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MASTER THESIS. Title of the master's thesis. Use of social networks such as Xing for the management consulting industry in Austria.

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1 MASTER'S THESIS Title of the master's thesis Use of social networks such as Xing for the management consulting industry in Austria Author Sarah Wendler, Bakk. rer. soc. oec. Desired academic degree Master of Science (MSc) Vienna, 2014 Study number according to study sheet: A Study area according to study sheet: Supervisor: Master's degree in business administration ao. Univ.-Prof. Dr. Christine Strauss

2 Xing offers an additional way to draw attention to your own company and by confirming that the members have contacted you, marketing is allowed on your own behalf. Lutz and Rumohr II

3 SWISS DECLARATION I hereby declare in lieu of an oath that I have completed the present work independently and without using any aids other than those specified. Thoughts taken directly or indirectly from external sources are marked as such. The thesis has not been submitted to any other examining authority in the same or a similar form and has not yet been published. Sarah Wendler Vienna, January 2014 III

4 Foreword and Acknowledgments For many people, social media are a new and unknown topic, for students of economics a natural, new medium for use in private and professional contexts. During the last semesters of the course, the marketing and electronic business specialization consistently focused on the topic of social network sites. In the context of the seminars in marketing and ebusiness, I have dealt intensively with the topic scientifically and written papers on social network sites on the Internet. In my professional environment, when I was employed at Wendler Coaching, social network sites on the Internet were discussed again and again. Personally and professionally, social media aroused my interest and my fascination was reinforced during my studies. The opportunity to implement this as part of this master's thesis gave me great pleasure. Therefore, I would like to take this opportunity to thank those people who have supported and looked after me. My thanks go mainly to my supervisor, Mag. Andreas Mladenow, Bakk., Who motivated me before and during the writing of my thesis and was always on hand with advice and tips. I would also like to join ao. Univ.-Prof. Mag. Dr. Christine Strauss, Head of the Electronic Business department, for the guidance and support during the specialization in the master’s degree. A big thank you goes to the interviewed management consultants who volunteered to take part in a survey. A qualitative, empirical survey was only possible through the availability of their time, their knowledge and their opinions. My biggest thanks go to my parents, Juliane and Franz, who always supported me and accompanied me with motivation during this work. Thanks also to my friend Martin, who stood by my side during the process. Many Thanks! IV

5 Table of Contents List of Figures ... IX List of Abbreviations ... XI 1.

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8 Acquisition of new customers on social network sites Word of mouth on social network sites Future development of social network sites Future development of the importance of Xing for companies Conclusion and outlook Summary of the results Conclusion Future outlook Bibliography Internet sources Technical literature Interviews Appendix I: Overview of the interviews Appendix II: Interview guidelines Appendix V: Abstract (German ) Appendix IV: Abstract (English) Appendix V: Curriculum Vitae VIII

9 List of figures Figure 1: Structure of a social network ... 5 Figure 2: Granovetter's network theory ...

10 Figure 43: Areas of activity in management consultancy Figure 44: Activities abroad Figure 45: Company size of the consultants Figure 46: Employees in the companies of the consultants Figure 47: Communication means of the management consultants Figure 48: Professional use of social networks Figure 49: Reasons for the Xing profile Use Figure 50: Advantages of a Xing profile for management consultants Figure 51: Chances of using social network pages Figure 52: Challenges of using social network pages Figure 53: Acquisition of new customers: opportunities on social network pages for companies Figure 54: Acquisition of new customers: opportunities for management consultants on social networks Network pages X

11 List of Abbreviations% Percent & Ampersand (Latin for und) AG Aktiengesellschaft AHS General education secondary school AMS Employment Service B2B Business-to-Business (English for relationship between at least two companies) BHAK Federal Commercial Academy approx. CRM Customer Relationship Management ( English for customer relationship management) ie that means DA-CH Germany-Austria-Switzerland Dr. Doctor dt. German E-Book electronic book EDV Electronic data processing electronic mail (English for electronic mail) engl. English EPOs one-person organizations etc. et cetera (Latin for and so on) EU European Union FEACO European Federation of Management Consultancies Associations FH Fachhochschule FV Fachverband GmbH Limited liability company HAK Handelsakademie HR Human Resources i.d. in IT information technology SMEs small and medium-sized enterprises lorries lorries Mag. Magister Mail short for Med-Uni Medical University NLP Neuro-Linguistic Programming OK or OK. Okay PC Personal Computer PDF Portable Document Format PE Personnel Development SMS Short Message Service TV Television UB Management Consulting UBIT Management Consulting and Information Technology Uni. University USA United States of America (English for United States) USP Unique Selling Proposition (English for unique selling proposition) etc. and so on WKO Chamber of Commerce Austria WOM Word-of-Mouth (English for word of mouth) WU University of Economics e.g. for example XI

