Soc. Netw. Anal. Min.
(2017) 7:51
https://doi.org/10.1007/s13278-017-0468-8
ORIGINAL ARTICLE
Social media usage and firm performance: the mediating role
of social capital
Shampy Kamboj1 • Vinod Kumar2 • Zillur Rahman3
Received: 7 October 2016 / Revised: 14 August 2017 / Accepted: 10 September 2017 / Published online: 16 October 2017
Ó Springer-Verlag GmbH Austria 2017
Abstract The emergence of various new technologies,
especially social media, has led to their worldwide accep-
tance, as these technologies offer dual-benefit to the
employees in terms of work as well as socialization and
entertainment. However, the knowledge about the influ-
ence of these social media technologies on the performance
of a company is limited. This study measures the influence
of social media usage on firm performance, mediated by
social capital. Data were collected using surveys method
from a sample of 132 social media users of large IT
company community members. It was found that all the
three dimensions of social media usage (social use, hedonic
use and cognitive use) have a positive influence on firm
performance (financial and market performance). Social
capital was found as a partial mediator between the rela-
tionship of social media usage and firm performance.
Theoretical and managerial implications along with future
research directions are also discussed.
Keywords Performance
Social capital
Technology

Use of social media
& Shampy Kamboj
kamboj.shampy@gmail.com
Vinod Kumar
vkmehta.iitr@gmail.com
Zillur Rahman
zrahman786@gmail.com
1
Amity School of Business, Amity University, Noida,
Uttar Pradesh 201313, India
2
International Management Institute (IMI),
New Delhi 110016, India
3
Department of Management Studies, Indian Institute of
Technology, Roorkee, Uttarakhand 247667, India
1 Introduction
Latest technologies bring capabilities that were previously
not available to the firms. Indeed, technical innovations
such as social media have enriched firms and facilitated
enormous capabilities and usage from generating innova-
tive business models and marketing methods, to enhancing
management, communication, learning practices, collabo-
ration and innovation (Urquhart and Vaast 2012). Recent
industry reports advocate that usage of social media may
affect businesses’ bottom line significantly; therefore,
social media is not only becoming the vital component of
the business strategy but also attracting more investments
(Power 2013). According to Kaplan and Haenlein (2010),
‘‘Social Media is a group of Internet-based applications
that build on the ideological and technological foundations
of Web 2.0, and that allow the creation and exchange of
User Generated Content’’ (p. 61). A number of researchers
conceptualize three dimensions of social media uses, i.e.,
social use, hedonic use and cognitive use (Ali-Hassan et al.
2015; Raacke and Bonds-Raacke 2008; Shao 2009).
Researchers also suggest that social media use affects
interpersonal relations (Yamakanith and Gurusamy 2014).
These interpersonal relations give rise to social ties, which
are known as social capital (Nahapiet and Ghoshal 1998).
Social capital provides vital resources like information,
knowledge and support to strengthen social relations (Adler
and Kwon 2002). Thus, social capital is a key resource of a
firm that affects the development of intellectual and human
capital inside the firm (Nahapiet and Ghoshal 1998).
Moreover, several researchers have found strong connec-
tions between social capital and firm performance (Leana
and Pil 2006). Tsai (2000, p. 927) defined social capital as,
‘‘the relational resources attainable by individual actors
through networks of social relationships.’’ Social capital
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encompasses three main dimensions, which are (a) struc-
tural dimension representing ‘‘the overall pattern of con-
nections between actors-that is, who you reach and how
you reach them’’ (Nahapiet and Ghoshal 1998, p. 244). The
second dimension is the cognitive dimension, which rep-
resents, ‘‘shared representations, interpretations, and sys-
tems of meaning among parties’’ (Nahapiet and Ghoshal
1998, p. 243). The third and last dimension of social capital
is a relational dimension, which represents the assets
engrained in intra-social network relationships such as
trust. The conceptualization of the three dimensions of
social capital comprehensively raps at the various charac-
teristics of social capital consequences.
