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Value added of social media in open innovation community: the perspective of a community-hosting company that produces B2B products

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Social media and open innovation communities are becoming increasingly important not only for business-to-consumer (B2C) companies, in which context they have resulted in relatively large and fast-growing research body, but increasingly also to the development of business-to-business (B2B) products and innovations. In order to find out how social media and open innovation communities can be used to create value for the development of B2B product, we selected a single case study research method. The selected single case represents a unique case regarding open innovation community and social media use in the development of complex B2B products.
Value added of social media in open innovation
community - the perspective of a community-hosting
company that produces B2B products
Jari Jussila
Tampere University of Technology
Korkeakoulunkatu 8
FI-33720 Tampere
+358 40 717 8345
jari.j.jussila@tut.fi
Jani Lyytikkä
Deloitte Oy
Albertinkatu 10 B 39
FI-00150 Helsinki
jani.lyytikka@deloitte.fi
Heli-Aramo-Immonen
Tampere University of Technology
Pohjoisranta 11
FI-28101 Pori
+358 40 8262931
heli-aramo.immonen@tut.fi
Hannu Kärkkäinen
Tampere University of Technology
Korkeakoulunkatu 8
FI-33720 Tampere
+358 40 8490228
hannu.karkkainen@tut.fi
ABSTRACT
Social media and open innovation communities are becoming
increasingly important not only for business-to-consumer (B2C)
companies, in which context they have resulted in relatively large
and fast-growing research body, but increasingly also to the
development of business-to-business (B2B) products and
innovations. In order to find out how social media and open
innovation communities can be used to create value for the
development of B2B product, we selected a single case study
research method. The selected single case represents a unique case
regarding open innovation community and social media use in the
development of complex B2B products.
Categories and Subject Descriptors
J.4 [Social and Behavioral Sciences]: Economics.
General Terms
Management, Economics, Human Factors, Documentation,
Performance.
Keywords
Social media, open innovation community, value creation, value
network analysis, value added, B2B.
1. INTRODUCTION
Social media and open innovation communities are becoming
increasingly important not only for business-to-consumer (B2C)
companies, in which context they have resulted in relatively large
and fast-growing research body, but increasingly also to the
development of business-to-business (B2B) products and
innovations. Aiming at understanding what added value social
media brings to the product development of a B2B company
hosting an online open innovation community, we aim to find out:
1. What different tangible and intangible value exchanges can
be identified from the perspective of studied B2B company
from an online open innovation community?
2. What is the role of social media in supporting the tangible
and intangible value exchanges?
2. THEORY AND RELATED RESEARCH
2.1 Social media and online innovation
communities in B2B
Despite the popularity of social media and its increasing
utilization among B2B companies, research is limited and focuses
largely on the consumer in a B2C domain rather than on B2B type
of businesses [29, 41]. Studies exist where social media and
online communities have been studied in companies that operate
in B2B markets or in which B2B companies are involved [14, 15,
32, 31, 16, 6, 36, 13, 28], but where the focus has not been on the
development of B2B products. The few found studies that discuss
social media and online innovation communities in development
of B2B products [10, 18, 9] have either focused on how to
motivate customers (or consumers) to participate in innovation or
how to implement and organise innovation competitions. With the
exception of Helander et al. [20] and Ketonen-Oksi et al. [22] no
previous studies were found that discuss social media and open
innovation communities from the perspective of value creation in
B2B companies product development.
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2.2 Value creation
Measurement and even the identification of “value” is not an easy
task. This is due to the multifaceted and complex nature of value;
it is a concept that is commonly used by both academics and
actors in the field, but it is often rather unclear what is actually
meant by it in different contexts [12, 19]. In business management
literature a commonly presented view of value is to understand it
as the trade-off between benefits and sacrifices [34, 39, 35, 33, 27,
38] which can be both monetary and non-monetary [1, 38]. The
utilization of social media in business strives mostly for monetary
value, as the ultimate objective for companies is to create profit
for their owners. Nevertheless, there is also a great value potential
included in social media for companies which cannot be directly
or easily measured in monetary terms, such as new knowledge in
terms of user feedback and ideas for product development, to
mention a few. These kinds of non-monetary value sources may in
the long run be even more important, because in the end, they may
create the biggest value and turn also into direct monetary value
e.g. in the form of new market areas, new product/service
innovations or even as the key enabler of company growth.
Furthermore, from a community-owning B2B supplier
perspective, they may for instance create various types of
customer lock-in effects, making it difficult for customers to turn
to other suppliers, and therefore, resulting in customer loyalty [5,
28]. Most approaches to analyzing and reconfiguring value
creation in enterprises have not taken into account the role of
knowledge and intangible value exchanges as the foundation for
networked enterprises [1].
