Social networking and the risk to companies and institutions

Abstract

Social networks open up new business opportunities for customer acquisition and retention, facilitate knowledge transfer within the company, and can positively influence work climate. However, they can also quickly destroy a company image that took years to build, while the use of social networks at work not only risks a loss in productivity but may also undermine legal obligations. Eager networkers might also divulge company internals to competitors or the public at large. And last but not least, “friendships” open up completely new attack vectors for professional hackers, thus significantly increasing company exposure to online break-ins. This article briefly summarizes the opportunities and dangers that this development poses for business. This contribution is based on an earlier article by the same authors (in German) (Langheinrich and Karjoth, 2010).

Introduction

By the last count (July 2010), the popular online social networking site (SNS) Facebook featured not less than half a billion users (Ostrow, 2010) – that is a few million more than, say, the population of all 27 EU member states together. In the US alone, Facebook’s user base grew more than 350% in the last 24 months – from 27 million users in July 2008 to more than 125 million in July 2010 (Burcher, 2010), representing 40% of the country’s population.

While much has been written about the benefits and risks of SNSs for individuals (e.g., Bilge et al., 2009, Fogel and Nehamad, 2009, Boyd and Ellison, 2007), their widespread use also increasingly affects companies and public institutions, even though such “legal persons” hardly seem to be in need of finding friends. However, today’s SNSs have become a powerful tool for customer acquisition and retention, employee recruiting, for intra-company knowledge transfer, and for creating a positive workplace atmosphere.

At the same time, the ability of SNSs to quickly destroy a highly profitable brand image that took years to build up, using nothing more but a low-cost grassroots campaign, is equally powerful. Also, Facebook-enabled employees risk neglecting their actual work over extensive networking (as of April 2010, almost 7% of all corporate Internet traffic is said to have come from accessing Facebook pages (See http://www.network-box.com/node/533)), or unknowingly spilling company secrets to “friendly” competitors. Firing employees that are “friends” with their managers might risk lawsuits that stipulate the improper use of private information, while hacking the SNS accounts of management can significantly improve the success rate of phishing attacks. Should companies avoid or embrace SNSs?