Social capital facilitates firm’s actors to share, combine,
and assimilate knowledge (Collins and Smith 2006; Kogut
and Zander 1992) and results in building the collective
capability to create a competitive advantage for the orga-
nization (Nahapiet and Ghoshal 1998). The literature on
social capital also reveals that differences in firm perfor-
mance may signify differences in organizations’ ability to
produce and utilize social capital (Nahapiet and Ghoshal
1998; Tsai and Ghoshal 1998). In order to facilitate shar-
ing, combining, and assimilation of knowledge, firms
should offer their employees the opportunity for interac-
tion, and employees should also possess the cognitive
ability to integrate the information (Adler and Kwon 2002;
Huysman 2004; Nahapiet and Ghoshal 1998). Furthermore,
a higher cognitive comfort upsurges the possibility of
collaboration among employees and substantially dimin-
ishes chances of adverse opportunism, which upsurges firm
performance (Bosse et al. 2009).
The situation matches the social capital dimensions,
which serve as drivers of knowledge sharing and integra-
tion (Adler and Kwon 2002; Huysman 2004; Nahapiet and
Ghoshal 1998). The reason behind is that structural
dimension facilitates interaction via social network ties; a
cognitive dimension not only facilitates interaction but also
makes information access easy, which in turn facilitates
knowledge assimilation; and the relational dimension
delivers the motivation to participate sharing knowledge
(Karahanna and Preston 2013).
Social contacts, described by information conversation,
shared vision and trust, which contribute significantly in
attaining better firm performance, and facilitate value
addition for firms involved in collaboration (Cousins et al.
2006). Following the same argument, social capital is
considered as an implicit resource existing in relationships.
All these aspects of social capital is possibly an influential
force for enhancing performance outcomes by enabling
communications that lead to collective action and knowl-
edge diffusion.
A growing body of extant literature on this topic reveals
the increasing significance of social media (Claussen et al.
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Soc. Netw. Anal. Min. (2017) 7:51
2013), and yet previous studies just represents a small part
of what can be revealed regarding social media’s impact on
the firm (Ali-Hassan et al. 2015; Bughin and Chui 2013).
Moreover, previous studies have not explained how the
different uses of social media can affect firm performance
directly and indirectly via social capital. Despite the fact,
various companies have started adopting and investing in
social media, there is a dearth of studies exploring the
impact of firms’ social media usage on its performance
(Trainor 2012). Thus, further future research is required to
fill up the knowledge gaps on top of social media and its
use (Aral et al. 2013; Ali-Hassan et al. 2015).
Companies are significantly adopting new technologies,
for instance, social media, which assist firm for fulfilling
their entertainment and socialization motives via offering a
list of social media use. Knowledge concerning the influ-
ence of such type of technologies on firm performance,
however, is currently limited (Ali-Hassan et al. 2015). The
last decade has seen as a growing research interest con-
cerning social capital and firm performance (Luo et al.
2004; Stam et al. 2014; Wu and Leung 2005). The previous
studies in this domain have mainly focused on the direct
impact of social capital on firm performance (Stam et al.
2014); however, understanding regarding the influence of
social media technologies on firm performance via social
capital is presently limited.
Accordingly, the research question addressed in the
present article is mentioned as follows: does the influence
of social media on firm performance differ based on how it
is used, if so, then to what extent? Addressing this question
is interesting as social media can be used in multiple ways,
not each and everyone directly perceived it as advanta-
geous to the performance. A relevant example is the large
discussion in the management regarding the potentially
negative impact of a few social media uses on the pro-
ductivity of their employees (Ali-Hassan et al. 2015).
Because of this concern, various companies have prohib-
ited the use of a number of social media applications such
as Facebook, YouTube, Twitter and Instagram at the work
(Fister Gale 2013; Miller and Tucker 2013). Due to these
bans, the present study considers an important look at the
outcome these extreme measures may give up.
Emerging literature on this topic also reveals social
media’s amplified significance (Claussen et al. 2013).
Specifically, we explore the impact of social media usage
on social capital and the resulting influence on firm per-
formance. This is relevant, as the studies examining the
association between social media and performance have
shown conflicting findings (Ali-Hassan et al. 2015; Kim
et al. 2015; Schniederjans et al. 2013; Trainor 2012), which
generates a need to study social media and performance
outcomes more comprehensively.
