The analysis of social capital in online social communities

To enhance the value within the scope of this analysis, an online survey was conducted to examine the effects of the dimensions of social capital: relational capital, structural capital,

The Analysis of Social Capital in Online

Social Communities

Submitted to:

School of Advertising, Marketing and Public Relations

Faculty of Business Queensland University of Technology

Submitted by: Wei-Yi Chiu Research students Queensland University of Technology

Acknowledgements

Time flies, and the life of researching seems to be a challengeable but impressive journey I had a great time since commencing my research I have not only absorbed and comprehended more in the particular area of knowledge but made friends with some wonderful people who helped and supported me to accomplish my thesis

First of all, I would like to offer my gratitude to my two supervisors Dr Edwina Luck and Dr Shane Mathews Thank you for supporting and believing in me from beginning to end with your passion and dedication I also wish to thank you for always encouraging me to express my ideas into my thesis with constructive feedback and positive praise I am delighted with having a good relationship with these two supervisors They are not only my supervisors but also my good friends inasmuch as they let me have absolute liberty during the time and we would chat about everything like friends

Secondly, I would like to acknowledge my lovely parents, Shaw-Kou Chiu and Pao-Chao Yu, and my three sisters, who are Wei-Fen Chiu, Wei-Hsuan Chiu, and Wei-Chih Chiu I appreciate them supporting and encouraging me spiritually and practically with their constant love and wisdom To satisfy my material requirements, Dad has been working very hard overseas, and thereby, Mom has been flying laboriously between two countries every two months in order to take care of us physically and psychologically Thank you for my three beautiful sisters who make

my research life interesting and happy with their smiles and thoughtfulness

Thirdly, I appreciate my editor Jane Todd She helped me to edit and proofread my thesis including correcting grammar, punctuation, spelling, referencing with APA style and formatting She also helped me to find any expression in my thesis which may confuse the examiners or may be inconsistent with the context I would not have been able to submit a perfect and completed document without her

I would like to thank my friends in the research office Thank you for providing considerable and useful information and generous friendships It is my fortune to have met all my excellent researching friends Finally, thank you Queensland University of Technology for providing a marvellous researching environment and also the staff at the Research Support Office, namely Jason McDonald, Kathryn

it

communities to share their interests, maintain friendships, and extend their

an important theory in sociology Researchers usually utilise social capital theory when they investigate the topic relating to social networks However, there is little literature that can provide an explicit and strong assertion in that research area due

to the complexity of social capital

This thesis therefore focuses on the issue related to providing a better understanding about the relationship between social capital and online social communities To enhance the value within the scope of this analysis, an online survey was conducted to examine the effects of the dimensions of social capital: relational capital, structural capital, and cognitive capital, determining the intensity

of using online social communities The data were derived from a total of 350 self-selected respondents completing an online survey during the research period The main results indicate that social capital exists in online social communities under normal circumstances

Finally, this thesis also presents three contributions for both theory and practice in Chapter 5 The main results contribute to the understanding of connectivity in the interrelationships between individual social capital exchange within online social networks Secondly, social trust was found to have a weak effect in influencing the intensity of individuals using online social communities Third, the perpetual role of information sharing has an indirect influence on individual users participating in online social communities This study also benefits online marketing consultants as marketers can not only gain consumer information easier from online social communities but also this understanding assists in designing effective communication within online social communities The cross-sectional study, the reliability of Internet survey data, and sampling issues are the major three limitations in this research The thesis provides a new research model and recommends that the mediating effects, privacy paradox, and social trust on online social communities should be further explored in future research

Certification of Thesis

The work contained in this thesis has not been previously submitted for a degree or diploma at any other higher education institution To the best of my knowledge and belief, this thesis contains no material previously published or written by another person except where due reference is made

Wei-Yi Chiu

27 September 2011

Table of Contents

Page

CHAPTER 1 INTRODUCTION 1

-1.1 Introduction 1

-1.2 Background of the research 1

-1.3 Research question and research hypotheses 4

-1.4 Justification for the research 5

-1.5 Methodology 6

-1.6 Limitations and assumptions 7

-1.7 Outline of this research 7

-1.8 Conclusion 9

-CHAPTER 2 LITERATURE REVIEW 11

-2.1 Introduction 11

-2.2 Parent discipline 1: Social Network 12

-2.2.1 Network 12

-2.2.2 Social network 18

-2.3 Parent discipline 2: Dimensions of Social Capital 21

-2.3.1 Social capital 21

-2.4 Synthesis Immediate Discipline 26

-2.4.1 Online social networks 26

-2.4.2 Dimension of social capital 29

-2.4.2.1 Relational Capital Social interaction - 30 -

2.4.2.2 Structural Capital Social roles and norms - 31 -

2.4.2.3 Cognitive Capital Social Trust - 32 -

2.4.3 Social Capital Online 33

-2.5 Theoretical framework 35

-2.5.1 Introduction 35

-2.5.2 Initial conceptual model 35

-2.5.3 Research Hypotheses 37

-2.6 Conclusions 40

-CHAPTER 3 METHODOLOGY 41

-3.1 Introduction 41

-3.2 Justification for the research paradigm 42

-3.2.1 Research paradigm 42

-3.2.2 Justification for the research paradigm 43

-3.3 Research design 45

-3.4 Data collection techniques 46

-3.4.1 Usage of surveys for data collection 46

-3.4.2 Questionnaire development 52

-3.4.3 Section 3 structure, content of questions, wording 54

-3.4.4 Section 4 response format 54

-3.4.5 Section 5 structure of the questionnaire 57

-3.4.6 Section 6 design web based survey 59

-3.4.7 Section 7 pretest 59

-3.4.8 Section 8 revise 59

-3.4.9 Section 9 place survey on web 60

-3.5 Reliability and validity 60

-3.6 Ethical considerations 63

-3.7 Conclusion 63

-CHAPTER 4 DATA ANALYSIS 65

-4.1 Introduction 65

-4.2 Data examination and prescreening 66

-4.2.1 Data cleaning and screening 66

-4.2.2 Missing data treatment 66

-4.2.3 Outliers 67

-4.2.4 Assumptions of multivariate 68

-4.3 Descriptive analysis 69

-4.3.1 Summary of descriptive statistics 69

-4.4 Test of model 75

-4.5 Test of hypotheses 80

-4.5.1 Testing Hypothesis 1 82

-4.5.2 Testing Hypothesis 2 83

-4.5.3 Testing Hypothesis 3 84

-4.5.4 Testing Hypothesis 4 86

-4.5.5 Testing Hypothesis 5 87

-4.6 Conclusions 89

-CHAPTER 5 DISCUSSIONS AND CONCLUSIONS 93

-5.1 Introduction 93

-5.2 Conclusions about hypotheses 94

-5.2.1 Hypothesis 1: There is a relationship between the dimensions of social

capital and the benefits/ risks of using online social communities 95

-5.2.2 Hypothesis 2: There is a relationship between the benefits and risks of using online social communities and the dimensions of social capital, and the intensity of 101

