Inter-firm Relationships:Collaborative Asset orCompetitive Risk?Robert Duncan, Anthos Yannakou, and Rene Erasmus, Universi...
LinkedIn inter-firm relationshipspurpose of the interviews was to assess each respondent’sexperience with implementing the...
LinkedIn inter-firm relationships                                                             formal policies or guideline...
LinkedIn inter-firm relationships                                                                concerning what is accept...
LinkedIn inter-firm relationshipsTraining                                                        REFERENCES     Organizati...
LinkedIn inter-firm relationshipsMcKenzie, J.; van Winkelen, C. (2006). “Creating       
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LinkedIn Inter-firm Relationships: Collaborative Asset or Competitive Risk


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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 networks, 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 through 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 outweight the risks.

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LinkedIn Inter-firm Relationships: Collaborative Asset or Competitive Risk

  1. 1. Inter-firm Relationships:Collaborative Asset orCompetitive Risk?Robert Duncan, Anthos Yannakou, and Rene Erasmus, University of South Africa LinkedIn, a massive online professional network Although our study was broader in nature andthat ‘links’ together individuals around the world, touched on many different areas, a subset of our data ishas grown to include over 120 million members. In directly relevant to competitive intelligence practitioners,our study we wanted to determine how much their and we focus on that portion in this article.participation in the LinkedIn network had increased thenumber of social connections they have outside theirown organization (including competitors), and at whatlevel they communicated with these new connections. To STUDY BACKGROUNDthat end, we surveyed a broad cross-section of over 500 For the survey portion of the study, we extended anLinkedIn users in numerous countries and conducted in- invitation to participate through LinkedIn itself, usingdepth interviews with twelve mid-to-CEO level managers, various means including emails, referrals, status updates,in organizations ranging in size from 7 to 180,000 and posting in LinkedIn’s Q&A section. In all, just overemployees. 500 respondents completed the survey. Note that this The overall aim of the study was to determine if was not intended to be a representative sample and thepeople who use LinkedIn had an increase in inter-firm respondents were self-selecting. Accordingly, we cannotrelationships, and if their use of LinkedIn led to improved generalize our findings to the entire LinkedIn universe.collaborative innovation and problem solving through This being said, we took care to not systematically excludethese inter-firm connections. The research propositions any respondent who was a LinkedIn user, and the resultingtested and confirmed by the research were that usage of data in terms of demographics suggests a similar pattern toLinkedIn results in: 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, • An increased number of inter-firm connections. had responsibility for the activities of numerous staff, and • An improved ability to communicate across inter- had experience with the use of online social networks in firm boundaries. their organizations. These in-depth interview respondents • Greater access to problem solving or innovation were sourced through a question posted in LinkedIn’s collaborators. Q&A section as well as through referrals. We conducted twelve in-depth interviews with these respondents, who • Increased organizational problem solving or ranged from mid-management to CEOs and worked in innovation ability. companies that had 7 to 180,000 employees. In part, the34 Competitive Intelligence
  2. 2. LinkedIn inter-firm relationshipspurpose of the interviews was to assess each respondent’sexperience with implementing the use of online social TABLE 2: INCREASE IN COMpETITORnetworks in their organization as well as obtaining CONNECTIONS ThROUGh LINKEDINsuggestions for best practices in this area. From a competitive intelligence practitioner point- I have more connections with people in competitorof-view, the implications of our study are substantial. If organizations as a result of using LinkedIn.LinkedIn creates increased connections to competitorsand increases the potential for information sharing, then Response Response Percent countthis could create potential risks at an organizationallevel. Further, if organizations are shown to have a lack Strongly disagree 5.2 27of guidelines, policies and training around informationsharing via online social networks, then this presents an Somewhat disagree 7.6 39opportunity to tighten some potential sources of unwantedinformation leakage to competitors. Somewhat agree 34.8 179 Strongly agree 21.4 110INTER-FIRM CONNECTEDNESS The survey results showed that the respondents were LinkedIn resulted in a greater number of professionalhighly connected on LinkedIn and over half (57.9%) connections that span inter-firm boundaries.had over 500 