Soc. Netw. Anal. Min. (2017) 7:51
Although prior research proposes that social media
usage is associated with firm performance (Trainor 2012),
and social capital influences performance of a firm (Tsai
and Ghoshal 1998), a research model incorporating these
three concepts is missing. This paper makes an attempt in
this direction by providing a research model on social
media usage, social capital and firm performance linkage.
This article aims to examine how the usage of social media
affects the interpersonal relations (i.e., social capital),
which in turn influence the firm performance. Thus, this
study links the three key aspects of social media usage, i.e.,
social usage, hedonic usage and cognitive usage (Katz et al.
1973; McQuail 1994) to social capital, which further
facilitates improved firm performance. These aspects refer
to the social media usage to create and retain social rela-
tions; social media usage to relax and amuse, and social
media usage to generate and share consumer-generated
content, respectively. Further, social capital as argued in
the current article and other researchers have argued,
finally affects the firm performance (Andrews 2010).
This paper structured in the following way: First, in
Sect. 2, we have described the available literature pertinent
to the key variables of hypothesized model and association
between them to develop hypotheses. Thereafter, in
Sect. 3, we have discussed the methodology employed to
conduct this study. In Sect. 4, the findings of this study
have been discussed, and finally we have concluded this
study by delivering theoretical, managerial implications,
and endeavors for future research in Sects. 5 and 6.
2 Theoretical context and hypothesis development
2.1 Uses and gratification theory and affordance
theory
In this study, we applied uses and gratification theory. This
theory is associated with psychological and social needs
that create media expectations, and resulted in diverse
pattern of media exposure and lead to the gratification of
needs (Katz et al. 1973). The main idea of this theory is
that use of media is selective and motivated through user’s
awareness of his/her expectation and needs and fulfilled
these needs via specific media (Ruggiero 2000). Thus, this
theory presents a connection between alternatives and the
results; therefore, it is appropriate to understand the media
use and its influence at performance (Stafford et al. 2004).
Existing uses and gratification researches have consid-
ered three needs, which may be gratified by diverse med-
ium: social needs, hedonic needs and cognitive needs (Katz
et al. 1973; McQuail 1994). In our study, we envisaged
three different elements of social media usage that match
up with above-mentioned needs: social usage, hedonic
Page 3 of 14 51
usage, and cognitive usage. Social usage refers to the
deployment of social media to generate new relations
socially, identify users with common interests and remain
in contact with presently available friends (Quan-Haase
and Young 2010). Hedonic Usage means making usage of
social media for entertainment (Brandtzæg and Heim
2009), leisure time (Quan-Haase and Young 2010), com-
forting (Papacharissi and Mendelson 2011) and amusement
(Shao 2009). Social media cognitive usage concentrates on
developing and sharing and obtaining content created by
other users (Shao 2009), involving sharing views, ratings,
personal photographs, videos and stories (Leung 2009).
Similarly, we have used affordances theory, which states
that the acts afford to an individual depend on the inter-
action between individuals’ abilities and attributes of
objects in the individual environment (Gibson 1977). Per-
ceiving availabilities is depending on individual’s objective
(Stoffregen 2003). Therefore, social media as an IT usage
have subjective evidence that the use of particular appli-
cation can significantly influence the performance (Gray
et al. 2011), and there is still a requirement to know the
association between diverse uses of social media and their
effect on performance. Based on this theory and above
discussion, we proposed our hypotheses. The hypothesized
model is described in Fig. 1.
2.2 Social media with social usage and structural
social capital
The structural aspect of social capital refers to ‘‘the overall
pattern of connections and interactions between individu-
als, and is characterized by the number and strength of the
existing network ties between individuals and by the net-
work’s configuration.’’ (Ali-Hassan et al. 2015, pp. 68).
Social media assist in developing and maintaining social
associations directly, via social networking tools, and
indirectly via communities of concern, may positively
influence social capital’s structural aspect (Wu 2013).
Existing research found that the internet assists users in
cultivating structural social capital (Ellison et al. 2007).
