Case 18 Social Networking and Social Responsibility The Beginnings of Social Networking Early social- networking web sites started in the form of generalized online communities such as The WELL (1985), Theglobe .com (1994), Geocities (1994) and Tripod .com (1995). The goal of these online communities was bringing people together to interact in virtual “chat rooms” to share personal information and ideas, which served as the start of the “blogging” phenomenon. These sites included Classmates .com (1995), focusing on ties with former peers, and SixDegrees .com (1997), which focused on indirect ties. The sites had the capabilities of creating user profi les; sending messages to users stored on a “friends list”; and searching for other members with similar interests in their profiles. Although some of these features predated these web sites, this was the first time such functions were available in one package. Between 2002 and 2004, four social networking sites (SNSs) emerged as the most pop u lar form of these sites in the world: Friendster in 2002 (which Google tried to acquire in 2003), MySpace and LinkedIn a year later, and fi nally, Bebo. By 2005, MySpace had emerged as the largest such site and was reportedly getting more page views than Google. Facebook emerged in 2004 and grew exponentially. In 2005, Facebook opened to the non- U.S. college community and created externally developed applications that enabled graphing of a user’s own social network and the capability of linking social networks and networking. A Growing Global Trend Social networking continues to be one of the fastest- growing global trends. According to Pew Research Center’s Internet and American Life Project, “the number of those using social networking sites has nearly doubled since 2008 and the population of SNS users has gotten older.” Fifty- nine percent of Internet users claim to use at least one SNS— 92% of SNS users use Facebook, 29% use MySpace, 18% use LinkedIn, and 13% use Twitter. Most people in the world today have either heard of or actively use Facebook, Twitter, MySpace, LinkedIn, or one of the many other SNSs available to the public. Common uses for social networking include: staying connected with fellow users, following world news and gossip, and sharing opinions and life experiences. SNSs, however, are being used for commercial purposes often unknown to the user. Social Networking in the Corporate World Businesses gravitated toward social networking as an innovative marketing strategy around March 2005 when Yahoo launched Yahoo! 360°. Various SNSs have since sprung up catering to different languages and countries. It is estimated that there are now over 200 SNSs using these existing and emerging social networking technologies. This number does not include the niche social networks made possible by ser vices such as Ning. Twitter, launched in 2006, has eclipsed many other social network ser vices, even though it lacks some features that were consi.

1. Case 18
Social Networking and Social Responsibility
The Beginnings of Social Networking
Early social- networking web sites started in the form of
generalized online communities such as The WELL (1985),
Theglobe .com (1994), Geocities (1994)
and Tripod .com (1995). The goal of these online communities
was bringing people together to interact in virtual “chat rooms”
to share personal information and ideas, which served as the
start of the “blogging” phenomenon. These sites included
Classmates .com (1995), focusing on ties with former peers, and
SixDegrees .com (1997), which focused on indirect ties. The
sites had the capabilities of creating user profi les; sending
messages to users stored on a “friends list”; and searching for
other members with similar interests in their profiles. Although
some of these features predated these web sites, this was the
first time such functions were available in one package.
Between 2002 and 2004, four social networking sites (SNSs)
emerged as
the most pop u lar form of these sites in the world: Friendster in
2002 (which
Google tried to acquire in 2003), MySpace and LinkedIn a year
later, and fi nally,
Bebo. By 2005, MySpace had emerged as the largest such site
and was reportedly
getting more page views than Google. Facebook emerged in
2004 and grew
exponentially. In 2005, Facebook opened to the non- U.S.
college community and
created externally developed applications that enabled graphing
of a user’s own

