Inter-firm relationships facilitated through online social networks like LinkedIn are both a collaborative asset and a competitive risk. Although there are clear benefits to sharing ideas and problems with an extended professional networks, there are also risks of inappropriate or accidental sharing of sensitive information with competitors due to a lack of formal policies, guidelines or training around the appropriate usage of online social networks and the types of information that can and can't be shared over these networks. These risks can be mitigated through best practices such as the creation of explicit guidelines on inter-firm information sharing as well as training to educate users on the use and interpretation of the guidelines. Employing these risk reduction strategies will ensure that the benefits of inter-firm connectedness continue to outweight the risks.

1. Inter-firm Relationships:
Collaborative Asset or
Competitive Risk?
Robert Duncan, Anthos Yannakou, and Rene Erasmus, University of South Africa
LinkedIn, a massive online professional network Although our study was broader in nature and
that ‘links’ together individuals around the world, touched on many different areas, a subset of our data is
has grown to include over 120 million members. In directly relevant to competitive intelligence practitioners,
our study we wanted to determine how much their and we focus on that portion in this article.
participation in the LinkedIn network had increased the
number of social connections they have outside their
own organization (including competitors), and at what
level they communicated with these new connections. To STUDY BACKGROUND
that end, we surveyed a broad cross-section of over 500 For the survey portion of the study, we extended an
LinkedIn users in numerous countries and conducted in- invitation to participate through LinkedIn itself, using
depth interviews with twelve mid-to-CEO level managers, various means including emails, referrals, status updates,
in organizations ranging in size from 7 to 180,000 and posting in LinkedIn’s Q&A section. In all, just over
employees. 500 respondents completed the survey. Note that this
The overall aim of the study was to determine if was not intended to be a representative sample and the
people who use LinkedIn had an increase in inter-firm respondents were self-selecting. Accordingly, we cannot
relationships, and if their use of LinkedIn led to improved generalize our findings to the entire LinkedIn universe.
collaborative innovation and problem solving through This being said, we took care to not systematically exclude
these inter-firm connections. The research propositions any respondent who was a LinkedIn user, and the resulting
tested and confirmed by the research were that usage of data in terms of demographics suggests a similar pattern to
LinkedIn results in: LinkedIn’s own statistics on its entire user base.
For the in-depth interviews, we sought respondents
who were at a mid-to-senior level in their organization,
• An increased number of inter-firm connections. had responsibility for the activities of numerous staff, and
• An improved ability to communicate across inter- had experience with the use of online social networks in
firm boundaries. their organizations. These in-depth interview respondents
• Greater access to problem solving or innovation were sourced through a question posted in LinkedIn’s
collaborators. Q&A section as well as through referrals. We conducted
twelve in-depth interviews with these respondents, who
• Increased organizational problem solving or ranged from mid-management to CEOs and worked in
innovation ability. companies that had 7 to 180,000 employees. In part, the
34 www.scip.org Competitive Intelligence