12 1. Introduction The introduction contains the background, motivation and aim of this study, as well as the structure and methodology of the work. Finally, in the introductory chapter you can find information about this work. Background to the work Social network pages on the Internet are among the websites that are most frequently used by users. Establishing and maintaining social relationships are the focus on social network sites on the Internet, on the one hand for private relationships and on the other hand for professional contacts. The popularity of social networking sites has motivated numerous companies to use this medium for advertising and interactions with customers. 1 Word of mouth is becoming increasingly important in social networking sites on the Internet. One of the questions in this thesis is whether companies try to use them positively for their corporate success. 2 Word of mouth also plays a major role in the management consulting industry in Austria. Professional contacts are established and maintained on the Xing network site. One of the main questions of this study is whether there is a connection between the importance of word of mouth and the use of Xing by business consultants. The assessment of the opportunities and challenges for companies to use social network sites to interact with customers influences the company's presence on this medium. So far, hardly any study has researched whether there are advantages for business consultants in Austria through activities, especially on Xing. 1 See Richter, et al. (2011), pp. 89f. 2 See Metaconsulting. (2012), accessed on

13 1.2. Motivation, questions and aim of the work Dealing with the topic of social network sites is essential due to the popularity of this new media. So-called social media experts recommend companies to expand their customer interactions on social network sites. The questions of the correct selection of the network, the addressing of the target group and the required strategy on these new media pose numerous challenges for companies. The literature raves about the huge opportunities that companies can achieve by using these social networking sites. Xing is also gaining increasing popularity and advertising profitable opportunities for all professional groups. The aim of this work is on the one hand to deal with the opportunities and challenges for companies on social network sites and on the other hand to answer the central questions: Can a management consultant specializing in coaching benefit from social networks like Xing in Austria? What are the opportunities for Austrian management consultants when they are used on social network sites? and Are the advantages from the literature such as new customer acquisition and word of mouth applied to social networking sites such as Xing in practice? and What challenges do companies face when using social network sites? The aim of the approach was to work on the questions and topics presented both theoretically and empirically. On the one hand, the theory should be examined in more detail and, on the other hand, management consultants should be asked about the topic. 2

14 1.3. Structure, methodology and notes of the work This work mainly consists of two large parts: the literature research and the empirical survey. The first three chapters contain definitions of terms and explain the topics of this work from the literature. In addition, the terms social network sites, Xing and management consulting industry in Austria are explained, as well as their history and functions. The fourth chapter compares the opportunities and challenges of social network sites on the Internet for companies from the perspective of literature, with the subject of word of mouth being discussed in more detail. The literature sources for the first four chapters are primarily from the Internet, as social network sites on the Internet and Xing represent new topics and therefore hardly any specialist books are available. Care was taken to ensure that above all scientific articles were cited. The empirical survey is then described and the data generation is discussed in more detail. The empirical survey consists of personal interviews with twelve Austrian management consultants. The seventh chapter summarizes the evaluations of the empirical survey. For this purpose, quotations from the interviews were selected and graphics were designed. The final chapter of this thesis contains the conclusion to answer the central questions of this study. A short summary of the work and a future outlook complete the chapter. An overview of the interviews, the guidelines and a curriculum vitae of the author of this work can be found in the appendix. In this work gender-specific differences were dispensed with, a neutral gender language was used and both genders are included. Furthermore, I would like to point out that all interviews can be subject to the interviewer bias and that possible distortions cannot be ruled out. The evaluations of the interviews were made subjectively by the author and the selection of the quotes was also made subjectively. 3

15 2. Social networks Social networks, engl. Social networks are relationships between people, social contacts and connections between people. 3 Denison cites Röhrle's social networks as the total of social relationships between a defined set of people, roles or organizations. 4 Social networks can take on informal and formal forms and a distinction can be made between private and professional social networks. Examples of informal private social networks are family and friends. Work colleagues and people with whom one interacts in a professional context can be described as formal professional social networks. 5 Networks, as well as network formation and maintenance, are particularly important for business consultants, since the networks of contacts represent the basis for recommendations. Networks of consultants can be, for example, in addition to family, friends and colleagues, associations, associations, current and former clients and social network sites on the Internet that can help identify new customers Structure of a social network The structure of a social network consists of nodes, these are actors, edges, which means the relationships, hubs, central actors and clusters, these are usually groups of several people who are connected to one another. A cluster consists of a limited number of nodes and edges between the nodes, which describes the social relationship between the actors. A hub is usually a person who has many contacts, so-called nodes, and who, as a central actor, has many connections in a social network. 3 Cf. Schenk, M. (1995), p. 4, accessed on, 14:06 4 Denison, K. (2006), p. 24, accessed on, 14:51 5 Cf. ibid., S Cf. Niedereichholz, C. (2010), p. 67f. 4th