2. social network and the capability of linking social networks and
networking.
A Growing Global Trend
Social networking continues to be one of the fastest- growing
global trends. According to Pew Research Center’s Internet and
American Life Project, “the number of those using social
networking sites has nearly doubled since 2008 and
the population of SNS users has gotten older.” Fifty- nine
percent of Internet users
claim to use at least one SNS— 92% of SNS users use
Facebook, 29% use
MySpace, 18% use LinkedIn, and 13% use Twitter. Most people
in the world
today have either heard of or actively use Facebook, Twitter,
MySpace, LinkedIn,
or one of the many other SNSs available to the public. Common
uses for social
networking include: staying connected with fellow users,
following world news
and gossip, and sharing opinions and life experiences. SNSs,
however, are being
used for commercial purposes often unknown to the user.
Social Networking in the Corporate World
Businesses gravitated toward social networking as an innovative
marketing
strategy around March 2005 when Yahoo launched Yahoo! 360°.
Various SNSs
have since sprung up catering to different languages and
countries. It is estimated
that there are now over 200 SNSs using these existing and
emerging social networking technologies. This number does not
include the niche social networks

3. made possible by ser vices such as Ning. Twitter, launched in
2006, has eclipsed many other social network ser vices, even
though it lacks some features that were considered essential
aspects of a SNS.
Social networking allows businesses to place their company
information
within an online network to build contacts and relationships
with individuals that
share the same interests and insights. It creates an outlet for
interactive communication using online communities. The tools
available also allow businesses to reach millions of people in a
short amount of time, usually with no cost attached. Companies
have found that SNSs such as Facebook and Twitter are great
ways to build their brand image. According to Jody Nimetz,
author of Marketing Jive, there are fi ve major uses for
businesses and social media: 1) to create brand awareness; 2) as
an online reputation management tool; 3) for recruiting; 4) to
learn about new technologies and competitors; and 5) as a lead-
generation tool to intercept potential prospects. These
companies are able to drive traffic to their own online sites,
while encouraging their consumers and clients to have
discussions on how to improve or change products or ser vices.
Companies and advertising firms use the sites to analyze
consumer trends,
opinions, and influence consumers to view their products
favorably. Is this practice
of tracking user information without their knowledge ethical?
Some companies
might state that they are simply trying to leverage social
networking to create
a creative work environment for their employees and offer a
better product to
consumers. IBM is a company that uses social networking in
both ways. The

4. ethical implications of social networking and consumers as
influencers are much
clearer when we take a closer look at how a company like IBM
uses social networking in its daily operations.
Social Networking at IBM
International Business Machines, or IBM, is one of the most
notable companies
operating in the world today. According to their company profi
le, IBM was
founded in 1910 and currently employs over 440,885 full- time
employees in 200
countries tasked with manufacturing and selling computer
hardware and software,
as well as infrastructure, hosting, and consulting ser vices in
areas ranging
from mainframe computers to nanotechnology. The company’s
fi ve segments of
operations include: Global Technology Ser vices, Global
Business Ser vices,
Software, Systems and Technology, and Global Financing. IBM,
as a world leader
in computers and computer software, has a unique method for
understanding and
applying new technologies for solving technical business
problems and leveraging
new technologies in the technology sector. The use of social
media and
social networking is no different. Companies continue to fi nd
ways to use social
media sites like Facebook and Twitter to increase their bottom
line. At IBM, social
networking has already been implemented to generate new
ideas, increase employee morale, monitor consumer trends, and
increase visibility and sales for the

5. company.
Social networking at IBM is publicly advertised as a creative
and innovative
way to keep employees connected and keep the company in tune
with consumer
demands. The framework for internal social networking among
IBM employees is an employee- edited directory known as
“Blue Pages.” This directory is used over 6 million times a day
by 400,000 IBM employees to access information on
other employees and send them instant messages. Employees at
IBM have control
over their profi les and can add photos, resumes, or other
personal information
to foster a sense of community with other IBM employees. The
company
points to the sharing of ideas or opinions on new technologies
and developments
as one of the main advantages of such a site.
IBM also offers an internal network space where employees can
post blogs
for other employees to read. Blog topics range from personal
opinions on various
technologies to updates on work that is being done by different
groups within the
company. The blogs offer a unique way for employees to
communicate with each
other and keep current on company events.
Wikis
Another element of social networking within IBM is
information- storing web sites
called wikis. The leaders of the various software production
teams at IBM manage

