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Author's profile photo Jason Cao

Social Media Impact on Transparency

I recently attended the International Business Conference 2010, hosted by the University of British Columbia’s Sauder School of Business. It was an excellent and well-organized conference which included a discussion panel to speak about “Social Media in Today’s Businesses.”

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I asked the panel what impact Social Media has on corporate transparency. Unfortunately, through a combination of sloppy panel moderation and signal-degradation, the panel was asked to comment on privacy concerns of social media instead. (Not exactly the question I asked.) Nevertheless, the panel had some great things to say about privacy. For example, Ryan Holmes, CEO of HootSuite, mentioned that should personal and sensitive information such as member password information be unintentionally released to the world, this could become a “privacy-Chernobyl” that will end the appeal of Social Media. Nancy Richardson, Director of Lululemon’s digital strategy (previously managed Starbucks’ digital strategy), reminded the audience that “It’s your choice what you do” which really puts the onus back on individuals to guard or decide what information to share. This is more in line with my original question and leads me on a search to learn more about the impact of Social Media on corporate transparency.

The Social Media Revolution

I assume you’ve all seen this video, from Erik Qualman, author of Socialnomics (John Wiley & Sons, 2009).


According to Qualman, 34% of bloggers post opinions about product & brands, and 78% of consumers trust peer recommendations, while only 14% trust advertisements. I think that corporations, governments, and even those whom we traditionally go to for news are no longer debating whether they need to take part in social media, or what its ROI is. Instead, organizations are now faced with new pressures from consumers, shareholders and citizens for greater levels of transparency and engagement. In this new environment, organizations are asking themselves “How to use social media well, and how to do this quickly?”

Impact on Transparency

Most organizations puzzle over the degree of transparency they should provide to stakeholders. Many social media experts (including those on IBC’s discussion panel) point out that transparency is about being authentic because it’s the right thing to do, and more importantly, because secrets are hard to keep nowadays.[1]

For Corporation

Corporations that misuse social media tools and are unauthentic about their goals can possibly see consumers use those same tools against them. The companies that used social media as a PR ploy (often referred “astroturfing”) have been revealed and punished by consumers (See Wal-Mart example). The companies that do use social media well have been rewarded. According to research done by Wetpaint and the Altimeter Group on the world’s 100 most valuable brands, corporations see a positive correlation between financial performance and deep social media engagement.[2] Not surprisingly, organizations of top brands like Starbucks, SAP and Dell rely on various best-practices – the most important of all are based on transparency and active engagement. In industries such as banking where trust is low, some have suggested that use of social media tools to initiate corporate dialogue with shareholders and investors can help to regain trust.[3]

For Governments

Governments are under the same pressures and requirements from its citizens to increase transparency and openness through the adoption of social media technology. Recent research describes a paradigm shift of government models transforming from a practice of simply providing information and services to one which involves collaborating with its citizens and partners to create information, service enhancements and new policies.[4] In the US, the Obama administration is implementing the final stage of “e-government” – which involves increased adoption and usage of social media and social networking technology, thereby extending the notions of participatory democracy. Official web sites of the United States Government, such as, are part of this new open government initiative.[5]

Other researchers describe social media as change agents that enable entire political movements to exist and sustain themselves. They point to examples such as the 2007 Australian federal election and the Iranian election of 2009, where bloggers and citizen journalists provide an uncensored view of the situation from the ‘ground,’ free from news media industry spin.[6]

For News Outlets

Journalists have traditionally abided by the principle of not revealing their personal views on political or social issues for the main reason of protecting their credibility, and that of the news organization they represent. However, in this new digital age a new school of thought and practice is forming, where by being honest about their opinions journalists can actually be more believable and trustworthy, not less.[7] According to some leaders in journalism, not joining this new media world of greater engagement and transparency with how news is consumed is a “formula for irrelevance.” It’s no wonder 24 of the 25 largest newspapers are experiencing record declines in circulation (as pointed out in the Social Media Revolution video above).

Laying Out Infrastructure and Ground Rules

Effective December 1, 2009, the Federal Trade Commission (FTC), issued endorsement guidelines primarily related to media statements made by celebrities, consumers, and experts. [9] In addition, these FTC guidelines were also concerned about employers who engage in deceptive use of social media in support of their company’s product and services. Therefore, organizations that make misleading claims using social media can also be prosecuted.