16 The following figure visualizes a social network in which the communication structure of the actors is shown: 7 Figure 1: Structure of a social network own illustration based on Heidemann 8 The figure shows the structure of a social network, a cluster with several actors (circles) that have relationships to each other, which are represented by lines. The whole lines can be visualized as strong relationships and the dashed lines as weak relationships. The central circle is the hub that, as the central actor, has the most relationships. As early as 1967, Stanley Milgram recognized that every person in the world is connected to another through a surprisingly short chain of familiarity relationships. 9 One also speaks of the Small World Phenomenon or of the fact that everyone knows each other over six corners. 10 Nowadays, social networks use inter- 7 Cf. Koch, M., et al. (2007), p. 449; Heidemann, J. (2010), S Cf. Heidemann, J. (2010), S Koch, M. et al. (2007), p

17 net Milgram's small world phenomenon. The online platform Xing shows how the members are connected to each other. Between the acquaintance and the person with whom contact is made, there are on average a maximum of five members. This connection, which is shown on Xing, reflects the short chain of familiarity relationships of Milgram. Contacting strangers is made easier via the common acquaintance on Xing through the network display. 11 Investigations into the structure of a social network and social relationships are nowadays carried out using the approach of analyzing social networks. The relationship between the actors, the connections within their clusters and the prerequisites for communication with each other are explored in the SNA, Social Networking Analysis, network theory by Granovetter At the beginning of 1970, Granovetter studied social networks and created the theory of The strength of weak ties weak relationships. B A C Figure 2: Network theory by Granovetter's own illustration A, B and C represent three people who are connected by arrows, the arrows reflect the relationship between the people. A B and A C share a strong relationship. B and C have no relationship to each other, but the relationship to A still connects them. The strong relationship between B and C and A can directly or indirectly lead to interactions with one another or generate a relationship with one another. The relation- 10 Cf. ibid., S Cf. Hofert, S. (2007), S Cf. Koch, M., et al. (2007), p

The relationship between B and C established through A is called a weak relationship. 13 These weak relationships can lead to a large information advantage, as the people in the weak relationships exchange information with their contacts, which are usually found in different clusters. This exchange via different clusters about weak relationships can also be understood as strong relationships, important relationships, due to the importance of the information content. Hence the strength of weak relationships is spoken of. Gladwell's Law of the Few According to Gladwell, there are three groups of people in a social network that are responsible for the rapid dissemination of information. Mavens (connoisseurs): People who collect and pass on information Salesmen (salespeople): People who convince others Connectors: People who know and connect many people Advantages of social networks on the Internet Teten and Allen list seven advantages of in their book the use of social networks for the formation of your own network: You can quickly and easily show your own strengths to many people and develop your character in social networks. A broad mass of people can expand their own competencies through access to new knowledge. Contacts can be made with people who can support you and help you achieve goals. A quick and easy exchange of information and experience is possible via the networks. The number of contacts can be increased through strong and weak relationships. 13 See Granovetter, M. (1973), pp. 1361f 14 See Koch, M., et al. (2007), S Cf. Richter, A. (2010), p. 62 7

19 A greater variety of acquaintances can be used through social networks on the Internet. Spatial, linguistic and cultural restrictions are almost eliminated via social networks on the Internet.Frequent communication and visible connection paths of the relationships with the members of the social network strengthen mutual trust and facilitate contact with acquaintances of acquaintances. Term Networking Furnham defines networking as the building of relationships within, by and between groups. 17 Networking refers to the search for contacts, relationship building and care. People can exchange ideas about the same interests and strive for cooperation in the same subject area. The aim is to minimize the search costs for building relationships if you invest in contacts at an early stage. The networking of people should generate benefits from strong and weak relationships. 18 The term networking is relatively new and it is understood as cultivating relationships and establishing contacts using a systematic and strategic approach. Networking is an activity that takes place under the conditions of voluntary exchange and personal gain. Active action, interest, sociability and open-mindedness are important elements in networking. The aim of networking is long-term and regular contact with people. Information gathering is an important part of networking and can lead to benefits in business too. Networking can be associated with systematic cultivation of relationships. 19 Networking consists of 16 Cf. Teten, D. & Allen, S. (2005), p. 18f. 17 Richter, A. (2010), p. 64f. 18 See ibid., P. 64f. 19 See Scheler, U. (2000), pp. 18f. 8th