6. these wikis and allow team members to share memos and other
information
for the entire team to view. Each team member can share his or
her progress with
the other team members through these wikis, allowing team
leaders to monitor
the entire project without having to contact each team member
directly. The major
advantage of this outlet is that IBM employees may work from
home or other locations without having to travel to a single
destination in order to complete a project. This is especially
important for the 42% of IBM employees that regularly
work from locations other than IBM facilities.
IBM has a policy in place that strictly forbids any employee
from joining the
company’s social- networking platforms anonymously. This
ensures that every
comment or post made by an IBM employee is transparent to
other employees
in the company. The onus is on the employees to police
themselves and forward
any inappropriate comments or posts to upper management.
While these social- networking tools attempt to connect
employees, IBM has
also leveraged social media to stay connected with customers.
IBM developed a
social media monitoring software known as the SPSS Modeler,
which the company
uses to search for customer comments, sentiments, and opinions
on various
social- networking platforms like Twitter, Facebook, and online
blogs. This tool
can mine through large piles of data searching for specifi c text,
industry terms,

7. or developing technology that may be pertinent to IBM’s
customers. IBM uses
this information to stay up- to- date with the latest trends and
consumer behaviors.
If consumers have positive or negative opinions about IBM
products, the company
can track the feedback and make changes accordingly.
IBM has also developed a software known as Cognos Consumer
Insight,
which can perform predictive analytics on the text and data that
the SPSS Modeler
can pull from Twitter, Facebook, etc. This technology takes the
data collected
by the SPSS Modeler from the SNSs, analyzes the consumer
sentiment, and
makes predictive analytical decisions based on the information
it is viewing. In
essence, the computer software is a form of artificial
intelligence that performs the job of marketing analysts. IBM
uses this software internally, but also sells it to other large
companies and retailers, along with the ser vices necessary for
these companies to learn how to analyze the data. Some
companies already using this IBM technology are Rosetta Stone,
Navy Federal Credit Union, and Money Mailer.
The ingenuity and resourcefulness displayed by IBM leveraging
social media
tools to enhance their business is a reminder that thinking
creatively can benefi t
even the largest companies. The use of social networking within
the company
helps to generate new ideas and develop a sense of camaraderie
among the
employees at minimal cost to IBM. Employees are allowed to
develop a personal
identity and share their stories and experiences through blogs

8. and personal profi
les. For a company that thrives on creativity and new
technology, social networking is the perfect way to share ideas
and opinions without the limitations that come from simple e-
mail correspondence.
Using Social Media for Consumer Data Collection
The ethical implications of using social networking to monitor
consumer demands
are far more complex. Unlike using social networking internally
to generate
discussion among employees bounded by rules and policies,
external uses
of SNSs allow IBM to monitor what consumers are saying
without consumers
knowing that they are being monitored. Although this is not an
illegal practice
because the information is publically posted on social media
platforms, the question must be asked, is it ethical? IBM is
openly developing and selling their software to other companies
so that they, too, can track consumer sentiment through social
networking and make key business decisions based on
information that consumers are sharing on the Internet. The
term used by IBM’s vice president
for social business and collaboration solutions, Sandy Carter is
“analytics.” Carter
prefers to focus on the positive results that social networking
has within the company, but also admits that analytics has
become a key component of “tracking
sentiments, and fi nding out how the community is feeling about
an issue.” She
goes on to say that IBM uses “deep analytic capability to fi nd
out what is being
said. Then we look at affinities.” IBM can track users tweeting
about the company,