-5.2.3 Hypothesis 3: The relationship between social interaction and the usage is influenced by indirect effects 106

-5.2.4 Hypothesis 4: The relationship between role and norms in online social communities and the usage is influenced by indirect effects 107

-5.2.5 Hypothesis 5: The relationship between trust and the usage is influenced by indirect effects 109

-5.3 Conclusions regarding the research problem 110

-5.4 Implications 111

-5.4.1 Contribution to theory 111

-5.4.2 Contribution to practice 114

-5.5 Limitations of this research 115

-5.6 Implications for future research 116

-5.7 Conclusion 118

References 119

Appendices 134

-List of Tables

Page

T ABLE 2.1: T HE DEFINITIONS OF SOCIAL CAPITAL - 23 -

T ABLE 3.1: D ATA COLLECTION METHODS COMPARATIVE TABLE - 49 -

T ABLE 3.2: I NTERNET SURVEYS FOR DATA COLLECTION - 50 -

T ABLE 3.3: G OOD QUESTIONNAIRE DESIGN PRINCIPLES - 55 -

T ABLE 3.4: V ALIDITY AND R ELIABILITY - 61 -

T ABLE 4.1: R ESPONDENTS P ROFILE - 70 -

T ABLE 4.2: F REQUENCY TABLE OF THE SELECTED RESPONDENTS PROFILE - 71 -

T ABLE 4.3: C OMPARISON OF AVERAGE TIME ACCESSING ONLINE SOCIAL COMMUNITIES - 71 -

T ABLE 4.4: P ERCEPTION OF CHANGE IN SOCIAL LIFE - 73 -

T ABLE 4.5: C HANGES ON ACCESSING ONLINE SOCIAL COMMUNITIES - 73 -

T ABLE 4.6: E XTRACTION METHOD : P RINCIPLE C OMPONENT A NALYSIS FOR DIMENSIONS OF S OCIAL C APITAL S TRUCTURE M ATRIX FOR 3 FACTORS - 76 -

T ABLE 4.7: E XTRACTION METHOD : P RINCIPLE C OMPONENT A NALYSIS FOR BENEFIT AND RISK S TRUCTURE M ATRIX FOR 4 FACTORS - 78 -

T ABLE 4.8: S UMMARY OF THE RESULTS OF HYPOTHESES - 92 -

T ABLE 5.1: L IST OF RESEARCH HYPOTHESES - 96 -

T ABLE 5.2: S UMMARY OF HYPOTHESES FOUND IN THIS RESEARCH - 97 -

T ABLE 5.3: I MPLICATIONS FOR THEORY AND PRACTICE - 113 -

List of Figures

Page

F IGURE 1.1: O UTLINE OF C HAPTER 1 - 1 -

F IGURE 1.2: O UTLINE OF THIS THESIS - 10 -

F IGURE 2.1: L ITERATURE REVIEW FRAMEWORK FOR THIS RESEARCH - 12 -

F IGURE 2.2: O UTLINE OF LITERATURE REVIEW FOR PARENT DISCIPLINE 1: S OCIAL N ETWORK - 12 -

F IGURE 2.3: RELATIONSHIP BETWEEN INDIVIDUAL 1 LIKES 2 - 14 -

F IGURE 2.4: 1 AND 2 LIKE ONE ANOTHER OR THEIR LIKING IS MUTUAL - 14 -

F IGURE 2.5: 1 IS CONNECTED TO 3 VIA 2 - 14 -

F IGURE 2.6: 1 AND 2 LIKE ONE ANOTHER , AND 2 AND 3 LIKE ONE ANOTHER - 14 -

F IGURE 2.7: 1, 2, AND 3 ARE INTERRELATED - 14 -

F IGURE 2.8: O UTLINE OF LITERATURE REVIEW FOR PARENT DISCIPLINE 2: S OCIAL C APITAL - 21 -

F IGURE 2.9: O UTLINE OF LITERATURE REVIEW FOR IMMEDIATE DISCIPLINE : S OCIAL C APITAL IN ELECTRONIC SOCIAL COMMUNITIES - 26 -

F IGURE 2.10: T HE DIMENSIONS OF SOCIAL CAPITAL - 30 -

F IGURE 2.11: D EVELOPED C ONCEPTUAL F RAMEWORK OF S OCIAL C APITAL - 36 -

F IGURE 3.1: O UTLINE OF CHAPTER 3 - 42 -

F IGURE 3.2: E LEMENTS FOR SELECTING TYPES OF DATA COLLECTION METHOD - 45 -

F IGURE 3.3: OUTLINE OF QUESTIONNAIRE DEVELOPMENT PROCESS - 53 -

F IGURE 4.1 : O UTLINE OF CHAPTER 4 - 65 -

F IGURE 4.2: P URPOSE FOR ACCESSING ONLINE SOCIAL COMMUNITIES - 72 -

F IGURE 4.3: P LACES ACCESSING ONLINE SOCIAL COMMUNITIES - 72 -

F IGURE 4.4: T HE INITIAL REGRESSION MODEL IN THE RESEARCH - 81 -

F IGURE 4.5: T HE REVISED REGRESSION MODEL IN THIS RESEARCH - 91 -

F IGURE 5.1: O UTLINE OF C HAPTER 5 - 93 -

F IGURE 5.2: T HE NEW CONCEPTUAL RESEARCH MODEL - 118 -

CHAPTER 1 INTRODUCTION

1.1 Introduction

The aim of this chapter is to provide a summary of this thesis After the introduction

in Section 1.1, Section 1.2 describes the background of the research Following that, the research question and research hypotheses are presented in Section 1.3 Section 1.4 and Section 1.5 briefly explain the justification and research methodology in this thesis, followed by Section 1.6, which describes the limitations and assumptions The outline of each chapter in this thesis is recapitulated in Section 1.7 Section 1.8 concludes this chapter by providing the structure of this research as shown in Figure 1.2 The outline of this chapter is illustrated in Figure 1.1