20 Practicing and taking between contacts, provided that you generate an economic advantage for yourself. Social network pages on the Internet A social network is a set of individuals who establish a connection with one another. 21 Since the rise of Web 2.0, the participation of Internet users has changed. It opened up new ways of communication and exchange for users. Since then, users have been spending more time on the Internet and are more actively involved in Web 2.0. The content of the Internet was previously made available by the providers and, due to the numerous changes, is now largely created by the users themselves, so-called user-generated content. The new technologies and the changes in user behavior led to new business models, such as the internet-based social network pages. 22 Social networks on the Internet, on the web, online Social networks, social network services, social network pages or online community are terms in which communication between members takes place via an internet platform. 23 The difference between social network sites and other forms of computer-aided communication lies in the use of profiles, networking with other users and user comments, which can be viewed by all users. 24 Social networking sites are the best-known form of virtual communities that have become known since the emergence of Web 2.0 technology. They are websites that are focused on building, strengthening and maintaining social relationships. 25 Boyd and Ellison define social network pages as a web-based service that enables people to 20 Cf. Niedereichholz, C. (2010), S Richter, D., et al. (2011), S See Enders, A. et al. (2008), pp. 199f 23 Cf. Heidemann, J. et al. (2011), S cf. Ahmad, A. (2011), S cf. Lin, S. & Liu, Y. (2012), p. 2 9

21 1. Create a public or private profile in a limited area, 2. Publish a list of people with whom you are connected, your network, 3. View and search the networks of all members of the system. 26 Whereby networking is usually the focus on social network sites on the Internet. 27 Online social networks enable users to connect and communicate with one another on the Internet. Social networks on the Internet can strengthen existing relationships, connect people with the same interests, and distribute content and knowledge among users. 28 These pursue the vision of a person-centered web in which the users' network and their interests are in the foreground. Nowadays there are a large number of social networking sites and the number of sites offered is increasing rapidly. 29 Many social network sites on the Internet orient their offers according to certain target groups, people with a common language, origin, the same geographic region, religion, sexual orientation, common interests, hobbies or political views. They also differ on the basis of technical functions, purpose, size and the possibilities of privacy settings 30 Structure of social network pages The basic structure of all online social network pages is similar, they consist of user profiles that show the connections of their social networks . 32 The users of the social network pages can create their own personal profile in order to present themselves to other users. Cf. Boyd, D. & Ellison, N. (2008), S Cf. Heidemann, J. et al. (2011), S cf. Gneiser, M. & Heidemann, J. (2010), S cf. Pallis, G., et al. (2011), S cf. Boyd, D. & Ellison, N. (2008), pp. 210f. 31 Cf. Gneiser, M. & Heidemann, J. (2010), S Cf. Boyd, D. & Ellison, N. (2008), pp. 210f. 33 See Enders, A. et al. (2008), p

22 Figure 3: Create profile Source: website of blogger and author Annette Schwindt 34 After users have joined a social network site on the Internet, they create an individual profile with information about personal data such as name, age and country of origin, as well as interests and activities , Photos or political attitudes. Depending on the platform, the user's options for setting privacy, public profile and data himself vary. After creating the profile, users can invite other users to their social network and establish connections with them. These relationships between users can take the form of friendship, contact, fan community or followers. Followers are called. Most social network sites offer communication services in addition to profiles so that members can send messages to each other via the platform. 35 social network sites create customer benefits as they promote networks in two different ways. On the one hand, they offer ways to get to know new people via social network sites and, on the other hand, they simplify the management of existing contacts and connections. When it comes to communication - Annette Schwindt. (2011), accessed on Cf. Boyd, D. & Ellison, N. (2008), pp. 212f 36 Cf. Enders, A. et al. (2008), p

23 History of Social Networking Sites In 1997, the first social networking site called SixDegrees.com was launched. SixDegrees made it possible for users to create a profile and to display the connection to the other members of the platform on the profile. Profiles were already being used by users on the Internet before 1997, for example on dating sites. The function of making the relationship with other users on the profile visible to all users, however, was revolutionized by SixDegrees. The platform ended its service in 2000 because SixDegrees failed to build a successful business as a social networking site on the Internet. A year later, the social network site Ryze.com focused on business people and tried to support users' professional networks on the Internet. Shortly thereafter, the rise of Friendster began, which put their focus on the network of friends. Due to the rapid growth in the number of users of Friendster through word of mouth, the servers and databases of the social network site were overloaded. The technical problems annoyed the users who switched to the competition MySpace. MySpace developed into a music network and primarily addressed younger target groups. 37 The aim of the platform is to support the establishment of contact and communication between artists, bands and musicians with their fan base. 38 Numerous social networking sites were founded and many specialized in niches to differentiate themselves from the competition. In 2003, LinkedIn and Xing founded platforms for business, jobs and careers, i.e. online contact networks in a professional context. Since 2005, users have been able to share videos on YouTube and photos on Flickr. 39 Twitter is a microblogging service whose text messages are limited to 140 characters and became popular in 2007. 40 Facebook was originally founded at Harvard to connect students at university. However, it was soon expanded to other universities. 41 In 2006, Facebook also made it possible for anyone interested to join the network. Facebook differentiates itself from the other social networks on the Internet by offering various new functions and applications. 37 Cf. Boyd, D. & Ellison, N. (2008), p. 212f 38 Cf. Heidemann, J. (2010), p See Boyd, D. & Ellison, N. (2008), pp. 212f 40 See Huberman, B., et al. (2008), S Cf. Ahmad, A. (2011), p