Likewise, Anderson and Rainie (2010) established that
there is an association between the usage of social media
and expressive ties development as a type of structural
social capital. Similarly, Steinfield et al. (2009) found the
same association for using social media inside the organi-
zation. In addition, few other studies also present findings
that are consistent with previously mentioned studies, their
results depict that the specific usage of media toward
socialization is adequate to uphold structural social capital
(i.e., expressive ties) between the individual in virtual
context (Wellman et al. 1996). The usage of social media
also enables users to approach socially dissimilar individ-
uals from distinctive communal worlds (Wellman et al.
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51 Page 4 of 14
Fig. 1 Conceptual model. Social media usage
Note: *** p \ 0.001;
** p \ 0.01; * p \ 0.05
Social Use
Hedonic Use
Cognitive Use
2001). Similarly, various tools of social media facilitate
management capabilities and searching facilities, which
permit users to search someone and build linkages (Wu
2013). Based on above-mentioned arguments, we hypoth-
esize that:
H1: Social use of social media has a positive impact on
structural social capital.
2.3 Social media with hedonic usage and structural
social capital
Another important aspect of social media is hedonic usage,
refers to making use of social media tools for enjoyment
and entertainment. Research has found that ‘‘solitary
recreation’’ through technology, for instance, high
involvement in online games lead to decreased socializa-
tion (Wellman et al. 2001). Similarly, the findings of study
conduct by Putnam (1995) also depict that high involve-
ment in broadcast media such as television resulted into a
decrease in socialization.
In the same line, Nevo et al. (2012) examined the use of
virtual worlds from gathering information to social inter-
action. Additionally, Hamari et al. (2014) conduct a review
on gamification and found the positive experiences such as
enjoyment, motivation and engagement in all organization
studied. A study conducted by Cole and Griffiths (2007)
found that in a ‘‘multiplayer online role-playing game’’
facilitate chances to develop strong relationships via
friendships. Several studies also provide evidence that
social media usage for hedonic purposes may create
chances for making new connections (Ali-Hassan et al.
2015). Therefore, considering all the arguments mentioned
above, we hypothesize that:
H2: Hedonic use of social media has a positive impact on
structural social capital.
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Soc. Netw. Anal. Min. (2017) 7:51
Social capital
Structural
Social capital
Firm
Relational
Performance
Social capital
Cognitive
Social Capital
2.4 Social media with cognitive usage and structural
social capital
Cognitive usage of social media refers as ‘‘to generate and
share content increases employees’ visibility and highlights
their characteristics, including their expertize, knowledge,
opinions, preferences, and hobbies, among others.’’ (Ali-
Hassan et al. 2015, pp. 69) provided the fact that shared
actions and same interests determine the formation of
social attachment. Images, publishing presentations and
videos can depict individuals and their interests, thus pro-
viding a space for building connections with others by tags
and comments. Additionally, self-exposé of individual
information, stories and photographs also facilitates a
chance to develop a new bond among individuals (Law and
Chang 2008). In addition, operating on a shared content
creation tool, such as wiki, compels individual to interact
and likely to create social relations. Therefore, we
hypothesize that:
H3: Cognitive use of social media has a positive impact
on structural social capital.
2.5 Social usage of social media and relational social
capital
The relational aspect of social capital emphasizes on
quality and nature of relations among group members,
group identification, commitments, group norms and trust
(Nahapiet and Ghoshal 1998). It is evident from past
studies that trust is an important part of relational aspect,
which is extensively investigated (Daniel et al. 2003).
‘‘Trust is the willingness of a party to be vulnerable, and
entails the expectation that the other will perform a par-
ticular action irrespective of the trustor’s ability to monitor
or control them.’’ Thus, it allows the enhancement of bonds
and familiarity, which reinforce relational dimension of
social capital (Rousseau et al. 1998). ‘‘The information on
Soc. Netw. Anal. Min. (2017) 7:51
the network tie that lies between two individuals may lead
to relational social capital through common ties.’’ (Ali-
Hassan et al. 2015, p. 70)
H4: Social use of social media has a positive impact on
relational social capital.
2.6 Social media’s cognitive use and relational social
capital
The deployment of social media in producing and sharing
content described through in-depth feedback, story build-
ing, personal and open conversations, all these are used to
create social capitals’ relational dimension in an online
setting. Whitener et al. (1998) relate the formation of
relational social capital to aspects like communication
frequency, and communication openness. In addition, the
deliberate nature of social media usage at work, any con-
tent contribution, such as in the type of advice, can be
treated compassionate that may enhance social capital’s
relational aspects (Henttonen and Blomqvist 2005).