2.3 Recent research on value creation of
social media and online communities
Bechmann & Lomborg [7] demonstrated that in terms of
processes of value creation previous research has addressed social
media either from the perspective of economic and socio-political
value creation, i.e. power, exploitation and business revenues, or
from the perspective of value creation as sense-making, i.e.
creative explorations of the self and management of social
relationships in everyday life. They argue that these two distinct
bodies of literature, namely industry-centric and user-centric
studies on user participation and usage patterns in social media,
have different assumptions and implicit conceptions of the user
[7]. This study follows the industry-centric stream of social media
literature that can be further divided into at least three
perspectives on user participation as value creation for the
industry: a) value creation from user networking, updating and
content contribution, b) value creation as contribution to
development and innovation, and c) value creation from the user’s
data [see 7]. In this study value creation is addressed especially as
contribution to development and innovation, regarding user
participants as a central element in product development and
innovation from the perspective of a B2B company.
Related to IT-based development and innovation, Haller [18]
recognized three ways companies can elicit user contribution to
development and innovation: 1) asking for challenges which
people face in their daily life, 2) asking for new product or service
concepts, c) request the development of fully developed solutions
to a defined problem.
2.4 Visualizing value with value network
analysis
Value networks have been studied extensively: for example, the
value net tool by Parolini [33], the value system continuum by
Möller, Rajala & Svahn, [30] and the model of value-creating
networks by Kothandaraman and Wilson [23] offer interesting
viewpoints to the subject. When examining value creation in a
network, however, it is especially fruitful to view it with a
perspective of different kinds of exchanges, as according to Allee
[3] they can provide more dynamic and deeper picture of the
network than is achieved e.g. through a mere social network
analysis. Furthermore, according to Allee [2][4], value network
analysis (VNA) that bases on identification of different exchanges
enables to make the intangible as visible and to model complex
value flows and human collaborations.
These kinds of network exchanges are carried out by the actors to
each other, as value is created through exchanges of monetary and
non-monetary benefits and sacrifices [see e.g. 17]. Allee [1] has
presented a division of exchanges in the value networks, which
include both monetary and non-monetary issues. The exchange
divisions are as follows: 1) goods, services, and revenue, which
refer to material exchanges that are usually easier to measure also
in monetary means, 2) knowledge, and 3) other intangible
benefits, such as customer loyalty, which are not accounted
directly in the financial sense. These exchange groupings are
further utilized in the VNA process, where the actors and their
roles are firstly identified, and further the exchanges of tangibles
and intangibles are analysed. In the VNA modelling, the nodes
represent participants and the roles they play. Furthermore, in the
VNA illustration the solid lines between the actors show tangible,
formal or contractual deliverable exchanged between the actors,
whereas the dashed lines show intangible or informal value being
provided by the actors. [see e.g. 4] Importantly, the VNA doesn’t
stop to this kind of identification of the actors, their roles and the
tangible and intangible exchanges between them, but instead it
continues to an impact analysis that in fact opens up the created
value to each of the actors through analysis of the trade-off of
benefits and sacrifices.
2.5 Roles of social media in online innovation
communities
A useful framework for conceptualizing the role of social media,
in our case in value creation, is the categorization of 5Cs based on
the various different functions enabled by social media tools:
these functions include communicating, collaborating, connecting,
completing, and combining. The frame was introduced by Vuori
[37]. Examples of social media tools based on the 5Cs
categorization are illustrated on Table 1
Table 1. Roles of social media based on 5C categories [37, 21].
Tools
Purpose
Application
examples
Communicating: publishing and sharing content
Blogs, media sharing
systems, discussion
forums,
microblogging,
instant messaging
Publish, discuss,
express oneself,
show opinion,
share, influence,
store
Blogger,
WordPress,
Flickr, YouTube,
Twitter,
SlideShare, Prezi
Collaborating: collective content creation
Wikis, shared
workspaces
Create content
together,
collaboration,
produsage
Wikipedia,
TWiki,
GoogleDocs,
MatchWare
Connecting:
networking people
Social networks,
communities, virtual
worlds
Socialise, network,
connect, play,
entertain
Completing: adding, describing and filtering
Tagging, social
bookmarking,
syndications, add-ons
Adding metadata,
describing content,
subscribing
updates,
combining,
serendipity
Combining: mixing and matching
Mash-ups, platforms
Combining other
tools and
technologies
according to
situation and needs
3. RESEARCH APPROACH
3.1 Research Methodology
In general, case studies are useful for investigating contemporary
phenomena within their real-life context [see e.g. 40]. Case study
method has been found to be a legitimate way of adding to the
body of knowledge in the information systems field; it provides
detailed and analyzed information about real world environments
through examples of phenomena under research [8]. This case
study is explorative and descriptive, due to the relative novelty of
the topic, and it is necessary to screen the value potential from
value creation perspective.
