Implications of online social activities for e-tailers ' business performance

Abstract

Purpose – Despite the growing popularity of internet based social media on e-commerce platforms, systematic examination of the emerging phenomenon is scarce. This paper aims to study whether online retailers ' social activity on e-commerce platforms improves their business performance, and if it does, what are the underlying mechanisms. Design/methodology/approach – The paper proposes a typology of online retailers ' social activities on e-commerce platforms. Then drawing on social capital theory and social network theory, the authors develop hypotheses that relate online retailers ' social activities to their business performance. The hypotheses are tested using a large dataset collected from an e-commerce platform in China. Findings – The paper shows that: online retailers ' social activities for friend-making improve their business performance, regardless of the directional attribute of the activities; social activities for advice-seeking decrease online retailers ' business performance; and social activities for advice-giving increase online retailers ' business performance. Research limitations/implications – The data in the empirical study are from an e-commerce platform in China, hence the research results may lack generalisability. Therefore, researchers are encouraged to test the proposed hypotheses further. Practical implications – The paper includes implications for e-commerce market makers and online retailers operating on e-commerce platforms. The authors show that online retailers ' social activities on e-commerce platforms can be an important source of business value. However certain types of social activities may hurt online retailers ' business performance, implying the necessity of a thoughtful social activity strategy in online marketplaces. Originality/value – This paper represents an early effort to study whether online retailers ' social activities on e-commerce platforms improve their business performance and the underlying mechanisms of the effect.