Therefore, we hypothesize that:
H5: Cognitive usage of social media has a positive
impact on relational social capital.
2.7 Social media’s cognitive use and cognitive social
capital
The cognitive aspect of social media depicts a common
understanding and shared context, which enables interac-
tion between parties. It includes resources, which facilitates
interpretations, shared representations, mutual codes, nar-
ratives and language. The cognitive dimension has attained
less attention from a scholar, specifically in the context of
work, perhaps the inconsistency regarding its definition,
measurement and sub-dimensions (Zheng 2010). Several
research have described the strength of this element as a
common context of group and understanding, and deter-
mined the shared language (Chiu et al. 2006), shared vision
of groups (Tsai and Ghoshal 1998), shared knowledge
(Levin and Cross 2004) and shared culture (Inkpen and
Tsang 2005). In this study, social capital’s cognitive
dimension is treated as shared perspective and take on
Hinds and Mortensen’s (2005, p. 293) conception, which
‘‘develops in a team when its members have access to the
same information and share the same tools, work processes
and work cultures.’’
Regarding shared context, individuals require to identify
their colleagues along with their expertize, their problems
with solutions and so on. Employees also require knowing
the social surroundings where they employed in. Initially,
technology was restricted only to convey contextual
aspects. Therefore, we proposed the following hypotheses:
Page 5 of 14 51
H6: Cognitive use of social media has a positive impact
on cognitive social capital.
2.8 Social capital and firm performance
The social capital concept has operationalized and con-
ceptualized in different ways (Leana and Van Buren 1999).
An important idea behind the concept is that in a com-
munity certain actors exploit the interpersonal resources in
order to attain required outcomes. Several scholars
emphasize specifically on bridging side of interactions
bonding various actors as a part of social capital (Burt
1997), whereas others highlight the linking nature of shared
values, which support to these interactions (Coleman
1994). Thus, social capital, therefore, includes ‘‘social
networks and the norms of reciprocity and trustworthiness
that arise from them’’ (Putnam 2000, p. 19). It means that
social capital is a multi-facet construct including both
structure-based (networks) and attitude-based (rules)
aspects. Both of these aspects of social capital were stated
in Nahapiet and Ghoshal’s (1998) multi-facet concept
formulation. Specifically, Nahapiet and Ghoshal 1998,
p. 245 discuss that ‘‘organizational social capital comprises
three key distinct (though interrelated) dimensions that
may enable the unlocking of ideas and information that can
positively influence organizational outcomes: structural
(connections among actors); relational (trust among
actors); and cognitive (shared goals and values among
actors).’’
As per Andrews (2010, p. 586), ‘‘Structural social cap-
ital indicates the presence of a network of access to people
and resources, while relational and cognitive social capital
reflects the capability for resource exchange.’’
The structure of formal and casual coordination and
collaboration inside firms may develop networks of con-
nections, which can be mobilized by managers in order to
facilitate superior firm outcomes (Scott 1999). Almost each
firm may gain from suitable shared connections across their
inside borders. Thus, ‘‘by encouraging interaction between
different departments within an organization, it becomes
increasingly possible for senior managers to access vital
information and knowledge ‘spillovers’ from across the
organization to accomplish collective goals or obtain
scarce resources.’’ (Willem and Scarbrough 2006, p. 1348)
Therefore, we hypothesize that:
H7: Structural social capital has a positive impact on firm
performance.
Relational social capital describes as the essential
reciprocity that directs exchanges among members of the
firm. As per to Leana and Van Buren (1999, p. 540), ‘‘this
is reflected in the extent of associability (willingness to the
subordinate individual to collective goals) and trust (the
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norm underpinning reciprocity) within an organization.’’ communication of firm values and mission all over the
This study emphasizes on the trust side of relational social organization can rouse managers (Willem and Scarbrough
capital instead of associability that is mainly associated 2006). Therefore, we hypothesize that:
with shared values of cognitive social capital. In addition,
H9: Cognitive social capital is positively related to firm
‘‘High levels of trust between organizational leaders and
performance.
members may permit the transfer of sensitive information
that is unavailable to those beyond the boundaries of trust.’’