LinkedIn connections. We explored thecomposition of these connections further through a series We also asked if they had more connections withof questions. One question asked whether respondents individuals in competitor organizations as a result of usingincreased their professional connections overall since using LinkedIn. The majority of respondents somewhat orLinkedIn, and over half strongly felt that they had (See strongly agreed with this statement (See Table 2). This notTable 1). only supports the finding that people using LinkedIn have more connections outside their organizations, but also The next question tested whether participation in that they are forming more connections with people in theLinkedIn increased their level of professional connections competitor organizations. This behavior might lead to awith people outside their organization. The respondents need to more consciously educate staff on the appropriatestrongly supported that statement, with 82% indicating sharing of information with competitors.they strongly or somewhat agree. For them, their use of TABLE 1: INCREASE IN pROFESSIONAL USAGE AND COLLABORATIVE BENEFITS CONNECTIONS OVERALL ThROUGh Given that LinkedIn users are more connected with LINKEDIN competitors than they were before, we explored the specific ways that members used their LinkedIn networks. Since using LinkedIn, I have more professional Most leveraged their networks to draw upon the expertise connections than I did previously. of others to answer questions and solve problems. A large majority of users indicated that they have asked for help, Response Response advice, referrals or other assistance from their network. Percent Count Respondents also agreed strongly (40.2%) or somewhat (36.5%) that they had provided help, advice, referrals or Strongly disagree 3.1 16 other assistance to other members of their network. Somewhat disagree 2.9 15 In terms of the effect that LinkedIn has had on their work, individuals reported that their network has allowed Somewhat agree 26.0 134 them to become more innovative in their work (See Table 3). It has also given them improved access to innovation Strongly agree 54.4 260 collaborators (66% strongly or somewhat agreeing) and has allowed them to solve problems faster (54% stronglyVolume 14 • Number 3 • July/September 2011 35
  3. 3. LinkedIn inter-firm relationships formal policies or guidelines on the appropriate usage of TABLE 3: ENhANCED INNOVATION ABILITY OSNs (See Table 4). ThROUGh LINKEDIN NETWORK Relatively few people said their organizations had formal policies or guidelines concerning what information Interacting with my LinkedIn network has can and cannot be distributed via online social networks allowed me to be more innovative in my work. (See Table 5). The results of these questions suggest that the policy landscape around the organizational use of Response Response online social networks is fairly unstructured, and presents Percent count opportunities for greater control and education about appropriate information sharing habits. Strongly disagree 5.4 26 To understand the degree of centralized control, we Somewhat disagree 8.2 42 asked whether or not they agree that their organizations keep strong central control of outbound messaging on Somewhat agree 35.7 184 online social networks. Respondents indicated very strongly that their organizations do not (See Table 6). Strongly agree 21.9 113 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 poseor somewhat agreeing). Taken together, the results confirm risks to organization due to accidental sharing of sensitivethat using LinkedIn provides collaborative benefits, information, especially given the connections users reportincluding improved access to innovation collaborators, and having with individuals in competing organizations.improved speed in solving problems. TABLE 5: FORMAL pOLICIES ON ShARING INFORMATIONORGANIZATIONAL CONTROL OF ONLINE SOCIALNETWORKS My organization has formal policies or guidelines To explore the organizational context around the use about what kinds of information can and cannotof online social networks (OSNs), we asked a series of be distributed via online social networks.questions about guidelines, practices and policies. Fewof the respondents reported that their organizations had Response Response Percent Ccount TABLE 4: FORMAL pOLICIES ON USAGE Strongly disagree 27.4 141 Somewhat disagree 12.4 64 My organization has formal policies or guidelines on the appropriate usage of online social Somewhat agree 18.1 93 networks. Strongly agree 14.8 76 Response Response Percent count Strongly disagree 30.1 155 To determine the availability of training in organizations concerning the appropriate use of online Somewhat disagree 10.9 56 social networks, we asked whether their organizations provide such training. The results show that most Somewhat agree 16.7 86 organizations do not (See Table 7). To some extent, the lack of formal policies and guidelines around the use of Strongly agree 13.2 68 OSNs could have been mitigated by the presence of strong and pervasive training on appropriate usage. It is clear, 36 Competitive Intelligence
