What is the Role of Social Media in (Open) Innovation Strategies?

Abstract

Over the years, numerous scholars have documented social media’s impact on businesses within the digital ecosystem milieu. The impact is so profound that billions of people today can be connected online forming a massive collective force that businesses are compelled to take notice. As a result, social media tools are being created enabling businesses to leverage the richness of the knowledge pool supporting organizational innovation and in particular, open innovation. However, studies that examine social media for open innovation are limited. Hence the focus of this chapter is to explain how social media facilitates open innovation thus depicting the benefits gained from social media, key challenges facing companies in leveraging social media and implications to managers. The benefits of social media from an innovation perspective is seen in terms of how social media supports the three phases of innovation. In leveraging the innovation process phases, the usefulness of social media can be demonstrated by the support for both radical and incremental innovation. In addition, the inflows of a variety of knowledge promotes exposure to novel ideas, as a bigger network size can provide more useful knowledge that benefit firms. Social media’s positive impact on open innovation provides great promise for companies, however, it has its own set of challenges that managers must grapple with while reaping its full benefits. Particularly, culture and structure of organizations as well as managers’ reservations on social media dampen efforts for open innovation. Moreover, the enormous amounts of interactions that flow into a social media site has little or no value to firms. Social media sites with only text-based applications can create communication barriers for users or customers. This chapter ends with implications to managers in which case businesses that profit from social media bear witness to facilitating open innovation in eight ways.