24 gen. 42 Today Facebook is the largest social network site in the world and has more than 700 million users, around 250 million of whom log in every day and spend an average of 1.5 hours on the site. Thus, social networking sites have become a part of many people's daily lives. 43 Since then, social network sites have enjoyed great popularity worldwide, high membership growth and aroused economic interest through the achievement of high sales prices for social networks. Friendster Xing Twitter MeinVZ SixDegrees Ryze LinkedIn YouTube Facebook MySpace StudiVZ Flickr Figure 4: Timeline of social network pages own presentation based on Heidemann 44 The figure above shows the founding years of selected social network pages on a timeline. The timeline begins in 1997, in which the first social network SixDegrees was founded, and ends in 2007, in which Facebook and MeinVZ offered their services to the public as social network pages on the Internet. Anderson's concept was developed by Enders et al. Transferred to social networks and social network pages. The possibilities of communication on the one hand with people with whom one has already been in contact in the past and on the other hand with users of weak relationships have been simplified via social network sites and 42 Cf. Boyd, D. & Ellison, N. (2008), pp. 212f 43 Cf. Lin, S. & Liu, Y. (2012), S Cf. Heidemann, J. (2010), S Cf. ibid, p

25 relieved. Another advantage over traditional communication via social network sites is the time saved. This has increased the number of people you communicate with and it takes less time and effort to get through users' contact details, personal information, activities, relationships and information. In summary, the potential of the social network sites lies in the easier access to information of the weak relationships and in the easier management of the existing contacts. The concept of the long tail of the social networks maps the network of individual network participants. It shows that those users with many contacts have a longer tail than those users with few relationships. A thicker curve can be displayed if there is a high intensity of contact frequency, i.e. if you interact a lot with the other users. Figure 5: The long tail of social networks own illustration based on Enders et al. 46 The X-axis of the figure shows the number of contacts and the Y-axis shows the network intensity, which is a function of the frequency of contact and the amount of contacts. The curve shows that each user has a few 46 See Enders, A. et al. (2008), pp. 201f 14

26 has strong relationships (left part of the curve) and has little contact with many people (right part of the curve). The contacts on the left can also be maintained using traditional communication methods, while the many relationships with low contact frequency can only be managed via social network sites. 47 See Enders, A. et al. (2008), pp. 201f 48 Cf. Koch, M. et al. (2007), p

27 Figure 6: Classification of social network pages own illustration 49 According to this, social network pages can serve private or business purposes. Social network sites that serve entertainment and deal with private content offer users fun and are limited to social private contacts. Professionally oriented pages enable users to exchange information and communication with colleagues and experts. Professional network pages are used to manage contacts on a productive and professional level. The data model of the social network pages can be divided into centralized and decentralized. For example, centralized data is stored in data centers and all data is compressed under a single administrative area. Decentralized data is stored in several administrative areas. Today more centralized data storage methods are used despite security concerns. The structure of the social network pages can be web-based or cloud-based. In web-based systems, application servers are accommodated and made available on websites that offer a range of services. With the cloud-based system, the application servers are made available on networks. The content of the social network pages can be user-oriented or content-oriented. User-oriented content is geared towards the needs and relationships of the users, while content-oriented pages are built on the common interests of the users. 50 social network pages can also be classified based on their access. Open access means that the social network site is not subject to any access restrictions, while a 49 Cf. Pallis, G. et al. (2011), pp. 7f 50 Cf. Pallis, G. et al. (2011), pp. 7f 16

28 closed access only allows selected people to use it. Those with closed entrances can usually only be found in-house. Social network sites can address their target group with general topics or special areas of interest. The content of special interest network pages can cover areas of professions, hobbies, relationships or age groups, for example. 51 Examples of social network pages on the Internet: general schoolchildren, students, business hobbies Figure 7: Examples of social network pages, own presentation Based on the above classification of social network pages, Facebook and MySpace, for example, can be assigned to private use. Business benefits are pursued as a business model on sites like Xing and LinkedIn. While YouTube can be seen as a content-oriented website, SchülerVZ and StudiVZ, as well as Friendster, can be divided into user-oriented pages Process on social network pages The following figure shows the typical sequence of the individual steps in use on social network pages on the Internet. 51 Cf. Heidemann, J. (2010), S Cf. Pallis, G. et al. (2011), pp. 7f 17

