Social media in business
UD's Basoglu to investigate social media impact on value of firms
10:28 a.m., May 6, 2011--With social media on the rise and the expansive use of technological communications tools to increase companies’ social presences on the web, it is time for firms to evaluate the impact such new business strategies have on their perceived values and market positions. With funding from a PricewaterhouseCoopers (PwC) grant, K. Asli Basoglu plans to research just that.
According to Basoglu, assistant professor of accounting and MIS in the Alfred Lerner College of Business and Economics, in an increasingly competitive environment companies must continuously reassess their potential for growth with new and innovative projects while keeping in mind economic and regulatory factors like social responsibility and sustainability.
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Firms must also strategically address these concerns as new business opportunities as they strive to remain competitive and effective in this challenging environment.
Through her research, Basoglu aims to estimate that value by measuring various investor, client and customer perception factors like the firm’s reputation, trustworthiness and transparency.
“The research will be investigated through the lens of signaling theory,” said Basoglu. “Essentially, buyers and sellers have an imbalance of information through the process of an exchange, and existing literature has shown that firms, in online environments, try to reduce asymmetries of information and signal quality.”
In other words, sellers use things like pricing and branding to send signals to buyers who in turn develop a perception of the quality of a firm’s products or services.
According to Basoglu, because the Internet offers a cost effective way to disseminate information, signaling value through various outlets like websites, Facebook and Twitter accounts can reduce asymmetries between stakeholders and enhance communication.
“Ultimately, the findings of this research could contribute significantly to theory and practice by enabling us to analyze how business innovations through online communication and social media can influence perception,” said Basoglu.
Basoglu’s grant, which totals $10,000, was made possible through the PwC INQuires, a program of funding for applied research.
PwC initiated the program four years ago to assist faculty and doctoral students seeking to increase the knowledge base that contributes to the practice of accounting.
Article by Kathryn Marrone
Photo by Kathy F. Atkinson