Figure 1.1: Outline of Chapter 1

Source: Developed for this research

1.2 Background of the research

The revolution of the Internet has changed human behaviour since the late 1990s (Stevenson & Hamill, 2002) Owing to the convenience and flexibility of the Internet, people started to use the Internet for personal purposes, and thereby the Internet

1.8 Conclusion 1.7 Outline of this research 1.6 Limitations and assumptions 1.5 Research methodology 1.4 Justification for the research 1.3 Research question and research hypotheses 1.2 Background of the research

1.1 Introduction

also resulted in the growth in popularity of online social networks The use of online social communities has been the global consumer phenomenon in today s information age as approximately two-thirds of the global Internet population have visited online social communities or blogging sites during the past decade (Nielsen Online, 2009)

Specifically, Australian online users recorded the second strongest social networking penetration in the Asia-Pacific region in 2008 with nearly nine million Australians visited online social networking sites in June 2009 an increase of 29 percent from the same period in the previous year (Nielsen Online, 2009) Online social communities are the new platform providing more opportunities for individuals to easily and quickly interact with people who have similar interests, belief or values, search information, and share knowledge compared with traditional social networks (Boyd & Ellison, 2007)

In order to understand how online social networks work, the concepts relating to how individuals interact need to be exploring While a social network essentially relates to like-minded individuals sharing information and ideas, the electronic social communities are similar to traditional social communities (Leonard, Mehra, & Katerberg, 2008) Within the scope of this analysis, social capital (Sander, 2002) will not only be discussed in relation to social networks and interaction but also examined as to whether the knowledge and abilities an individual brings to a social network can significantly alter both online social networks and individual users

Social capital is an important theory focusing on social relations in sociology It has been widely utilised and defined from various perspectives in research fields involving social sciences, economics, politics, education, and management since the 1970s (Inkpen & Tsang, 2005; Mathwick, Wiertz, & Ruyter, 2007) The term social

is an entirely new concept in Internet-marketing research with the growth

of Internet use Sander (2002) asserts that social capital is the knowledge and capabilities either collectives or individuals bring to a large social network Understanding social capital can also help a social network merge and conform their

conceptual cognitions in belonging to a specific groups with the same values, attitudes and beliefs (Mort & Weerawardena, 2006)

Considering the importance of social capital on electronic social communities, more and more researchers, for instance Boyd and Ellison (2007), Hsu and Lin (2008), and Valenzuela, Park and Kee (2009), have begun to investigate the relationship between social capital and online social communities recently However, the issue of social capital on the Internet is still arguable among researchers due to the complexity of social capital theory (Adler & Kwon, 2002; Miyazaki, 2008; Sander, 2002; Williams, 2006) Social capital theory is comprised of several dimensions which have an effect

on different research results (Inkpen & Tsang, 2005; Nahapiet & Ghoshal, 1998), and hence, there is no clear or strong evidence to verify the relationship between social capital and online social communities The purpose of this thesis is to investigate the three selected components among those dimensions of social capital, which are relational capital, structural capital, and cognitive capital in online social communities

Putnam s (2000) argument is one of the controversial issues in social capital research in the past few years Putnam (2000) emphasises that social capital should have a positive relationship with political participation from a collective perspective Therefore, he predicts that social capital is declining in American society The popularity of high-technological products causes less American citizens to participate in social and political activities In addition, Nie and Erbing s research (2000) could be another argument They argue that using online social communities would isolate people from their families and real social communities, and as a consequence, social capital is weak in online social communities (Nie, 2001; Nie & Erbing, 2000)

Notwithstanding several previous researchers providing some evidence to explain the relationship between social capital and the Internet, a growing number of current researchers have begun to criticise those contentions They argue that people use online social communities to maintain existing relationships (Boyd &

Ellison, 2007), resurrect past relationships (Ellison, Steinfield, & Lampe, 2007), and share their knowledge or information (Valenzuela, Park & Kee, 2009), which appears

to correspond to relational capital and cognitive capital Moreover, Dustin Moskovitz, the Facebook co-founder, also emphasises that the purpose of Facebook is to build social capital on online social networks through social interactions with online friends via Facebook, and therefore, can create more business opportunities for online members (Doyle, 2008) Those assertions are supported by little relevant research nowadays

Therefore, the purpose of this thesis is to provide and clarify the concept of social capital on online social communities by investigating the relationship between the selected dimensions of social capital, including relational capital, structural capital, and cognitive capital, and online social communities The research question and research hypotheses will be listed in the next section

1.3 Research question and research hypotheses

According to the background of the research, the purpose of this thesis is to address the research question:

To what extent does a relationship exist between social capital and online social

communities?

To answer the research question, the primary research objective was designed to investigate the relationship between social capital and online social communities usage Notwithstanding some researchers have investigated the issues of social capital in online social communities through examining various dimensions of social capital from different perspectives, it is still an argument owing to the complexity of

social capital theory Therefore, this thesis will focus on exploring how the three

selected dimensions of social capital, which consists of relational capital, structural capital, and cognitive capital, influence the intensity of using online social communities This thesis will enable the research gaps between research issues and

current literature to be filled by investigating users online social communities usage

The conceptual framework of social capital and the research hypotheses were developed in Section 2.5 to conduct the data collection (Chapter 3) and data analysis (Chapter 4) based on the literature review In addition, researchers also indicated that information sharing and risks, such as privacy issues, have a direct effect on the relationship between social capital and the intensity of individuals using online social communities (Barnes, 2006; Boyd & Ellison, 2007; Clark & Roberts, 2010; Williams, 2006) However, little research is known about the indirect effects of information sharing and risks in that relationship and, as a result, the indirect effect hypotheses were developed in this thesis The research hypotheses are outlined as follows:

Hypothesis 1: There is a relationship between the dimensions of social capital and

the benefits/ risks of using online social communities

Hypothesis 2: There is a relationship between the benefits and risks of using online

social communities and the dimensions of social capital, and the intensity of online social communities usage