9. users that are the most influential tweeters, and so on. Tracking
these types
of postings allows the company to make decisions based on
consumer feedback
without the consumers ever knowing that they influenced the
decision. Carter
does not condemn the company’s decision to use social media to
analyze consumer
decisions, and justifies the practice by making the argument that
whether
or not your company participates in social media or monitors
consumer sentiment,
most brands are already openly discussed by consumers, so you
might as
well monitor what they are saying.
Legality of Social Networking
As social networking grows rapidly, the debate over legal
implications of using
various social- networking tools continues. IBM is using social
networking to support internal innovation and form a closer
bond among its various departments.
At the same time, the company is attempting to deflect the focus
from its other uses of social networking that include developing
and using software to track customer sentiments and infl uence
consumer behaviors. From a legal standpoint, IBM is not
violating any existing laws, but social networking is an area in
which laws are constantly evolving. Most of the laws in
existence today protect socialnetworking companies from
lawsuits brought on because of information that users have
posted on their pages. These types of lawsuits would be relevant
to companies like Facebook and MySpace, where users share
their opinions and ideas to a larger community. Although IBM
encourages their employees to write blogs and share information
on their personal profi les, any content that is displayed by

10. employees must adhere to the IBM code of conduct.
The major hurdle for IBM regarding their external data
analytics practice
revolves around the privacy issues that SNSs now face on a
regular basis. Sites
such as Tagged and Facebook have come under legal scrutiny
for using members’
e-mail address books to solicit new members, or for
broadcasting members’ transactions with affi liated web sites on
their Facebook pages. The lawsuits these
SNSs faced were based on the premise that the consumer or user
has certain
rights to privacy that these companies violated. If companies
like Facebook are
coming under fi re for breach of privacy, how does IBM get
away with monitoring
user information and using it to infl uence consumer decisions
without their
knowledge? Although no laws currently exist to prevent IBM
from continuing this
practice, changes are being made by the government and SNSs
themselves to
slowly limit intrusion into personal information. Companies that
participate on
SNSs have the same potential liabilities as any one of us has,
including copyright
infringement, trademark infringement, and defamation.
Analyzing information that
users openly disclose on their profi le pages to infl uence
business decisions is
not considered illegal because it is the users’ job to withhold
any information that
they do not want companies to see.
A person who has a Facebook page and openly shares opinions

11. or personal
information on that page is giving Facebook own ership of
his/her photos and postings; and, accepts the fact that
information is publically viewable. Monitoring practices have
come under scrutiny by individual users and consumer rights
groups, but few lawsuits have challenged this type of data
collection. Any lawsuits that have challenged it are usually
directed at the SNSs themselves for failing to maintain certain
levels of user privacy. Because social networking is a relatively
new trend whose potential is not fully understood, the
legislation governing this type of technology is not yet up to
pace with its rapid growth and expanding capabilities.
It is feasible that within the next 10 years, Sandy Carter and
executives at
other companies will not be able to rely on social media for
consumer analytics.
In 2010, the Federal Trade Commission (FTC) made it clear that
federal regulation
may be necessary to protect the private information of
consumers if self-regulation
fails. At the same time, the U.S. Judiciary Committee has
passed the
Personal Data Privacy and Security Act and the Data Breach
Notification Act,
which broaden consumer privacy rights regarding information
collected and distributed by “commercial data brokers.” These
data brokers are the types of companies to which IBM sells its
analytic software. IBM uses social networking both internally
and externally, and the ethical implications of those uses are
significant. The company openly promotes its usage of internal
fi le sharing and blogging, but all employee actions are guided
by IBM’s ethics codes and value statements. IBM’s use of
analytics to monitor consumers is technically legal, but
ethically questionable.

12. Ethical Implications
IBM is one of many large fi rms that uses analytics in its day-
to- day operations and continues to develop analytic software
for other companies. The company also
promotes the use of social- networking tools to share ideas and
connect with different groups operating in the company. A
question still remains about whether
or not this and other practices are ethical.
Ethical implications may be considered from two angles: the
internal and
external or gan i za tion al uses of social networking. A
company’s use of social
networking to pass along ideas and share personal information
internally may
be ethical and morally acceptable if no harm is done to any user
or the company.
Employee stakeholders interested in developing new ideas and
increasing wages
and benefi ts may help the company with their contributions
using social media.
Customers and customer advocacy groups may also be
interested in purchasing
a product that lives up to its stated advertised online purpose
and that functions at
or above the promised level. Those government, po liti cal
groups, and competitors
that are interested in ensuring that organizations operate in fair
and legal ways
would be observant of the ways social media methods are used
with external
groups, including consumers. Stockholders, suppliers, vendors,
and companies
also have a stake, not only in maximizing their profi ts through
using social media,