2. LinkedIn inter-firm relationships
purpose of the interviews was to assess each respondent’s
experience with implementing the use of online social TABLE 2: INCREASE IN COMpETITOR
networks in their organization as well as obtaining CONNECTIONS ThROUGh LINKEDIN
suggestions for best practices in this area.
From a competitive intelligence practitioner point- I have more connections with people in competitor
of-view, the implications of our study are substantial. If organizations as a result of using LinkedIn.
LinkedIn creates increased connections to competitors
and increases the potential for information sharing, then Response Response
Percent count
this could create potential risks at an organizational
level. Further, if organizations are shown to have a lack
Strongly disagree 5.2 27
of guidelines, policies and training around information
sharing via online social networks, then this presents an
Somewhat disagree 7.6 39
opportunity to tighten some potential sources of unwanted
information leakage to competitors.
Somewhat agree 34.8 179
Strongly agree 21.4 110
INTER-FIRM CONNECTEDNESS
The survey results showed that the respondents were LinkedIn resulted in a greater number of professional
highly connected on LinkedIn and over half (57.9%) connections that span inter-firm boundaries.
had over 500 LinkedIn connections. We explored the
composition of these connections further through a series We also asked if they had more connections with
of questions. One question asked whether respondents individuals in competitor organizations as a result of using
increased their professional connections overall since using LinkedIn. The majority of respondents somewhat or
LinkedIn, and over half strongly felt that they had (See strongly agreed with this statement (See Table 2). This not
Table 1). only supports the finding that people using LinkedIn have
more connections outside their organizations, but also
The next question tested whether participation in that they are forming more connections with people in the
LinkedIn increased their level of professional connections competitor organizations. This behavior might lead to a
with people outside their organization. The respondents need to more consciously educate staff on the appropriate
strongly supported that statement, with 82% indicating sharing of information with competitors.
they strongly or somewhat agree. For them, their use of
TABLE 1: INCREASE IN pROFESSIONAL USAGE AND COLLABORATIVE BENEFITS
CONNECTIONS OVERALL ThROUGh
Given that LinkedIn users are more connected with
LINKEDIN
competitors than they were before, we explored the
specific ways that members used their LinkedIn networks.
Since using LinkedIn, I have more professional
Most leveraged their networks to draw upon the expertise
connections than I did previously.
of others to answer questions and solve problems. A large
majority of users indicated that they have asked for help,
Response Response
advice, referrals or other assistance from their network.
Percent Count
Respondents also agreed strongly (40.2%) or somewhat
(36.5%) that they had provided help, advice, referrals or
Strongly disagree 3.1 16
other assistance to other members of their network.
Somewhat disagree 2.9 15 In terms of the effect that LinkedIn has had on their
work, individuals reported that their network has allowed
Somewhat agree 26.0 134 them to become more innovative in their work (See Table
3). It has also given them improved access to innovation
Strongly agree 54.4 260 collaborators (66% strongly or somewhat agreeing) and
has allowed them to solve problems faster (54% strongly
Volume 14 • Number 3 • July/September 2011 www.scip.org 35

3. LinkedIn inter-firm relationships
formal policies or guidelines on the appropriate usage of
TABLE 3: ENhANCED INNOVATION ABILITY OSNs (See Table 4).
ThROUGh LINKEDIN NETWORK
Relatively few people said their organizations had
formal policies or guidelines concerning what information
Interacting with my LinkedIn network has can and cannot be distributed via online social networks
allowed me to be more innovative in my work.
(See Table 5). The results of these questions suggest that
the policy landscape around the organizational use of
Response Response
online social networks is fairly unstructured, and presents
Percent count
opportunities for greater control and education about
appropriate information sharing habits.
Strongly disagree 5.4 26
To understand the degree of centralized control, we
Somewhat disagree 8.2 42 asked whether or not they agree that their organizations
keep strong central control of outbound messaging on
Somewhat agree 35.7 184 online social networks. Respondents indicated very
strongly that their organizations do not (See Table 6).
Strongly agree 21.9 113 The use of OSNs in many organizations is a decentralized
activity, relatively unbounded by formal policies or
guidelines on the sharing of information. This may pose
or somewhat agreeing). Taken together, the results confirm risks to organization due to accidental sharing of sensitive
that using LinkedIn provides collaborative benefits, information, especially given the connections users report
including improved access to innovation collaborators, and having with individuals in competing organizations.
improved speed in solving problems.
TABLE 5: FORMAL pOLICIES ON ShARING
INFORMATION
ORGANIZATIONAL CONTROL OF ONLINE SOCIAL
NETWORKS My organization has formal policies or guidelines
To explore the organizational context around the use about what kinds of information can and cannot
of online social networks (OSNs), we asked a series of be distributed via online social networks.
questions about guidelines, practices and policies. Few
of the respondents reported that their organizations had Response Response
Percent Ccount
TABLE 4: FORMAL pOLICIES ON USAGE Strongly disagree 27.4 141
Somewhat disagree 12.4 64
My organization has formal policies or guidelines
on the appropriate usage of online social
Somewhat agree 18.1 93
networks.
Strongly agree 14.8 76
Response Response
Percent count
Strongly disagree 30.1 155 To determine the availability of training in
organizations concerning the appropriate use of online
Somewhat disagree 10.9 56 social networks, we asked whether their organizations
provide such training. The results show that most
Somewhat agree 16.7 86 organizations do not (See Table 7). To some extent, the
lack of formal policies and guidelines around the use of
Strongly agree 13.2 68 OSNs could have been mitigated by the presence of strong
and pervasive training on appropriate usage. It is clear,
36 www.scip.org Competitive Intelligence