Hypothesis 3: The relationship between social interaction and the usage is

influenced by indirect effects

Hypothesis 4: The relationship between role and norms in online social communities

and the usage is influenced by indirect effects

Hypothesis 5: The relationship between trust and the usage is influenced by indirect

effects

1.4 Justification for the research

The investigation of social capital in online social communities is essential for the future of marketing With the advent of the Internet, social networks have expanded in a way that has allowed massive amounts of personal information, spending habits, personal product reviews and opinions to be accessible to

practically everyone (Chaffey, Ellis-Chadwick, Johnston, & Mayer, 2006) Marketers have before them a concentrated set of data that identifies what collectivism and individual belongs to, their interests, how they perceive themselves and others and what they like and do not like to spend their money on (Dewhirst & Davis, 2005)

In other words, online social communities have changed human behaviour in the way of gathering information and interacting with other people with less expense but more flexibility (Castells, 2000; Leonard et al., 2008) Visiting online social communities now is an essential part of many people s daily routine Thereby,

understanding how online social networks work and how social relations influence

the intensity of using online social networks have become a necessary investigation for researchers since they can predict human s activities based on human s social behaviours and intentions in online social communities

Finally, from a marketing perspective, this investigation into these areas will provide marketers with insights into how best to make considerations and plans prior to developing marketing campaigns and advertising methods to targeting demographics Nevertheless, online social communities are still growing and both marketers and advertisers are still learning how to manipulate online social communities effectively and efficiently to interact with consumers (Freeman, 2004)

1.5 Methodology

The positivist research paradigm was utilised to ascertain the relationship between the dimensions of social capital and online social communities usage with deductive research techniques in this thesis This type of approach is an efficient

measurement when researchers or marketers know exactly what is required in research areas and how to measure those variables which were identified in

previous studies (Creswell, 2008; Ponterotto, 2005; Tashakkori & Teddlie, 2003)

Similarly, the Internet has been widely utilised for personal purposes since the mid 1990s (Buchanan & Hvizdak, 2009), which results in the increasing population of

Internet users The online survey, therefore, has become a prior data collection technique particularly in business research Chapter 5 will illustrate with tables the comparison of data collection methods and the effects of using Internet surveys

In summary, the online questionnaire (Nie & Erbing, 2000; Wright, 2005) was selected as the most appropriate technique to collect primary data in this thesis regarding the research question and research hypotheses defined in the earlier sections The data then was collected via self-completion questionnaires from a sample of self-selected respondents on the Internet (Bryman & Bell, 2007; Malhotra, 1999) A further explanation for research methodology including the questionnaire development process, reliability and validity, and ethical considerations will be discussed in Chapter 5

1.6 Limitations and assumptions

The three major limitations were addressed in this thesis The limitations of a cross-sectional study where data are gathered just once is the first issue, and the reliability of web survey data is the second limitation of the research Finally, the sampling issue is considered as another limitation in this thesis Those limitations will be explicitly discussed within the thesis The following section will provide the outline of each chapter of the research

1.7 Outline of this research

This research comprises five chapters to develop the knowledge of social capital on the Internet by investigating the dimensions of social capital in electronic social communities Figure 1.2 illustrates the detailed structure of this thesis by noting theoretical and empirical phases The chapters are summarised as follows:

Chapter 1 provides the overall picture of this thesis The research background and research question with research hypotheses were briefly elucidated, and following that, the justification of the thesis and the overview of research methodology were

presented This chapter also summarises the limitations and outlines each chapter

of the thesis

Chapter 2 expounds the two major parent disciplines, which are social network and social capital, by reviewing relevant literature and develops the research question from a integrated research concept which is the dimensions of social capital in online social communities The research hypotheses are designed for investigation based on the developed conceptual framework of social capital

Chapter 3 describes and justifies the research methodology in the thesis To begin with, this chapter introduces and justifies the chosen research paradigm and research design Likewise, the Internet survey was designed as a quantitative data collection technique to be conducted in this research according to the research question The collecting method and the issues of validity, reliability, and ethics are discussed after that

Chapter 4 analyses the data collected from the Internet survey and reports the results of the data analysis via SPSS 19.0 Considering the purpose of this research, SPSS 19.0 was utilised to examine the descriptive analysis, factor analysis, and regression analysis Finally, the results indicate that three research hypotheses were disproved and the rest of the hypotheses were confirmed

Chapter 5 discusses the findings from Chapter 4 by updating the research and concludes the hypotheses regarding the research question This chapter then provides some contributions for both theory and practice, and limitations related with this thesis The implications for future research are ultimately recommended at the end of this research The conclusion of Chapter 1 will be presented in the following section

1.8 Conclusion

This chapter provided the recapitulation of this thesis The background of the research area and research hypotheses was introduced in Section 1.2 and Section 1.3 The research then was justified (Section 1.4) and the methodology was also briefly explained following that Finally, limitations and the outline of each chapter were presented in Section 1.6 and Section 1.7 Chapter 2 will review the relevant literature and present the developed conceptual framework of social capital based

on the literature review

Figure 1.2: Outline of this thesis

Source: Developed for this research

Chapter 1

Introduction

Chapter 2

Literature review

 Online social networks

 Social capital online

 Conceptual framework model

Empirical ( Data Collection)

Theoretical ( Linking Findings to Literature)

CHAPTER 2 LITERATURE REVIEW

2.1 Introduction

Chapter 1 introduced the outline of this thesis The purpose of this chapter is to establish the elementary knowledge of social capital theory in online social communities from empirical literature It will assist researchers to develop hypotheses directly answering research questions, data collection and data analysis The parent disciplines comprise social network and social capital theory, and the immediate discipline is the dimension of social capital in electronic social communities The three major dimensions of social capital to investigate in online social communities were identified This chapter, likewise, develops a conceptual framework model according to the research question that emerged from gaps within the literature

There are six sections in this chapter as is illustrated in Figure 2.1 The two parent disciplines of social networks (Section 2.2) and social capital theory (Section 2.3) are reviewed after the introduction in Section 2.1 Section 2.4 expounds the immediate discipline, the dimension of social capital in electronic social communities, for this research by identifying relational capital, structural capital, and cognitive capital on the Internet Section 2.5 develops the research model and five major research hypotheses by identifying the research question, and the last section concludes the literature review (Section 2.6)

