviews said that their organization had no formal policies governing the kinds of company information that staff can disclose via online sharing networks, which supports the quantitative survey findings. In general, the organizations relied upon existing information sharing and confidentiality policies. They were making an effort to do more staff training

concerning what is acceptable behaviour on OSNs, and most respondents were comfortable adapting the existing policies and norms of the organization.

The exception was in firms subject to external regulations, such as financial services, and firms which dealt extensively with confidential information. Most of these companies already have explicit written policy documents that governed employee behaviour and treatment of confidential information. Not surprisingly, the largest firms with thousands of employees had more formal policy infrastructures.

In general, though, companies had an overall lack of formal policies specifically about online social networks, and most organizations either used informal guidelines and training to reinforce expected norms of employee behaviour. Many companies place a substantial amount of trust in their employees, and rely on them to know how to behave appropriately, whether on an OSN or at a social gathering.

Although they had a distinct lack of appetite for very explicit, restrictive policies governing the use of online social networks, several respondents conceded that the lack of existing policies did create some vulnerability for their organizations. Since social media have such immediate impacts, the risk of a mistake or error in judgement was seen as a very real. Most acknowledged that their company had largely avoided negative consequences through luck thus far. With the exception of very large firms with well-developed policy infrastructures, most respondents said their company should be developing and disseminating some form of guidelines, and several noted that they had already started this effort.

GuidelinesGuidelines that govern the appropriate use of

online social networks, confidentiality, and disclosure of information should be supplemented by training for all staff. As one person noted, there is nothing fundamentally new about them; they are just an enabling technology in the same ways as a telephone and a fax machine. It can be helpful to look at how the organization has dealt with other new technologies in the past, since there may not be a need for entirely new strategies, policies or guidelines.

However, it is still necessary to have a plan for handling negative results, accidents, or missteps. Written corporate policies and procedures should cover both an employee and departmental perspectives. A good starting point for this effort are the existing policy frameworks for items such as security, access, usage, and confidentiality, and see if these can be adapted.

My organization keeps strong centralized control of outbound messaging on online social networks.

Response Percent

Response Count





TABLE 6: CENTRALIZED CONTROL OF OUTBOUND MESSAGING

My organization provides training on the appropriate use of online social networks.

Response Percent

Response Count





TABLE 7: TRAINING ON AppROpRIATE USAGE



TrainingOrganizations need training for both new hires and for

existing employees that is based on best practices for online social network usage. For example, not all employees may know how to use them effectively or be in agreement with company policies. Often, employees need to be reminded that they are representing the company at all times and the same rules apply online as well as offline. Online social networks can help empower employees as advocates of a brand or an organization, but those employees need to understand what the company considers as appropriate behaviour.

SUMMARYThis article presents recent research conducted

for the Doctor of Business Leadership degree at the University of South Africa. We gathered additional qualitative information from in-depth interviews with senior managers to gain insights into some suggested best practices for organizations wishing to use online social networks like LinkedIn.

Inter-firm relationships facilitated through online social networks like LinkedIn are both a collaborative asset and a competitive risk. Although there are clear benefits to sharing ideas and problems with an extended professional network, there are also risks of inappropriate or accidental sharing of sensitive information with competitors due to a lack of formal policies, guidelines, or training around the appropriate usage of online social networks and the types of information that can and can’t be shared over these networks.

These risks can be mitigated though best practices such as the creation of explicit guidelines on inter-firm information sharing as well as training to educate users on the use and interpretation of the guidelines. Employing these risk reduction strategies will ensure that the benefits of inter-firm connectedness continue to outweigh the risks.

Online social networks continue to be a fast-growing phenomenon, and the adoption of these tools by business and other organizations is arguably still in its infancy. More research is needed to clarify the role that online social networks can and should play, both in and between organizations. The research summarized in this paper is intended to help serve as a starting point for further research into the field. Undoubtedly, some of the opinions presented here will already have changed since May 2010, though the suggested focus areas of guidelines and training continue to be important.

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Robert Duncan is currently completing the Doctor of Business Leadership (DBL) degree at the University of South Africa. He has a BA in Economics from the University of Ottawa, an MBA from York University and is a Certified Management Consultant. Robert’s consulting firm, Great Capes Consulting is focused on professional speaking, training and consulting in the areas of leadership, teamwork, intelligence and innovation. He is the author of books on teambuilding and competitive intelligence, and is co-author of a book on improvisation as a business tool.

Anthos Yannakou has managed a wide range of functions at middle, senior, and executive management levels internationally over the past 35 years, including Executive Vice President of a 2000 person portfolio of high-tech business units in South Africa, CEO of a 350 person joint-venture in Australia. He has served on external Boards as Chair and a Director in South Africa, the UK, and Australia. Anthos has an MBL (Cum Laude) from the University of South Africa, Pretoria, and a PhD from the University of Pretoria; his thesis focused on the strategic management of innovation and technology to help organisations become internationally competitive and regionally relevant.

Rene Erasmus has worked on a wide range of functions at middle and senior management levels in South Africa and is a consultant on knowledge management; strategic human resources management; corporate social responsibility and strategy. She is a tutor on the MBA program and a promoter on the doctoral program of the School of Business Leadership (SBL) of the University of South Africa. Rene has an MBL and DBL degree from the University of South Africa, Pretoria.


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