29 Figure 8: Process on social network pages own representation based on Richter 53 The user joins a platform by logging in with a name, password and address. Most services send a registration confirmation to the address for verification. The user then creates a profile and networks with friends, acquaintances and colleagues on the platform. After contact has been established, contact requests are sent to mutual contacts. After these process steps, you can exchange ideas on the social network pages on the Internet. Motives of users of social network pages The reasons and motives for using a social network page are often used in the studies with the benefit-reward approach. The Uses and Gratifications Theory. This theory takes the approach that people use social networking sites to find social satisfaction. Furthermore, motivation is mentioned as a factor for participation on social network sites. Motivation can take on intrinsic or extrinsic forms. In the case of intrinsic motivation, actions out of interest and fun are pursued, while in the case of extrinsic motivation, reward or pressure is in the foreground. 53 See Richter, A. (2010), p. 77f. 54 See ibid., P. 77f. 18th

30 reason. Intrinsic motivation in particular plays a major role when using social network sites, with the focus being on having fun and enjoying participating. Several studies have shown that the reasons for using social network sites lie in people's desire to contact other users. Contact and communication with already known people, with friends and also getting to know new users are the main motives. The social motives and the desire for society connect the users with each other. 55 A survey by Raacke and Bonds-Raacke has shown that the majority of respondents take part in social network sites because they want to get in touch with previous acquaintances. Being in touch with friends is also given by more than 90 percent as a reason for activity. Publishing photos and viewing photos of other users, meeting new people and finding old friends are further incentives for participation. The exchange of information about personal data, events and feelings are further driving factors for registering on social network sites. 56 In summary, one can name social motivational factors as the main motive for using social network sites.Social balance, the satisfaction of social identity, the desire to meet new people and to maintain and strengthen friendships all influence the exchange of information on the social network pages. 57 The basis of the Human Needs Theory was developed by Krasanova et al. used to explain the use of social networking sites. Accordingly, the need to belong and the need for self-presentation are the most important reasons for participating in the network pages on the Internet with private use. However, according to Schaefer's study, establishing, maintaining and managing contacts are the main motives for professional network sites such as Xing. Cf. Lin, S. & Liu, Y. (2012), S Cf. Raacke, J. & Bonds-Raacke, J . (2008), S cf. Lin, S. & Liu, Y. (2012) S cf. Richter, D. et al. (2011), pp. 96f 19

31 2.5. Statistics on the use of social network pages Statistics from the Federal Association for Information Technology, Telecommunications and New Media e.v. (Bitkom) shows the reasons for using social networks in Figure 9: Reasons for using social network pages Source: Gründerszene 59 For the majority of users, maintaining contacts is the top priority for membership in social networks. Exchanging ideas with users and getting to know new members are also reasons for using online communities. Maintaining contacts for work is also increasingly important to Internet users via social networks. 60 An integral study also shows reasons for using social network sites. 59 Schindler, J. (2010), called on Cf. ibid., Called on: 18 20

32 Figure 10: Useful functions of social network pages own presentation, source: Integral Percent of the 2000 respondents in Austria in 2012 stated that keeping in touch with friends and staying up to date with friends are the most common reasons for their participation in social networks. The users of social networks also appreciate event invitations and information about products and services. The ability to manage images and videos is also used on social network sites. Addressing new customers and being able to keep in contact with customers are functions that are increasingly used by companies in social networks. See Integral. (2012), called on Cf. ibid., Called on: 18 21

33 The following figure shows the most popular social network pages in Germany: Figure 11: Visitors to social networks Source: Blogs Faz.net 63 The graphic above shows which social network pages in Germany are most frequently visited by users. Facebook is the front runner in terms of the popularity of social network sites and, as mentioned above in the chapter on the history of social network sites, is currently the largest and most successful website in the world. The social network sites that specialize in the target groups of students and schoolchildren, such as StudiVZ and SchülerVZ, are also very popular. Professional networks such as Xing are also among the top 10 visitors to social network sites. 64 Compared to the figure visitors to social networks from 2010 from the F.A.Z. blog, Frankfurter Allgemeine Zeitung, the top 10 social networks figure from 2013 from Statista, the statistics portal, shown below shows clear differences. 63 Cf. Schmidt, H. (2010), call on Cf. ibid., Call on: 26 22