2.9 Role of social capital as a mediator
(Andrews 2010, p. 587)
‘‘Organization members in a high trust environment may
Several researchers argued that social capital is positively
simultaneously perceive there to be strong support from
associated with the performance of firm (Andrews 2010;
leaders and a corresponding sense of obligation and
Leana and Pil 2006). Various researches have also dis-
attachment on their own part.’’ As suggested by Andrews
cussed that social capital contributes as a mediator. Social
(2010, p. 587) ‘‘Shared norms of reciprocity both underpin
media usage has increased among both customers and
access to such exchanges and provide the necessary moti-
corporate firms, but still a very less portion of funds
vation to do so, generating strong ties among members of
assigned for promotional purposes is contributed to social
the same community.’’ This kind of unity inside firms may
media. It may be due to the complexity of measuring the
enhance the viewpoint for harmful externalities related
return on investment in social media.
with closure to appear, for instance, ‘‘groupthink’’ that
Despite this complexity, various studies have the effort
limits the openness of information and understanding.
to appraise its investment value. Although, the customer
However, powerful relationship ties are mainly associated
value for a company not only includes the portion of funds
with positive externalities, consisting of decreased turnover
they have expended, but also include their influence over
intention and high level of commitment toward organiza-
other persons through spreading their views using social
tion (Dirks and Ferrin 2001) that facilitates improved
media; thus the real value of customers covers greater than
results (Benkhoff 1997).
their actual spending (Fisher 2009).
Social capital’s relational dimension is concerned with
Assessing and computing social media return on
identification level shared by members or with the com-
investment start with calculating return on sales and then
munity to which they belong (Nahapiet and Ghoshal 1998).
determine costs. However, regarding social media it is
In 1986, Tajfel and Turner propose social identity theory,
inadequate. Thus, companies should also take care of
which argues that group to which an individual belongs
which marketing goals are fulfilled through social media
defines his/her identity. Up to now as persons value their
usage. These may be, such as, new products knowledge,
recognition with the group, they assist to attain organiza-
brand engagement and providing information to customers.
tional goals. On the basis of social identity theory and
Therefore, it is not necessary that returns will always be in
above discussion, we hypothesized the following:
financial terms (Hoffman and Fodor 2010) or realized in
H8: Relational social capital is positively related to firm short time span.
performance. However, numerous researchers have studied the asso-
ciation between social media and financial figures (Sch-
As per Andrews (2010, p. 587) ‘‘Cognitive social capital
niederjans et al. 2013; Trainor 2012). Ghoshal and Moran
differs from the relational social capital in that it relates to
(1996) suggest that ‘‘It is shared purpose that allows
the extent to which subjective interpretations of organiza-
organizations to create and nurture a social context that
tional values and goals rather than feelings of trust are
shapes the values, goals and expectations of members’’ (p.
shared by the many actors within a given organization.’’
37). As in a firm social capital is recognized by shared
‘‘Shared interpretations of the values and mission of the
purpose among workers, it facilitates combined action and
organization furnish cognitive dimension for particular
creates value for the firm (Tsai and Ghoshal 1998). ‘‘Social
types of actors, which may enable them to cope with
capital is a more proximal factor affecting firm perfor-
environmental uncertainty, potentially creating positive
mance.’’ (Mahajan and Benson 2013, p. 731). Nahapiet and
externalities for organizational performance.’’ (Andrews
Ghoshal’s (1998) social capital framework also helps to
2010, p. 587). Moreover, ‘‘The willingness and ability to
understand the antecedents of social capital and investi-
define collective goals that are then enacted collectively’’
gating its influence on firm performance. Bosse et al.
(Leana and Van Buren 1999, p. 542), is therefore con-
(2009) found that higher cognitive comfort as a part of
nected with better firm effort.
cognitive social capital enhance the possibility of future
Different values among firm members may intensify
cooperation between employees and significantly decreases
combined act problems connected with intensify trying to
realize policies, plans and strategies. Efficient

123
Soc. Netw. Anal. Min. (2017) 7:51
the likelihood of negative opportunism, which results into
improved firm performance.