Considering the case selection, we wanted to identify a case
company and case community from which we can learn as much
as possible from this topic. Thus, we chose an information-
oriented case selection strategy [11].
To this purpose, first of all, the community had to be oriented to
development of hosting company’s products, and particularly
B2B- products. Naturally, we had to select a community which
could be accessed by researchers to allow netnographic
observation [26, 24, 25]. To maximize learning, we wanted to
select a community which was very active and professionally
hosted. If possible, it should have been operating for some time to
have evolved its content and community approaches to involve
various types of professional users as far as possible. We also felt
it necessary that the community would be versatile in in relation
to allow the development of hosting company’s B2B- products, as
well as versatile in its social media use. To this purpose, we
screened existing professional B2B- hosted communities. Among
the pinpointed ones, one of the pioneering communities is
National Instrument’s Developer Zone, which is relatively purely
built around the company’s professionally oriented business-to-
business products.
To study the community and its value creation activities, and to
get a data-based view of,the community operation, we ended up to
selecting observation of the community actor transactions by
netnographic approach.
The netnographic research approach has been designed for
studying online communities based on the observation of textual
or other discourses in selected communities. The subject area of
the observation of textual discourse was specifically various
discussions and discussion groups most significantly related to the
facilitation of current B2B products and the development of new
products. To collect data, participant observation was used as a
part of our netnographic approach to identify different types of
product development- related discussions (or transactions; see
tables 1-3). The observation included registration to the online
platform, browsing through the available textual discourses
related to the above objectives, and identifying, observing and
analyzing the social media- related actions the companies
performed in the community.
3.2 Case National Instruments
National Instrument has been founded in 1976, and it produces
various different types of instrumentation products for other
companies and research organizations. Among main products are
graphical development environments, virtual instrumentation tools
and modules and interfaces for the automation industry.
NI developer Zone is an online community, the purpose of which
is heavily to support the development of existing and new
professional B2B products and services. Some of the main
objectives are to allow the sharing of up-to-date information about
company’s products and technologies to users, and to offer them
to share their own development ideas and concepts. The main
actors that the community actors consist of are National
Instruments employees, end users of their products, and outside
experts.
As what comes to the selected case, it represents an interesting
exploration on how social media and open innovation
communities can be used to support the value creation process of
a B2B company.
4. RESULTS AND FINDINGS
Value network analysis offers a way to model, analyse, evaluate,
and improve the capability of a business to convert both tangible
and intangible assets into other forms of negotiable value, and to
realize greater value for itself [2]. The future success of a
company or organisation as a whole depends on how efficiently it
can convert one form of value into another form and how
effectively company can utilize intangibles as a barter units in
exchange. In Figure 1 we introduce the focal value network.
National
Instruments
End user
External
experts
Product web casts and videos
Publishing Software code
Rewarding
Product news
Answers to questions
R&D ideas
Developed software code
New product consepts
Questions and feedback
Customer loyalty
Figure 1. Value network between end users, experts and National
Instruments. Dashed lines are describing intangible value
exchanges and lines describe tangible value exchanges.
Transactions, or activities, originate from one participant and end
with another. In the figure 1 the arrow is a directional link that
represents movement and denotes the direction of what passes
between two roles. Solid lines are formal contract exchanges
around product and revenue, while the dashed lines depict the
intangible flows of market information and benefits. [2]
According to Allee [2] value realization is the act of a turning a
value input, either tangible or intangible, into real gains, benefits,
or assets that contribute to the success of the participants and their
organization. In value network analysis roles are the critical
agents for value conversion. Therefore, it is useful to explore
value creation at the level of key roles. An impact analysis (Table
2) shows whether a role is realizing value from the inputs it
receives. The first column of the table indicates whether the value
exchange is tangible or intangible. The second column describes
the value transaction, the third column who is source of the
transaction, and fourth column who is the destination of the
transaction. In the fifth and last column of the table it is described
1) what activities are generated by each value transaction, and 2)
what is the impact (value) of the value transaction to the case
organization, in this case National Instruments.
Table 2. Impact analysis in focal case.