34 Figure 12: Top 10 social networks Source: Statista 65 Facebook continues to lead the top 10 social networks with 39.2 million visitors in March 2013 in Germany. Social networks such as SchülerVZ, StudiVZ, MeinVZ, Who-knows-whom and MySpace are no longer in the top 10 most visited networks in Germany. Google+ and networks such as Tumblr, alk.fm, LinkedIn and deviantart have been added. The social networks Xing, Twitter and StayFriends have significantly improved their visitor numbers. Data protection and security in social network sites Social network sites on the Internet are no more at risk than other websites in terms of data security and privacy, but they contain much more personal information about users. Despite numerous protective mechanisms for social network sites, there is always a risk of attackers. 67 The success of social network sites on the Internet consists of user-generated content, communication between members and the exchange of information. The public self-presentation is the main part of participating in social network sites. 65 Cf. Brandt, M. (2013), Called on Cf. ibid., Called on: 15 67 Cf. Wondracek, G. et al. (2010), p. 1 23

35 zer information, experiences, successes, photos and lists of friends, leave comments and take part in discussions. A reduction in information or user participation due to data protection problems harms the existence of social network sites. Privacy concerns restrict the members of social networking sites from sharing information about themselves and can lead to disinterest in the networking site. 68 Numerous studies show that users are not aware of the dangers and do not think of security vulnerabilities when publishing information including photos and confirming contact requests. The use of the privacy settings offered by the social network sites is mostly neglected by the users. 69 Data protection is a major challenge for providers of social network sites on the Internet. The user profiles of millions of members in social networks must be protected from web attacks and technical security gaps overcome. The user is also faced with a challenge to fully utilize the advantages of social networks by hardly restricting the release of information in order to protect personal data from misuse. 70 According to Cutillo, Molva and Strufe, three security goals can be identified in connection with social network sites on the Internet: privacy, integrity and availability. The goal of privacy concerns the protection of the user's privacy, in particular the access to personal data only for contacts. The data, information and actions of the user must be hidden from third parties. The protection of integrity includes protection against manipulation and unwanted access by third parties. The existence of a real person behind the registration in social networks should also be guaranteed by the website provider. The availability of the profiles is a basic function on social network sites and must be guaranteed. Censorship or name theft must be prevented, especially on business pages with members' professional data. Cf. Krasnova, H. et al. (2009), pp. 40f. 69 See Cutillo, L. et al. (2009), pp. 95f. 70 See Heidemann J. (2010), S See Cutillo, L. et al. (2009), pp. 95f. 24

36 A study by Krasnova et al. examined the greatest fears of participants on social networking sites. The collection, storage and use of personal data of the providers of the social network sites and of third parties negatively influences the behavior of the users by reducing the self-presentation on the platform. The members of social network sites also see the viewing of profiles of non-contacts or undesired persons as a restriction. Cf. Krasnova, H. et al. (2009), pp. 40f. 25th

37 3. Opportunities and challenges of social network sites on the Internet for companies Marketing via social media opens up new opportunities to get in touch with customers. With the increasing popularity of social media among consumers, this medium can be used as a new marketing tool. Traditional media such as newspapers, television and websites were used to convey information to customers, while social media made it easier to communicate and build customer relationships. 73 The exchange between consumers and companies via social media on the one hand and with each other on the other hand leads to changes in consumer behavior, such as perception, access to information, opinions, attitudes, purchasing behavior and evaluation. With the new medium, companies are challenged to use it for their own purposes and to benefit from it. Concept of social media Social media is a group of internet-based applications based on Web 2.0 technology that enable the creation and exchange of user-generated content. 75 Social media are Internet resources that are used by people for exchanging messages, photos, videos, pictures, etc. 76 In recent years, social media have become very popular due to their ease of use, speed and reach and support social networks. 77 A person can communicate with several hundred other users via social media 73 Cf. Drury, G. (2008), p. 274f. 74 See Mangold, G. & Faulds, D. (2009), pp. 357f. 75 Kaplan, A. & Haenein, M. (2010), S cf. Drury, G. (2008), S cf. Asur, S. & Huberman, B. (2010), p. 1 26

38 communicate and users have more information available than before. 78 Social media encompass a variety of platforms and tools that are used for communication, interaction and the exchange of content and information, such as social networks. 79 market research studies have shown that social media, including social network sites, are used to build relationships with customers, increase website traffic, discover new business opportunities, create social networks, disseminate content and information, and provide feedback from To get customers to publicize products / services and brand. With the help of social network sites, B2B (business-to-business) companies in business networks can also benefit from word of mouth and build brand awareness. To generate a competitive advantage, small and medium-sized companies in the B2B area should be represented on social network sites in order to achieve a greater reach of the target group. 80 Due to the high level of acceptance, low entry barriers, widespread access and use of smartphones and tablet PCs, social media are becoming more and more popular and the presence of companies in these media is inevitable. Social media are used for customer information, service, satisfaction measurements, loyalty and product development. 81 Consumers and B2B purchase decision-makers nowadays spend more time looking for information, so there are also new opportunities for small and medium-sized companies that should be seized. A big impact can be made on social media even with a small budget. A lack of resources and no existing know-how about the correct use of social media are reasons why companies are not yet active. However, it makes sense to deal with the topic in order to stay up-to-date and modern. Social media are suitable for strengthening relationships, trust and competence, but not directly for generating sales. The dialogue with customers and business partners should therefore be the focus of the 78 Cf. Mangold, G. & Faulds, D. (2009), p. 357f. 79 Grabs, A. & Bannour, K. (2011), p. 22, accessed on, 12:57 80 Cf. Michaelidou, N. et al. (2010), pp. 1155f. 81 Cf. Bulander, R. & Wüstemann, J. (2012), p. 127f. 27