Figure 2.1: Literature review framework for this research

Source: Developed for this research

2.2 Parent discipline 1: Social Network

Figure 2.2: Outline of literature review for parent discipline 1: Social Network

Source: Developed for this research

2.3 Parent Discipline 2: Social Capital

2.3.1 Social Capital

Parent Disciplines

Dimension of Social Capital in Online Social Communities

2.4.1 Online Social Networks 2.4.2 Dimensions of Social Capital 2.4.3 Social Capital Online

2.4 Synthesis - Immediate Discipline

Framework of Social Capital within Online Social Communities Development of research questions and propositions

2.5 Theoretical Framework

2.6 Conclusion

2.2 Social Network

supplier and the customer

2.2.2 Social

Network

the combined interaction between individuals (i.e exchange ideas)

relationship (Gummesson, 2002a, p 40) This relationship can be considered the core relationship within marketing because from this relationship the supplier must develop their own networks through their suppliers and manufacturers, while the customer communicates a product s worth to others through their individual and complex web of social networks, which in turn can generate more customer relationship interaction with the original supplier

The supplier is an individual assigned the task of selling the product or service to the customer This can be done in a variety of ways, such as directly (face-to-face), or through other traditional forms such as the television and print media, telephone marketing or in the last couple of decades, via email or internet sources

The customer is the person seeking the product or service They are usually external individuals or parties that are surveying the market for the ideal balance between what they want and the price they are expecting to sell at I convince them of the worthiness of the particular product or service they are

necessarily need to be classified as being between two individual people Instead, it can be between individual organisations Gummesson, (2002b, p 35) sums up this relationship where he clarifies (also see Figures 2.3-2.7),

In individual market relationships a customer interacts with another individual who is a salesperson, or another employee of the selling organisation Market relationships also exist between companies, industries, regions, countries and groups of countries When the selling situation is more extensive and complex, the selling activity turns into negotiations The salesperson becomes the negotiator and the negotiations are often handled by a team from either side

Figure 2.3: Relationship between individual 1 likes 2

Figure 2.4: 1 and 2 like one another or their liking is mutual

Figure 2.5: 1 is connected to 3 via 2

Figure 2.6: 1 and 2 like one another, and 2 and 3 like one another

Figure 2.7: 1, 2, and 3 are interrelated

Source: Developed for this research

As with any relationship there is a certain level of interaction aimed at maintaining the exchange For the seller it is getting a sale, but also, perhaps more importantly, it

is to establish a longer-term relationship with the customer that translates into return business (Gummesson, 2002b) Any core relationship between the seller and the customer should be looked upon as the seed from which further contacts, both

in the form of return business from the original customer and additional customers recommended to the seller by the original customer, grow (Gummesson, 2002a; Wicks & Roethlein, 2009) In effect, the salesperson is taking advantage and exploiting the customers extended social network through providing quality service

and quality products (Wicks & Roethlein, 2009)

Many marketing perspectives consider the core customer as an important resource

in that the relationship is already established and the salesperson does not have to work as hard in re-establishing an understanding with the customer in order to sell the particular product or service (Licata, 2009; Wicks & Roethlein, 2009) The energy and expenditure of getting new customers is considered in some instances as being too expensive in relation to the returns gained ( Keller & Lehmann, 2006)

However, Licata (2009) argues this perspective against that core customer should be considered a link with the broader social network that they are a part of By providing quality service, by establishing trust between the salesperson and the

sell products and services to them also (Licata, 2009)

Maintaining a healthy relationship between the salesperson and the customer is not easy The customer expects the same level of service and quality of product for every purchase event This can prove difficult for the salesperson If for example, a product was on sale when the salesperson managed to establish the relationship and the customer purchased the item, the customer might expect similar treatment

in the future, undermining the earning potential of the product (Garretson & Burton, 2005)

Retaining customers is not an easy undertaking, no matter how strong the relationship (Gummesson, 2002a) Ultimately there will be some level of customer drift or migration to other suppliers, especially if the quality of service supplied at the beginning is not capable of being maintained Maintaining customer relationships works best in small operations where the interaction is usually kept between known individuals This however becomes problematic when the company has a customer-base of hundreds or thousands At this size, quality relationships are difficult to maintain, and ultimately cannot be sustained, resulting in a percentage of the customer base moving on (Lay & Bowden, 2009)

Marketing strategies have been developed to try and maintain this relationship Although essentially lacking in the direct face-to-face interaction, many advertisement platforms such as television and print media try, through language and image, to suggest a relationship can be established, maintained and repeated Even though basically these are not as effective, they do in the short term gain the

companies to employ this strategy and that it was successful in generating replies

technique in a large-scale international operation for individualised direct mail (p 109)

Perhaps the most interferential, but equally effective method of direct marketing is the telephone Telemarketing is seen as being as effective as face-to-face marketing but is considerably more cost effective Perhaps the success of this medium is the voice exchange process, where the customer has to respond to the caller, in effect, engaging in a negation of sorts (Schultz & Schultz, 2004)

In order for customer relationship marketing to be successful, several key criteria need to be considered First of all, how the target group can be communicated with needs to be established This helps marketers formulate the best way to establish the personalised approach Certain groups such as older demographics for example, might respond better to personalised letters or phone calls rather than emails, simply because they are less likely to use the technology Teenagers, in contrast, would perhaps be better approached through email or online social communities

Following this, interaction needs to be established in the form of constructive and productive dialogue By exchanging information with the customer or potential customer if the contact is a cold call there is a better chance of identifying the

valuable That is, customers can start to build brand loyalty based on the belief that the company values their business and that they are being treated better than they would be by a competitor via social networks Whether they are or not does not

matter it is the perception that they are that is essential to retaining the customer

(Madhavaram et al., 2005; Price et al., 1997; Rempel et al., 2001)

Finally, marketing is not only about convincing a customer that the product or service on offer is worth purchasing, it is about gaining valuable market data on the

campaigns in the future, or to allow specific products and services to be designed or

modified in a way that specifically suits that particular demographic, resulting in higher potential sales By building a relationship with the customer, the salesperson

or marketer can gather increasingly larger amounts of information to create a detailed profile These profiles can prove extremely useful and a valuable commodity in their own right when exchanged or sold to various marketing groups

or companies (Kanso & Nelson, 2007)