4. LinkedIn inter-firm relationships
concerning what is acceptable behaviour on OSNs, and
TABLE 6: CENTRALIZED CONTROL OF most respondents were comfortable adapting the existing
OUTBOUND MESSAGING policies and norms of the organization.
The exception was in firms subject to external
My organization keeps strong centralized control
regulations, such as financial services, and firms which
of outbound messaging on online social networks.
dealt extensively with confidential information. Most
of these companies already have explicit written policy
Response Response
documents that governed employee behaviour and
Percent Count
treatment of confidential information. Not surprisingly,
the largest firms with thousands of employees had more
Strongly disagree 40.2 207
formal policy infrastructures.
Somewhat disagree 17.1 88 In general, though, companies had an overall lack of
formal policies specifically about online social networks,
Somewhat agree 8.4 43 and most organizations either used informal guidelines
and training to reinforce expected norms of employee
Strongly agree 5.2 27 behaviour. Many companies place a substantial amount of
trust in their employees, and rely on them to know how
to behave appropriately, whether on an OSN or at a social
however, that this training is not sufficiently in place, and gathering.
organizations are currently exposed to competitive risks Although they had a distinct lack of appetite for very
through online social networks. explicit, restrictive policies governing the use of online
social networks, several respondents conceded that the lack
of existing policies did create some vulnerability for their
MANAGING ThE RISKS OF INFORMATION organizations. Since social media have such immediate
ShARING: GUIDELINES AND TRAINING impacts, the risk of a mistake or error in judgement was
The majority of the managers interviewed in the seen as a very real. Most acknowledged that their company
qualitative in-depth interviews said that their organization had largely avoided negative consequences through luck
had no formal policies governing the kinds of company thus far. With the exception of very large firms with well-
information that staff can disclose via online sharing developed policy infrastructures, most respondents said
networks, which supports the quantitative survey their company should be developing and disseminating
findings. In general, the organizations relied upon some form of guidelines, and several noted that they had
existing information sharing and confidentiality policies. already started this effort.
They were making an effort to do more staff training
Guidelines
TABLE 7: TRAINING ON AppROpRIATE USAGE Guidelines that govern the appropriate use of
online social networks, confidentiality, and disclosure of
My organization provides training on the information should be supplemented by training for all
appropriate use of online social networks. staff. As one person noted, there is nothing fundamentally
new about them; they are just an enabling technology in
Response Response the same ways as a telephone and a fax machine. It can
Percent Count be helpful to look at how the organization has dealt with
other new technologies in the past, since there may not be
Strongly disagree 34.6 178 a need for entirely new strategies, policies or guidelines.
However, it is still necessary to have a plan for
Somewhat disagree 12.8 66 handling negative results, accidents, or missteps. Written
corporate policies and procedures should cover both an
Somewhat agree 15.9 82 employee and departmental perspectives. A good starting
point for this effort are the existing policy frameworks for
Strongly agree 8.5 44 items such as security, access, usage, and confidentiality,
and see if these can be adapted.
Volume 14 • Number 3 • July/September 2011 www.scip.org 37

5. LinkedIn inter-firm relationships
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