  4. 4. LinkedIn inter-firm relationships concerning what is acceptable behaviour on OSNs, and TABLE 6: CENTRALIZED CONTROL OF most respondents were comfortable adapting the existing OUTBOUND MESSAGING policies and norms of the organization. The exception was in firms subject to external My organization keeps strong centralized control regulations, such as financial services, and firms which of outbound messaging on online social networks. dealt extensively with confidential information. Most of these companies already have explicit written policy Response Response documents that governed employee behaviour and Percent Count treatment of confidential information. Not surprisingly, the largest firms with thousands of employees had more Strongly disagree 40.2 207 formal policy infrastructures. Somewhat disagree 17.1 88 In general, though, companies had an overall lack of formal policies specifically about online social networks, Somewhat agree 8.4 43 and most organizations either used informal guidelines and training to reinforce expected norms of employee Strongly agree 5.2 27 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 socialhowever, that this training is not sufficiently in place, and gathering.organizations are currently exposed to competitive risks Although they had a distinct lack of appetite for verythrough online social networks. explicit, restrictive policies governing the use of online social networks, several respondents conceded that the lack of existing policies did create some vulnerability for theirMANAGING ThE RISKS OF INFORMATION organizations. Since social media have such immediateShARING: GUIDELINES AND TRAINING impacts, the risk of a mistake or error in judgement was The majority of the managers interviewed in the seen as a very real. Most acknowledged that their companyqualitative in-depth interviews said that their organization had largely avoided negative consequences through luckhad no formal policies governing the kinds of company thus far. With the exception of very large firms with well-information that staff can disclose via online sharing developed policy infrastructures, most respondents saidnetworks, which supports the quantitative survey their company should be developing and disseminatingfindings. In general, the organizations relied upon some form of guidelines, and several noted that they hadexisting information sharing and confidentiality policies. already started this effort.They were making an effort to do more staff training Guidelines TABLE 7: TRAINING ON AppROpRIATE USAGE Guidelines that govern the appropriate use of online social networks, confidentiality, and disclosure of My organization provides training on the information should be supplemented by training for all appropriate use of online social networks. staff. As one person noted, there is nothing fundamentally new about them; they are just an enabling technology in Response Response the same ways as a telephone and a fax machine. It can Percent Count be helpful to look at how the organization has dealt with other new technologies in the past, since there may not be Strongly disagree 34.6 178 a need for entirely new strategies, policies or guidelines. However, it is still necessary to have a plan for Somewhat disagree 12.8 66 handling negative results, accidents, or missteps. Written corporate policies and procedures should cover both an Somewhat agree 15.9 82 employee and departmental perspectives. A good starting point for this effort are the existing policy frameworks for Strongly agree 8.5 44 items such as security, access, usage, and confidentiality, and see if these can be adapted.Volume 14 • Number 3 • July/September 2011 37
  5. 5. LinkedIn inter-firm relationshipsTraining REFERENCES Organizations need training for both new hires and for Avram, Gabriela (2006). “At the crossroads of knowledgeexisting employees that is based on best practices for online management and social software,” Electronic Journal ofsocial network usage. For example, not all employees may Knowledge Management v4n1 p1-10. PDF available atknow how to use them effectively or be in agreement with www.ejkm.comcompany policies. Often, employees need to be reminded Awazu, Y. (2004). “Informal roles and intelligencethat they are representing the company at all times and activities: some management propositions,” Journal ofthe same rules apply online as well as offline. Online social Competitive Intelligence and Management, v2n1 p16-networks can help empower employees as advocates of a 24.brand or an organization, but those employees need tounderstand what the company considers as appropriate Blomqvist, Kirsimarja; Levy, Juha (2006). “Collaborationbehaviour. capability – a focal concept in knowledge creation and collaborative innovation in networks,” International Journal of Management Concepts and Philosophy, v2n1 p31-48.SUMMARY This article presents recent research conducted hoy_9645.pdffor the Doctor of Business Leadership degree at the Chesbrough, Henry (2006). Open Business Models: HowUniversity of South Africa. We gathered additional to Thrive in the New Innovation Landscape. Boston:qualitative information from in-depth interviews with Harvard Business School Presssenior managers to gain insights into some suggested bestpractices for organizations wishing to use online social like