Marketing is about making a connection with the customer, of creating a

individuals, belong to large and increasingly complex social networks These webs are intricate in that an individual can belong to several at once, each with their particular concerns and interests For marketers, this is an essential matrix of interconnections that must be digested in order to understand how the customer thinks and how they will respond to particular marketing approaches (Okazaki, 2004) Through mimicking social network structures and using language and methods that parallel social networking structures there is a higher probability of

marketing profile and gaining other potential customers by tapping into their associated social networks In order to expand on this concept, an investigation and analysis of what social networks are, the importance of social capital and the process or social network analysis needs to be made (Okazaki, 2005)

2.2.2 Social network

While a network is the relationship between a business and its customers, a social network is the combined interaction of a set number of individuals exchanging ideas, opinions and information that is of collective interest (Harrison & Carroll, 2006) Social networks however involve a broad range of socio-cultural considerations where one individual can belong to multiple networks at any one time, influences, and is influenced by these networks (Granovetter, 2005; MacKenzie & Millo, 2003; Zuckerman, 2003)

A social network, in its most basic form, is the interrelated contacts between set

numbers of individuals within a certain demography These demographics, in turn, can be interrelated, widening the potential sphere of influence for strategic marketing campaigns (Leonard et al., 2008)

The core element of a social network is the individual, known as a node or tie This terminology can also refer to an organisation within a larger group, such as a department within a government structure These nodes or ties are related through

a common set of characteristics or circumstances that can range from religious or political ideas, financial class, personal or intimate relationships, family ties or cultural associations, both ethnic and social These links are not singular in scope Typically the individual is linked interdependently with multiple sub-groups and cultures, resulting in a complex matrix of associative contacts (Mok, Morris, Benet-Martinez, & Karakitapoglu-Aygun, 2007)

Social networking starts at an early age between an individual and members of their immediate family (MacKenzie & Millo, 2003) This interaction teaches individuals how to relate to each other, to express their needs, wants and desires, while also interpreting the socio-political makeup of the group The next transition is the broader family, which in turn leads on to neighbours and family associates (Zuckerman, 2003) By the time a child is ready to attend playgroup, kindergarten or preschool, they have developed a broad range of skills that enables them to communicate effectively on a wide range of subjects and be able to identify similar traits in others (Granovetter, 2005; Labianca & Brass, 2006)

Subsequently, this leads to an understanding of social structures, roles of authority and how to modify communication styles among groups This ability is essential in the development of political awareness, in which individuals become aware of what

to say to whom and where it is appropriate (Harrison & Carroll, 2006; Zuckerman, 2003) This is not solely a human trait Chimpanzees and other apes have to observe, develop and use complex social networks with strict hierarchies As social animals, it

is important for primates in general and humans specifically to require social interaction to order and structure their lives (Podolny & Baron, 1997)

Individuals throughout their lives become very astute at modifying their roles within social networks and can change characteristics depending on the group in question Social networks, while being interlinked, can operate on a variety of scales, ranging from family groups to regional or potentially global sized associations of significant complexity (Labianca & Brass, 2006) The underlying purpose of social networks is the sharing of knowledge, information, materials and resources that service the continued existence (or survival) of the individual or collective The success or

problems, overcome obstacles and continue to prosper

Social networks prosper through the development and sharing of social capital (MacKenzie & Millo, 2003) In essence, social capital is the value an individual brings

to the network This node can be a person with particular skill sets or an organisation that strengthens the network with a unique set of resources or capabilities Social capital is the underlying strength of a social network because it adds diversity to common attributes shared by the group This can inspire

the group stand for (Fussell, Harrison-Rexrode, Kennan, & Hazleton, 2006)

Social networks, from a marketing perspective, relate to particular demographics or sub-cultures within a larger network These sub-cultures can be determined by social or financial classes, political ideology or religious beliefs, perceptions of social dominance or marginalisation, and ethnic or gender-based associations as well as other broadly based factors (Harrison & Carroll, 2006) Through social network marketing strategies, marketers can custom-design advertising campaigns aimed at triggering different emotional responses in the target demographic, improving the potential marketability of a product or service The core issue related to the effectiveness of marketing approaches being used to target specific social networks

is a sound understanding of how social capital, combined with the influences of

society and why they find themselves attracted to certain groups Once a marketer has this information, the process of designing a campaign that triggers emotional

reactions in the consumer is much easier (Freeman, 2004; Mason, Conrey, & Smith, 2007)

Summary of parent discipline 1: Social Networks This section has introduced the

importance of networks and social networks with regard to this thesis Generally,

the term networks was identified as the relationship between people, and social networks as the interaction between one another in social communities from a

sociological perspective (Gummesson, 2002b; Granovetter, 2005; Zuckerman, 2003) This perspective appears to be similar to social capital theory The following section, then, will review the social capital literature in the perspective of the research problem in the thesis Finally, this research will synthesise the literature review for both parent disciplines and apply it to electronic social communities

2.3 Parent discipline 2: Dimensions of Social Capital

This section of this chapter will review the scholarly literature on social capital from

a sociological perspective while providing various definitions of social capital

Figure 2.8: Outline of literature review for parent discipline 2: Social Capital

Source: Developed for this research

2.3.1 Social capital

Social capital is the knowledge and capabilities an individual or small group bring to

a larger social network (Adler & Kwon, 2002) Social capital helps a social network

merge and conform, strengthening their conceptual understanding that they belong

to a certain clique that have the same core set of values, attitudes and beliefs The diverse range of skills and knowledge that individuals bring to a social network also helps the network link with others that are not directly associated with the group, taking advantage of personal and professional relationships that can strengthen the

many such interactive situations (Sander, 2002)

resources, information or knowledge to the social network, but also the exchange of trust and goodwill (Dekker & Uslaner, 2001) Social networks are essentially about sharing information with like-minded individuals and social capital allows people to exchange these ideas and learn from each other in ways that otherwise might not

be available (Mort & Weerawardena, 2006)

Social networks have been recognised as differing in size and complexity with a wide range of interconnecting aspects where individuals can belong to multiple networks

at one time (Kuo, Lai, & Wang, 2008; Social Capital Research, 2005) Social capital is equally complex as it varies depending on whether researchers focus primarily on the maintaining relations, the structure of relations within a collectivity, or both types of linkages (Adler & Kwon, 2002) A focus on maintaining relationships has been identified as external relations or bridging (Woolcock, 1998) and the collectivity as internal relations or bonding or linking (Dekker & Uslaner, 2001) Table 2.1 summarises the various definitions of social capital and was categorised by external relations, internal relations, and both types as shown below