Technology organizations such as SAP, Intel and IBM are leading the pack by developing and communicating proper social networking guidelines for employees that can potentially avert significant liability and loss of goodwill. The following are taken from the “SAP Social Media Participation Guidelines 2009” (more in Timo’s blog):

  • Identify yourself
  • Be honest
  • Be respectful
  • Separate opinions from facts
  • Add value
  • Be engaged and be informed
  • Aim for quality, not quantity
  • Don’t pick fights
  • Protect your privacy

These guidelines are based on public etiquette, and should remind everyone (and not just SAP employees) that the same set of protocols applies. Certainly, the ‘golden rules’ of social media aren’t limited to the technology sector, as pharmaceuticals and even those in the fashion industry are leveraging social media. Similarly, news organizations such as the Washington Post have also issued guidelines on social media usage. (By the way, many have criticized WaPo’s guidelines as too restrictive, to the point of discouraging engagement.)


Social media is an available and necessary tool to meet increasing transparency requirements of consumers, shareholders and citizens. Transparency is about being honest, and does not mean revealing proprietary or private information. For businesses, it means telling a genuine story to improve understanding. For government, transparency promotes accountability. For journalism, transparency means gaining trust. For me, Social Media is more than a fad. It is a tool that helps me remain visible to and connected with my contacts.

[1] Jody Paterson, “Walking The Talk,” Douglas Magazine, Nov/Dec 2010 edition, pg. 29.

[2] Ben Elowitz and Charlene Li, Wetpaint and Altimeter Group, “Engagementdb Ranking the Top 100 Global Brands,”

[3] Enrique Bonsón and Francisco Flores, “Social Media Metrics and Corporate Transparency,” Online 34, no. 4 (Jul, 2010): 23-25.

[4] Soon Ae Chun, Stuart Shulman, Rodrigo Sandoval and Eduard Hovy, “Government 2.0: Making connections between citizens, data and government,” IOS Press, 2010.

[5] The White House website, Open Government Initiative,

[6] Stephanie Gleason, “Going Public,” American Journalism Review, Winter 2009, p. 6-7.

[7] Ibid.

[8] Bart A. Lazar, “Drafting Social Networking Policies,” Information Today, May 2010, p. 20.


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      Author's profile photo Bill Wood
      Bill Wood
      The real issue I have concerns about is in the widespread adoption of "social media" without careful evaluation of the business purpose:

      Social Media Fads and the Risk to the Enterprise

      I think there are some benefits to SOME of the social media tools.  For example I wrote these posts some time ago (one of them a few years ago):

      SAP, ERP III, SOA — Learning Organizations through Social Media Collaboration

      ERP III – Is the Integration of Collaboration the Future of Enterprise Applications

      Recently I offered my perspective on the different types of ERP, including the emerging area of "ERP III"

      ERP vs. ERP II vs. ERP III Future Enterprise Applications

      The real issue I have concerns about is in the widespread adoption of "social media" without careful evaluation of the business purpose:

      Author's profile photo Jason Cao
      Jason Cao
      Blog Post Author
      Hi Bill,
      Thanks for your comments and for sharing links to your posts. I agree that organizations who use social media blindly are in for disappointment.

      Natascha Thomson just shared a nice article Note the first step listed is to "Determine your goal." Perhaps choosing the right tool should be one of these steps?


      Author's profile photo Former Member
      Former Member
      You put so much thought behind it and are providing really great info. It's long though, and I have to admit I have to digest it in pieces. Maybe a 2-3 blog series would have been good.
      Author's profile photo Jason Cao
      Jason Cao
      Blog Post Author
      Thanks for your feedback Natascha! I'll have to remember to keep my posts shorter next time.
      Author's profile photo Benny Schaich-Lebek
      Benny Schaich-Lebek
      As the video is not available in Germany due to copyright issues, her is one that you can watch:


      Author's profile photo Jason Cao
      Jason Cao
      Blog Post Author
      Hi Benny,
      Thanks for posting the Deutsch version of the video! (I didn't know about the copyright issues.)


      Author's profile photo Benny Schaich-Lebek
      Benny Schaich-Lebek
      Hi Jason,
      that is not your fault 😉
      It would be a little bit strange to expect you to check about legal rules everywhere. Because of that youtube does it for you - I think next it would be nice by them to tell everybody who links their content...