13. but also in acting socially responsible toward each other to
ensure business
growth, while protecting consumers and the environment.
Using social networking to share ideas and information with
other employees
or departments internally also aligns with the responsibilities
and moral obligations
a company has to its various stakeholders. Sharing new thoughts
and ideas with
others through social- networking software can potentially
increase opportunities
for successful innovation and product development.
Additionally, as employees
connect with each other at human and communal levels, morale
and motivation
to act ethically increase.
Darker Sides of Social Networking
Using social networking to monitor consumers and analyze
trends without their
knowledge is a different matter, one that is ethically
questionable. Legally, using
data collected by consumers to analyze and infl uence certain
business decisions
is permitted, but the legislation protecting consumers is
constantly changing
and evolving with technology. As quickly as the legal system is
working to catch
up with technology, it could be a practice that is illegal in a
matter of years.
Corporations have an ethical responsibility to inform
consumers; not misrepresent
or withhold information from consumers; not force or take
undue advantage of

14. consumers; and take “due care” to prevent any mishaps. Based
on this framework, companies like IBM are acting unethically
by using social networking to perform customer analytics. First
and foremost, the very nature of collecting data from Facebook
and MySpace without letting the customer know that they are
doing so
breaks the first rule of informing the customer. If customers are
aware that they
are being monitored and permit companies to collect data from
their accounts,
then there may be no legal or ethical issues. An alleged
argument about some
data- collection methods used in analytics to collect unbiased
information, is that
this process can occur without consumers’ awareness.
Corporations also have
a responsibility to not misrepresent or withhold information
about a product
or ser vice that would hinder a consumer’s free choice. By
setting up corporate
SNSs and then luring consumers to view the pages through daily
deals, games,
and prizes, the corporation would be withholding information
from the consumer.
A person without specific marketing knowledge might think that
playing a game
or leaving a comment on the Facebook page of a company is of
little or no consequence. Meanwhile, the company is collecting
and analyzing such activity
while strategizing how to translate a product or brand into a
consumer need and
choice.
A major aim of ethical reasoning is to gain a clear focus on
problems to facilitate
acting in morally responsible ways. In this case, the company

15. that is knowingly
collecting information from consumers without their knowledge
is morally
responsible for the harmful effects of their actions when they
knowingly and freely
acted or caused the act to happen and knew that the act was
morally wrong, or
if they knowingly and freely failed to act or prevent a harmful
act, and they knew it
would be morally wrong for a person to do this. Companies like
IBM that choose
to monitor Facebook, Twitter, and MySpace for data may walk a
thin line between
providing consumers with desirable products and violating
consumer rights.
Government agencies such as the FTC work towards protecting
consumers from
certain acts by providing laws to promote consumer choice, and
protecting consumer privacy. Specifically, the FTC has certain
guidelines represented in the
FTC Act that allows it to work towards preventing deceptive
acts. In Section 5 of
the act, the term “deceptive” is defined as a practice that is
misleading to consumers, or one that affects consumers’
behavior or decisions about the product
or service.
Advancements in technology have certainly blurred the lines
between what
is right and wrong, ethical and unethical. A major issue with
regard to the ethical
implications surrounding the use of technology in the business
world is that technology seems to advance much more quickly
than related legislation.
Questions for Discussion

16. 1. What are the benefi ts and risks associated with a company’s
use of social
networking?
2. Are there any signifi cant differences between a company’s
use of social
networking technologies and an individual use?
3. As a social media user, are you concerned that your
information is tracked for
“advertising” purposes? Why or why not?
4. Compare IBM’s private social network Blue Pages with a
public
social- networking site like Twitter or Facebook. Do you think
user information
is any safer on Blue Pages? Why or why not?
5. What responsibilities do companies have regarding private
company
social- networking sites?
6. Do you think it’s right for companies to collect and analyze
user data from
social- networking sites in order to infl uence consumers? Why
or why not?
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