Originally perceived as a community-based aspect where information was exchanged on a broad scale it is now understood to be adaptable and adjustable depending on the size of the social network the individual with the social capital belongs to at that time (Brewer, 2003) There is much debate as to whether social capital is a community based phenomenon or can be identified on a micro-group or individual level (Tanas & Saee, 2007) Social capital is often compared to human

capital, but generally speaking it can be argued that human capital is only one aspect of the overall concept of social capital This is because groups, especially social networks, comprise individuals with the intent of exchanging and sharing ideas, views and beliefs with the aim of teaching and learning from the other members of the network (Walker, Kogut, & Shan, 1997)

Table 2.1: The definitions of social capital

Types of relations Authors Definitions of social capital

External relations Baker

a resource that actors derive from specific social structures and then use to pursue their interests; it is created by changes in the relationship among actors (1990, p 619)

Belliveau, O'Reilly, Wade

an individual's personal network and elite institutional affiliations (1996, p 1572)

Bourdieu

the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition (1986, p 248)

made up of social obligations ( connections ), which is convertible, in certain conditions, into economic capital and may be institutionalized in the form of a title of nobility (1986, p 243)

Bourdieu Wacquant

the sum of the resources, actual or virtual, that accrue

to an individual or a group by virtue of possessing a durable network of more or less institutionalized relationships of mutual acquaintance and recognition (1992, p 119)

Boxman, De Graai Flap

the number of people who can be expected to provide support and the resources those people have at their disposal (1991, p 52)

Burt

friends, colleagues, and more general contacts through whom you receive opportunities to use your financial and human capital (1992, p 9)

the brokerage opportunities in a network (1997, p 355)

Knoke

the process by which social actors create and mobilize their network connections within and between organizations to gain access to other social actors' resources (1999, p 18)

Portes

the ability of actors to secure benefits by virtue of membership in social networks or other social structures (1998, p 6)

Internal relations Brehm Rahn

the web of cooperative relationships between citizens that facilitate resolution of collective action problems (1997, p 999)

Coleman

is defined by its function It is not a single entity, but a variety of different entities having two characteristics in common: They all consist of some aspect of social structure, and they facilitate certain actions of individuals who are within the structure (1990, p 302)

Fukuyama

the ability of people to work together for common purposes in groups and organizations (1995, p 10) the existence of a certain set of informal values or norms shared among members of a group that permit cooperation among them (1997)

Inglehart

a culture of trust and tolerance, in which extensive networks of voluntary associations emerge (1997, p 188)

Portes Sensenbrenner

those expectations for action within a collectivity that affect the economic goals and goal seeking behavior of its members, even if these expectations are not oriented toward the economic sphere (1993, p 1323)

Putnam

features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit (1995, p 67)

Thomas

those voluntary means and processes developed within civil society which promote development for the collective whole' (1996, p 11)

Both types Loury

naturally occurring social relationships among persons which promote or assist the acquisition of skills and traits valued in the marketplace, an asset which may be

as significant as financial bequests in accounting for the maintenance of inequality in our society (1992, p 100)

Nahapiet Ghoshal

the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual

or social unit Social capital thus comprises both the network and the assets that may be mobilized through that network (1998, p 243)

Pennar

the web of social relationships that influences individual behavior and thereby affects economic growth (1997, p 154)

Schiff

the set of elements of the social structure that affects relations among people and are inputs or arguments of the production and/or utility function (1992, p 160) Woolcock the information, trust, and norms of reciprocity

inhering in one's social networks (1998, p 153)

Source: Adler and Kwon (2002), Dekker and Uslaner (2001), Social Capital Research

(2005), from http://www.socialcapitalresearch.com

Social networks vary in structure just as they do in size and purpose It has been found that social networks need various degrees of social capital in order to operate These networks can consist of groups of individuals that endeavour to have a mutually beneficial medium of exchange through a flexible form of membership, or

in contrast develop structure and organised entities that are determined and guided

by rules and procedures In essence the rules and procedures of social networks are

beliefs (Krishna, 1999)

Social networks are groups that have a common set of interests or goals Subsequently, it can be seen that these groups consist of individuals from similar backgrounds, interests, age, religion, socio-economic standing and political affiliation (if any) (Kuo, Lai, & Wang, 2008) The social capital these networks are composed of arguably has its origins in the development of social grouping and interaction that has helped humans, as a social species, survive and flourish collectively (Fukuyama, 1995)

These determinants are of significant interest to marketers as they help in narrowing and organising marketing campaigns in a way that directly appeals to a specific type of individual (Kuo et al., 2008)

Social capital has become a significant concept and been widely discussed as a collectivism based theory since early capital society (Coleman, 1988) Putnam (1995,

networks, norms, and social trust that facilitate coordination and cooperation for

as a supplier of resources, information or knowledge to the social network, but also the exchange of trust and goodwill through collective activities (Williams, 2006) However, developing the concept of social capital has been emerging with the growth of online social communities usage Putnam (1995) points out that social capital should have positive relationships with political participation and therefore, social capital is declining because of a number of citizens participating in social and

L and Ensel (1999) however argue that social capital should be considered not only from a collective but also an individual perspective as online social networks now are a type of online community This appears to be a similar idea to that of Steinfield, Ellison, and Lampe (2008) who assert that online social relationships influence individual perceptions and may impact on economic growth (Lin, & Ensel, 1999; Williams, 2006)

Summary of parent discipline 2: Social Capital Social capital is complex when

developing theory within social networks Social networks are essentially about

sharing information with like-minded individuals and social capital allows people to exchange these ideas and learn from each other (Mort & Weerawardena, 2006)

There is debate whether social capital is collective based or can be identified on an individual base, as social networks have been developed from the local community

to the global community and thus, social capital should be developed from local to global as well (Brewer, 2003; Tanas & Saee, 2007) The internet, as identified as a new communicating platform, offers technological communicating tools for people

to interact with individuals quickly and globally Therefore, the following section will discuss the social network and social capital on the Internet

2.4 Synthesis Immediate Discipline

Figure 2.9: Outline of literature review for immediate discipline: Social Capital

in electronic social communities

Source: Developed for this research

2.4.1 Online social networks

The need to manage connections and social networks has become a priority in society as the traditional repressions and institutional controls; in particular religions, communities and families have waned Therefore, the terminology of Network Society was invented to describe this period of time by Van Dijk (2006) in

