Internal Social Networks: The Danger of Misleading Promises

Introduction

Today’s business is fast. Increased competition, dynamic environments as well as broad access to a global market pose challenges to business operations and organizations’ internal coordinating mechanisms alike (Montoya-Weiss, Massey, & Song, 2001; Siggelkow & Rivkin, 2005). Hence, internal processes must meet the requirement of enabling the rapid flow of information to ensure well-informed decision making and successful coordination (Ericson, 2009; Lawrence & Lorsch, 1967; Milgrom & Roberts, 1995). As a result, the recent upsurge of social networks in different areas and these networks’ seemingly superior potential for providing an efficient coordinating mechanism have come to the forefront of academic interest (Gloor, Paasivaara, Schoder, & Willems, 2008; Hossain & Zhu, 2009). However, a question yet unanswered is whether these networks actually can help companies in establishing processes that meet the above mentioned requirement (Andriole, 2010). In this chapter, we propose that the fit of network activities and co-determination structures is an important aspect in order to answer this central question. Therefore, we ask if democratically structured networks are more suitable than meritocratically structured ones for companies to learn from.

Looking back, most companies used a hierarchical, top-down setup (Fayol, 1949). This setup had top management decide on strategic matters while management at lower levels of the firm dealt with more functional issues and front line employees were hardly involved in any kind of decision making. New organizational models have tried to reduce the rigidity of this original top-down model by setting up matrix-based structures, which cross-linked hierarchical lines with functional expertise (Galbraith, 1971). Until today, internal communication has continuously been revolutionized by establishing more internal communication channels to the point where finally any employee has the chance to contact and to be heard by upper management (Aldrich, 1979; Wyld, 2008). However, even in the research on these new organizational models the question of voting weight has largely been left unaddressed.

In parallel to this development a special kind of user network began a triumphal course – known today as social networks. Amongst other examples there are Facebook, MySpace, and Google+. To the huge surprise of many stakeholders, these networks rapidly developed into multi-billion user networks, in which members not only communicated daily issues, but also coordinated work related tasks, special events and much more content relevant to business contexts. As a consequence, these networks were quickly used as much by individuals as by companies (Dutta, 2010; Haislip, 2006; Wilson, Guinan, Parise, & Weinberg, 2011). Examples such as the role of Facebook in the Arab Spring demonstrated the unforeseen potential inherent to social networks (Benn, 2011), raising huge expectations about the advantage of their internal use in an organization. However, as companies have thus far merely learnt to use such networks externally (e.g., Schilling & Phelps, 2007), the question is how to most effectively internalize these coordination mechanisms into existing company structures, if this is possible at all. Moreover, in order to answer this question it is important to acknowledge that there are several different kinds of networks to learn from. Hence, a more comprehensive perspective on their types and their respective benefits is needed.