LinkedIn. Innovation-Landscape/dp/product- description/1422104273 Inter-firm relationships facilitated through onlinesocial networks like LinkedIn are both a collaborative asset Cross, Robert; Parker, Andrew (2004). The Hidden Powerand a competitive risk. Although there are clear benefits to of Social Networks. Boston: Harvard Business Schoolsharing ideas and problems with an extended professional Publishingnetwork, there are also risks of inappropriate or accidental of sensitive information with competitors due to a Understanding/dp/1591392705lack of formal policies, guidelines, or training around the Erasmus, Rene (2005). The Impact of Communities ofappropriate usage of online social networks and the types Practice (CoP) on Inter-firm Alliance Research Teams.of information that can and can’t be shared over these DBL thesis. University of South Africa. Pretoria. 132networks. pages These risks can be mitigated though best practices as the creation of explicit guidelines on inter-firm thesis.pdfinformation sharing as well as training to educate users onthe use and interpretation of the guidelines. Employing Fleming, Lee; Marx, Matt (2006). “Managing creativity inthese risk reduction strategies will ensure that the benefits small worlds,” California Management Review, v48n4of inter-firm connectedness continue to outweigh the risks. p6-27. Online social networks continue to be a fast-growing, and the adoption of these tools by business CMR2006.pdfand other organizations is arguably still in its infancy. Granovetter, Mark (1973). “The strength of weak ties,”More research is needed to clarify the role that online American Journal of Sociology, v78n6 networks can and should play, both in and betweenorganizations. The research summarized in this paper intended to help serve as a starting point for further into the field. Undoubtedly, some of the opinions Gulati, Ranjay; Gargiulo, Martin (1999). “Where dopresented here will already have changed since May 2010, interorganizational networks come from?” Americanthough the suggested focus areas of guidelines and training Journal of Sociology, v104n5) p1439-93.continue to be important. 38 Competitive Intelligence
  6. 6. LinkedIn inter-firm relationshipsMcKenzie, J.; van Winkelen, C. (2006). “Creating successful partnerships: the importance of sharing Yannakou, Anthos; Gorjestani, Nicolas (2004). Increasing knowledge,” Journal of General Management, v31n4 knowledge flows through global research networks. p45-61 African Policy Institutes Forum, Harare, November 15-16, 2004. do?UIN=192897413&ETOC=RN, Henry (2009). “Rebuilding companies as TheGlobalResearchAllianceSEPPaper.doc communities,” Harvard Business Review, v87n7 p140- 143.Nebus, James (2006). “Building collegial information networks: a theory of advice network generation,” Robert Duncan is currently completing the Doctor of Business Leadership (DBL) degree at the University of South Africa. Academy of Management Review, v31n3 p615-637. He has a BA in Economics from the University of Ottawa, an MBA from York University and is a Certified Management bqh1mtb26wwtldkm/ Consultant. Robert’s consulting firm, Great Capes ConsultingO’Murchu, Ina; Breslin, John; Decker, Stefan (2004). is focused on professional speaking, training and consulting in “Online social and business networking communities,” the areas of leadership, teamwork, intelligence and innovation. DERI Technical Report, August. He is the author of books on teambuilding and competitive intelligence, and is co-author of a book on improvisation as a business tool., Mike; Gray, Christian (2007). “Online social networks, virtual communities, enterprises and information professionals,” Searcher. V15n7 July/ August. 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 ofSchmitz, Christoph (2005). Towards self-organizing a 2000 person portfolio of high-tech business units in South communities in peer-to-peer knowledge management Africa, CEO of a 350 person joint-venture in Australia. He [Online]. 6 pages. 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 aSnowden, David (2005). “From atomism to networks in PhD from the University of Pretoria; his thesis focused on the social systems,” The Learning Organization, v12n6 strategic management of innovation and technology to help p2-11. organisations become internationally competitive and regionally relevant. htm?articleid=1523900Tapscott, Don; Williams, Anthony (2006). Wikinomics: How Mass Collaboration Changes Everything. New York: Portfolio. Rene Erasmus has worked on a wide range of functions at middle and senior management levels in South Africa and Changes-Everything/dp/1591841933 is a consultant on knowledge management; strategic human resources management; corporate social responsibility andThompson, Clive (2006). “Open-source spying,” New strategy. She is a tutor on the MBA program and a promoter on York Times, December 3. the doctoral program of the School of Business Leadership (SBL) of the University of South Africa. Rene has an MBL and DBL magazine/03intelligence.html degree from the University of South Africa, Pretoria.West, Joel; Lakhani, Karim (2008). “Getting clear about the role of communities in open innovation,” Industry and Innovation, v15n2 p223-231.Volume 14 • Number 3 • July/September 2011 39