39 Participation in social media are available. As a basis for this, concrete goals and the selection of suitable networks in social media are advisable. Social media and networks in the company's value chain Figure 13: Company's value chain Own representation based on Porter 83 Social media can be used in almost all levels of the company's value chain become. Social networks and business networks also offer potential in many areas of the company. In human resource management, social media and networks can be useful for recruiting, staff evaluation and the image of an employer. The networking of people in social networks and the weak relationships in business networks can be used when looking for jobs and personnel. On the one hand, companies can obtain more information about applicants via social networks and, on the other hand, potential candidates can be found more easily in social networks via headhunters. In business networks, résumés and recommendations can be used through mutual contacts in recruiting. In addition, companies can position their desired employer image on social media and present themselves to future employees. Product ideas and trends can be filtered out of social media for research and development. Companies can motivate customers to help with product development with knowledge and know-how. About social networks- 82 See Schmitz, C. & Ahlers, M. (2012), p. 308f. 83 Cf. Pietsch G. (2012), p

40 works, especially business networks, facilitate professional exchange with experts on research and development topics. In the procurement area, it is also possible to search for industries, products, providers and partners in social media. Joint contacts, experiences and exchanges about reputation are particularly helpful in the case of complex products and services that require intensive advice in order to facilitate the search. Business networks, for example, offer the opportunity to seek help from contacts when looking for advisory services in order to minimize uncertainty and costs. Customers can be involved in production as co-designers. Own platforms enable customers to design and create their own products. Social media are primarily used and used in marketing. Apart from advertising, companies can increase their presence on social media and thus improve their image. Dialogue with customers and the development of brand communities can strengthen customer loyalty and increase awareness of the company. Market observation and monitoring are possible through social media. Maintaining contacts and integrating customers into the sales process are advantages of social media in the company's sales. The customer search is made easier for sales employees through social media and networks, and networks on the Internet can serve as an additional sales channel. Customer service is primarily focused on customer dialogue and customer care through the support of social media. Knowledge exchange, the acquisition of the available information and the contact options are easier through social media and reduce costs Opportunities and challenges of social media and social network sites on the Internet for companies People and consumers communicate and share content about products and services via social media without any influence of the company. The power of social media has increased and companies have the opportunity to participate. Companies should be aware that ignoring participation can lead to undesirable consequences. 84 See Pietsch G. (2012), p. 456; Cyganski, P. & Hass, B. (2011), pp. 84f. 29

41 As a result of viral effects, negative and unwanted news spreads worldwide in a very short time and leads to discussions among consumers. The company's image can be damaged if the company does not intervene and respond to consumer complaints. Taking advantage of social media opportunities as a business requires good strategy and resources. First of all, the right choice of social medium on the Internet is necessary. Depending on which target group is to be reached and which message is to be spread, a suitable application of social media must be found. Usually each platform addresses a different target group, so the company should find the social medium in which its target group is present. Many existing platforms have already established themselves and offer a large number of users. Sometimes it is necessary to use several platforms in order to achieve a large range. It must be ensured that the activities in the social media are coordinated with one another. The content in social media should always be up to date, attract the attention of the target group and be adapted to the rules of the platform. Friendliness and personality have more priority than professionalism in social media. The benefits of social media aren't just relevant to large companies. Even small and medium-sized companies can establish contact with end customers at low cost and with little expenditure of time via social media. Networking is particularly important to consumers, which is why companies can offer their customers their own groups and communities where people of the same interest can exchange ideas. In these networks, companies can offer information or contact consumers. If consumers have the opportunity to give feedback to the company, they feel more connected to the company and the products. The bond with the company can also be strengthened with special offers that are only available for the target group in the social medium. 87 The use of social networking sites can give companies easier access to younger target groups. The formation of a brand community is also easier for companies via social network sites. Social network pages can also be used for the 85 Cf. Kietzmann, J. et al. (2011), S cf. Kaplan, A. & Haenlein, M. (2009), p. 65f. 87 See Mangold, G. & Faulds D. (2009), p. 361f. 30th

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