Transaction analysis
Impact
analysis
Deliverables
From
(discove-
red
online
commu-
nity
actor)
To
1)Activities
generated
2)Impacts
caused by
transactions
Intangible
R&D ideas
End user,
external
expert
Case
Company
1) Making
use of ideas
in product
development
2) a)
Reduced
need of
R&D
resources
b) Extended
knowledge
about
products and
customer
needs
Tangible
Developed
software
code
End user,
external
expert
Case
Company
1) Testing
software
code
2) a)
Reduced
need of
R&D
resources
b) Extended
knowledge
about the
developed
technology
Tangible
New product
concepts
End user,
external
expert
Case
Company
1) Making
use of new
product
concepts in
product
development
2) a) New
customer
driven
product
concepts,
decreased
R&D costs
b) Extended
knowledge
about
customer
needs
Intangible
Questions/
feedback
End user,
external
expert
Case
Company
1) Asking
questions
2) a) More
resources to
maintain
discussions
b) Extended
knowledge
about
customer
needs and
increased
customer
loyalty
Intangible
Customer
loyalty
End user,
external
expert
Case
Company
1) Active
end user
involvement
in the
processes
2) a)
Increased
sales
numbers b)
Increased
sense of
community
in virtual
platforms.
Increased
customer
relationship
quality
In order to understand the more specific roles of social media in
value creation in the open innovation community of a B2B
company, an analysis of the roles of social media based on 5C
functions is performed. In Table 3 the roles of social media are
evaluated in relation to how they support the different deliverables
in product development in the online innovation community.
Table 3. The roles of social media in value creation in the open
innovation community.
Transaction
Type
The role of social media in value
creation analysed by 5C categories
Deliverables
5C category
Tangible
Exchange
New product concept
development
Connecting
Tangible
Exchange
New product concept
testing
Connecting
Collaboration
Tangible
Exchange
Rewarding
Connecting
Communicating
Intangible
Knowledge
Exchange
New product and
service ideas
Connecting
Communicating
Collaborating
Intangible
Knowledge
Exchange
Feedback for R&D
Connecting
Communicating
Intangible
Knowledge
Exchange
User experience data
Connecting
Communicating
Intangible
Knowledge
Exchange
Taylor made user
specific news
Communicating
Intangible
Knowledge
Exchange
Answering to
feedback/questions
Connecting
Communicating
Other
Intangible
Exchange
Rewarding and sense
of community
Connecting
Communicating
Other
Intangible
Customer loyalty
Communicating
Connecting
Exchange
The value network analysis (VNA) combines smoothly with other
approaches to intangible asset management. Due to the
compatibility of VNA with other business modeling tools, it can
serve as an integrative language for modeling a business or value
network. (Allee 2008) Value conversion is very challenging for
companies. In the next chapter we conclude the findings and the
practical implications we could identify from these analysis.
5. DISCUSSION
Aiming to understanding what added value social media brings to
product development of a B2B company hosting an online open
innovation community, we stated two research questions:
1. What different tangible and intangible value exchanges can
be identified from the perspective of studied B2B company
from an online open innovation community?
2. What is the role of social media in supporting the tangible
and intangible value exchanges?
We could find in the case company’s value exchange analysis that
there were several tangible exchange artefacts, including e.g. new
product concept development, new product concept testing and
rewarding. Intangible value exchange took place via knowledge
exchange such as new product and service ideas, customer
feedback for R&D, user experience data collected, tailor made
user specific news and answering to feedback questions. These
create a significant product development- related resource for the
hosting company. They benefit e.g. by reduced need for inside
R&D resources and customer support, as well as professional-
level insights for the development of current products and new
products. They receive extensive amount of in-depth information
about their customers’ needs both from customers’ feedback and
comments to other customers, as well as e.g. from the manner that
customers use the provided documentation by NI personnel.
While NI governs the community, they can make use of
quantitative analysis of customers’ behavior inside the
community. NI benefits also from increase customer loyalty and
customer relationship quality. However, simultaneously, the users
also seem to benefit quite significantly from the very same value
exchanges by receiving professional feedback for their own
business- related problems from the other community’s users and
external experts, as well as NI’s own experts.
Based on the results we argue that social media has a significant
supportive role for supporting the value transactions from the
perspective of the community hosting B2B -company in the
studied open innovation community. Social media supported both
tangible and intangible value transactions identified in the study.
Social media also made it easier and more efficient to use
customer not only as innovation resources providing e.g. ideas
and feedback for products, but enabled also co-creation of
knowledge about new solutions, concepts and customer needs.
Wikis, blogs and discussion forums of the community enable not
only communicating (sharing of information), but offer a wide
variety of other useful functions, such as connecting to other
persons that might benefit the users, external experts or NI
personnel. The paper has identified which social media functions
were used in individual various types of value transactions. Social
media services and tools were found to support the innovation
community in different phases of the innovation process, from the
early phases of innovation (such as customer need identification)
to product concept generation, and all the way to the later phases
of innovation process, such as product testing and feedback. In
addition, social media supports the exchange of common value
transactions in innovation community. Social media services
generate value for the community hosting B2B -company by
reducing their R&D costs and intensifying their current
performance. Besides that, social media enables completely new
working methods which were not possible previously without
social media.
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