California Management Review
California Management Review is a premier academic management journal published at UC Berkeley
by Dan Prud'homme and Shawn Pope
Image Credit | dole777
Social media – once considered a powerful unifying force – increasingly stands accused of creating negative social impacts. For example, a whistleblower from Facebook recently testified to Congress that the social media giant incentivizes angry and divisive content.1 Meanwhile, Instagram just paused the roll-out of Instagram-for-kids due to concerns it would contribute to an unhealthy body image among teens.2
However, it is not just social media companies themselves that are under increasing scrutiny: Companies that merely rely on these platforms for customer engagement are coming to grapple with a related set of drawbacks. How can these companies both harness the power of social media while also managing the risks involved? In this article, we briefly outline these risks and propose a solution.
There are a number of legal and reputational risks that mere engagement with social media can present to companies. Many of these risks fall into the following categories:
To date, concerns about privacy violations have been perhaps the most significant risk facing companies reliant on social media for marketing. In reaction, a number of governments around the world have recently instituted legislation establishing basic requirements for protecting Internet users’ privacy. These include, for example, the General Data Protection Regulation (GDPR) in the EU, a new Personal Information Protection Law (PIPL) in China, and privacy legislation in the US.3 Non-compliance with these requirements creates obvious legal risks.
At the same time, despite these legal initiatives, many Internet users remain skeptical about companies’ interest in truly safeguarding their data. The long, legalistic privacy statements that companies have formulated portray them as more concerned with legal liability than respect for individuals’ privacy. This creates potential reputational risks for companies.
Many micro- and small enterprises that rely on social media to engage customers continue to be unaware of the entirety of copyright violations that they may be committing. This exposes these companies to legal risks.
Generally speaking, marketers still make a number of incorrect assumptions when curating their social media accounts. For example, they incorrectly assume that posting work (e.g., a video, picture, or other creative content) on social media is a signal that it can be freely used by others, that crediting the original creator of a work avoids the obligation to pay for its exploitation, and that another company’s work that does not seem creative (to you) probably is not protected by copyright.4
Social media continues to be a hotbed for the spread of misinformation and other content contributing to anti-social behavior.5 Despite efforts to control this type of material, it still spreads, for example, on Facebook and Twitter.6
This phenomenon exposes companies that merely leverage social media to engage with customers to potential reputational risks. Such firms may be lumped together in the mind of the average consumer, even if inaccurately, as being a contributor to these problems with social media.
It has become well-known that social media platforms are designed based on algorithms that push information and ads onto users.7 By offering sparkly new content, the platforms provide a hit of dopamine to users, in turn reinforcing the desire to frequently visit the platforms.8
Many companies assume that this “addiction,” as some have called it, is a good thing. However, companies reliant on this model of user engagement may paradoxically be opening themselves up for long-run reputational risks.
This is because social media addiction differs from traditional proclivity towards purchasing offline, physical goods and services.9 In comparison, social media users are more likely to feel that their compulsions are “unwanted.”10 This feeling can arise due to the frequency with which social media engagement occupies the mind of the user and the fact that doing so prevents his/her engagement in other, more preferred activities. In this way, even companies that just rely on social media engagement for marketing may eventually be considered by users as contributors to an “inherent” addictiveness problem created by the medium.
Suboptimal social media engagement can also create conflicts of interest. This can lead to legal complications and, more generally, harm company reputation.
For example, connecting with clients on social media can blur the line between professional and personal relationships. This can lead to liabilities if the personal side of the relationship sours. In addition, connecting with clients on social media can afford service providers additional information about the personal life of a client. While helpful in some instances, this closeness can also sometimes cloud the service providers’ ability to provide objective advice.
We believe that one of the most practical solutions to mitigate the aforementioned risks is to craft and implement a solid social media ethics strategy. A critical part of such a strategy is a Social Media Ethics Code: A statement that lays out your company’s general policies regarding social media ethics. In our view, a good Social Media Ethics Code should satisfy at least four core principles:
With a solid Social Media Ethics Code in place, you will be better prepared to weather many of the risks that social media is currently posing to companies.
Allyn, B., 2021. Here are 4 key points from the Facebook whistleblower’s testimony on Capitol Hill. NPR, available at https://www.npr.org/2021/10/05/1043377310/facebook-whistleblower-frances-haugen-congress?t=1634200987607
Bursztynsky, J., 2021. Facebook says it’s pausing effort to build Instagram for kids. CNBC, available at https://www.cnbc.com/2021/09/27/facebook-pausing-effort-to-build-instagram-for-kids.html
Geyser, W., 2021. GDPR and social media: what data protection and privacy mean for social media marketers. Influencers Marketing Hub, available at https://influencermarketinghub.com/gdpr-social-media/; Lomas, N., 2021. China passes data protection law. Tech Crunch, available at https://techcrunch.com; State laws related to digital privacy. National Conference of State Legislatures, available at https://www.ncsl.org/research/telecommunications-and-information-technology/state-laws-related-to-internet-privacy.aspx
For example, see Kees, L., 2020. Pause before you post – copyright issues in social media. National Law Review, available at https://www.natlawreview.com/article/pause-you-post-copyright-issues-social-media
Salisbury, D., 2019. Social media marketing: essential, but with pitfalls. California Management Review, available at https://cmr.berkeley.edu/2019/08/social-media-pitfalls/
Forster, D., 2020. We must make moral choices about how we relate to social media apps. The Conversation, available at https://theconversation.com/we-must-make-moral-choices-about-how-we-relate-to-social-media-apps-147509
For example, see Rotter, K., 2018. Targeted ads: The good, the bad, the unavoidable. California Management Review, available at https://cmr.berkeley.edu/2018/04/facebook-ads/
Waters, J., 2021. Constant craving: how digital media turned us all into dopamine addicts. The Guardian, available at https://www.theguardian.com/global/2021/aug/22/how-digital-media-turned-us-all-into-dopamine-addicts-and-what-we-can-do-to-break-the-cycle
What is social media addiction? The Addiction Center, available at https://www.addictioncenter.com/drugs/social-media-addiction/
We reached this finding based on not yet published surveys conducted in Paris. Also on this subject, see, for example: Longstreet, P., Brooks, S., 2017. Life satisfaction: A key to managing internet & social media addiction. Technology in Society, 50: 73-77.
Statement on guidelines for the ethical use of social media by surgeons. American College of Surgeons, available at https://www.facs.org/about-acs/statements/116-social-media