1991 and developed by Manuel Castells (Castells, 2000) in 1996

The network society was first defined as a combination of social and media networks for organisations in a society and most powerful structures influencing the level of individual, organisational and societal in the world (Dijk, 2006) That is, a networked society aims at managing the relationship in media networks and developing face-to-face marketing communication in social networks

emergence of a new network society owing to the recent revolution in information and communication technologies has prompted an intense discussion about the changing organising principles of economic activity (Castells, 2000) The classical type of network society is not only about social networks or any types of networks in social organisation It is more concerning managing information and using micro-electronic based technologies such as Internet and mobile phones Castells (2000b, p 181) clarifies the new technological paradigm through its informational character, networking logic, flexibility, functioning as an integrated system and the societal pervasiveness of its effects Furthermore, the new idea is

an information based society, that is to say, it is not merely focusing on technology, but also the elements of culture, economy and politics to constitute modern network society (Tikkanen & Parvinen, 2006)

Online social communities are new platforms where users can share information and keep in touch with people at less cost and more efficiently compared with traditional communication tools (Boyd & Ellison, 2007) Online social communities are essentially electronic variations of the more traditional social network, only larger These networks allow individuals to expand their circle of influence and in turn expose themselves to a wider range of views, information and knowledge While previous social networking interactions usually involved face-to-face exchange

or initially face-to-face introductions, online social communities have allowed people to communicate with other people they may have never met and probably will never meet (Peter, 2002) It also allows an individual to have a degree of

anonymity that previous social interactions made practically impossible On the Internet, an individual can be whoever they want to be without fear of discovery, criticism or identification This is one of the main reasons that Internet social communities have become so popular

Organisations such as My-Space, Facebook and Twitter have allowed online users to interact with each other as never before What many users do not realise, or perhaps do not care, is that these online social communities are essentially accumulating information in a concentrated format for others to use in categorising their interests and habits for potential use in marketing and advertising campaigns

In essence, these online social communities are providing data mined information for anyone who is willing to collate the information for future use (Ellison, Steinfield,

& Lampe, 2006)

From a marketing perspective, personal information from online social communities can be used to help marketers identify their target groups to understand what motivates members This information however, is not always available without

Terms of Service agreement that users must agree to before being able to start their own Facebook page Facebook changed the service agreement to allow it to keep, store and use information and images from Facebook user accounts indefinitely (Valenzuela et al., 2009)

Like social networks, online social communities allow individuals to interact with others and share ideas and information (Boyd & Ellison, 2007) Social networking has evolved into a new medium, although the underlying principles of social capital still remain An individual is attracted to a certain group due to the familiar belief systems the group represents An individual learns from this group but also enhances it through adding their knowledge to the collective The Internet has simply made this process easier and on a wider scale

For marketers, this new aspect of social communities has essentially combined the traditional network of the business and consumer with the social interactions of a social network The lines have been merged and both marketers and consumers can take advantage of the ease of information flow, the ability to communicate with those in authority easily and the access to raw data that allows marketers the opportunity to streamline their marketing processes so that their campaigns can be more specifically targeted and effective (Brown, Broderick, & Lee, 2005)

consisting of relational capital, structural capital, and cognitive capital which will be explained in the following section

2.4.2 Dimension of social capital

As mentioned in Section 2.3, the social capital theory is complex in sociology, and therefore, the term social needs numbers of components to support and explain in different research areas The complexity results in diverse controversies surrounding the theory as well Considering the purpose of this thesis, the dimension of social capital theory was conducted to investigate the research problem The dimension of social capital was first defined by Narayan and Cassidy (2001) It comprises five dimensions to contribute to the meaning of social capital as seen in Figure 2.10 (Narayan & Cassidy, 2001) As a result of that, the social capital

in electronic social communities needs to be treated as multi-dimensional rather than one-dimensional, thus, the three major dimensions of social capital were selected to investigate in this research They are relational capital (social interaction), structural capital (social roles and norms), and cognitive capital (social trust), which will be briefly introduced in the following section

Figure 2.10: The dimensions of social capital

Source: Narayan and Cassidy (2001, p 68)

2.4.2.1 Relational Capital Social interaction

First of all, social interaction can be classified as relational capital (Collier, 1998) It occurs when individuals have a strong identification with the collective (Krishna, 1999) and is an essential requirement for both social communities and its members That is, individual members are willing to help each other without any purpose since everyone in social groups is part of the collective sharing the same goals (Wasko & Faraj, 2005)

Generally, the social interaction ties, known as network ties, are divided into weak ties and strong ties (Ellison et al., 2007; Granovetter, 2005; Putnam, 1995) The weak ties occur in the connections between various social networks Individuals have loose connections who may offer useful resources or new perspectives for one

another, however, it is typically without emotional support (Chiu, Hsu, Wang, 2006; Ellison et al., 2007) The strong ties, on the contrary, usually arise from stable and simple social networks (Williams, 2006) For example, the relationship between family and close friends has strong ties as individuals believe that they can provide not only useful information for them but also emotional support

In this research, social interaction represents the strength of friendships and the frequency of communicating with online friends Some empirical research indicates that the Internet provides opportunities for online users to strengthen their social communication with friends (DeKerckhove, 1997; Williams, 2006) However, Nie and Erbing (2000) and Putnam (2000) argue against the contention as the Internet provides thin trust between individuals and also isolates people from their offline friends and social communities

Moreover, current research provides some evidence that the frequent social interaction enhances the pleasure for knowledge sharing on online social communities (Chiu et al., 2006) However, little is known about the effect of information sharing on the relationship between social interaction and online social communities

2.4.2.2 Structural Capital Social roles and norms

The social roles and norms are categorised as structural capital (Collier, 1998; Fukuyama, 1995) and is an important predictor of collective action (Putnam, 1995) Social role is the basic unit of socialisation and is the behaviour as expected by other members in social communities Individuals usually develop a perception of membership through group action (Ellis & Fisher, 1994) A social norm is influencing individuals behaviour (Ellis & Fisher, 1994) Collective action usually occurs when individuals have a strong and direct relationship between one another in social networks It is like a habit of cooperation (Wasko & Faraj, 2005) indicating that numbers of individuals are in regular contact with others and they act collectively