On the basis of above discussion, we proposed the fol-
lowing hypotheses.
H10: Social capital will positively mediate the rela-
tionship between social media usage and firm performance.
3 Methodology
The following section explains in detail the research
methodology and approach used.
3.1 Research context
In this study, survey method was used for collecting data.
The sampling frame was social media community con-
sisting of 1200 personnel of a large IT company. The main
aim of this community was to share general news regarding
technology and to disseminate information regarding social
media advancements through blogs, wikis and discussions.
The members of this community having a dissimilar
membership, including the persons with limited social
media exposure who were mainly concerned about to know
how of social media to an individual who had either uti-
lized or continue to utilize different social media tech-
niques for their works. During this study, the company
promoted the wide usage of social media tools among its
employees consisting of social networking sites, social
tagging, blogs, etc. In this study, the respondents were
informed as per Ali-Hassan et al. (2015, p. 73) that the
‘‘social media refers to applications loosely labeled as
Web2.0 or social software and include blogs, wikis, social
networking, microblogging, tagging, podcasts, media
sharing, social bookmarking, virtual worlds and others.’’
The respondents were assured that only aggregate
results would be disclosed and their individual responses
would keep confidential. The questionnaire was sent to the
social media community members and only 307 responses
were received. Respondents were also asked about their
acquaintance of their business operations and from how
long they are into this business, in order to appraise their
appropriateness to give responses. Subsequently, under
experienced (experience \ 1 year) respondents in the
company were deemed to be invalid. The size of the
company (number of employees) was greater than 500 and
revenue (% of sales) was greater than 30. In order to
maintain greater accuracy in the results, the respondents
who were given invalid and incomplete responses were
eliminated from the survey. In total, 132 responses were
considered useful with a response rate of 11%. In the
present study, the survey method provided a response rate
of 11%, which is similar to other related studies that have
Page 7 of 14 51
an average online survey response rate of 9.68%, (Kaushik
and Rahman 2017), 4.64% (Kaushik et al. 2015) and 3.2%
(Sheehan 2001), and thus statistically significant sample for
the present study.
In this study, the key informants consist of managers
who were employed by IT companies due to the below-
mentioned reasons: Previous studies on social media and
firm performance have also considered managers for giving
information (Arendt and Brettel 2010; Cao et al. 2013).
Some study has supported the fact that managers offer
reliable and effective data (Cao et al. 2013; Li and
Calantone 1998) as they have control over the functions of
their company and they had thorough information con-
cerning the functions of the firm, the market, and their
competitors.
Following Armstrong and Overton (1977), the
researcher examined non-response bias by comparing
‘‘early’’ and ‘‘late’’ responses with the help of one-way
ANOVA test. To do so, fifty early responses were com-
pared with fifty late responses. The ANOVA test was
applied to compare means of all the observed variables.
Results revealed that there was no significant difference
between these two groups. Thus, the results preclude the
possibility of non-response biases with respect to response
time.
3.2 Measures
A multi-item scale was employed to measure the theoret-
ical variables of the recommended model. The measures
were taken and their items are explained in detail below.
For the most of the constructs the measurement scales were
adapted from previously established scales.
As discussed earlier, in this study social capital is con-
ceptualized as per the three dimensions by Tsai and
Ghoshal (1998), and Nahapiet and Ghoshal (1998). The
capital was operationalized in a manner in which compa-
nies are linked by using two items that were adapted from
Andrews (2010) and Miller’s et al. (1983) scale. Relational
capital measures proximity in interpersonal interactions,
that was examined as trust in this study by using four items
adapted from Andrews (2010), Hansen et al. (2005), Law
and Chang (2008), Leana and Pil (2006) and Singhal et al.
(2014) study. Singhal et al. (2014) found that in trust based
‘communities’ co-evolution rates are more than the other
communities, and linkage between business and trust
within the communities’ decrease as their size increases.
This scale measures perception of trust among all col-
leagues instead of trust of an individual, therefore it was
best suited to this study needs. Cognitive capital measures
the extent to which in a relationship both parties have a
shared vision. It was operationalized using four items
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51 Page 8 of 14
adapted from Andrews (2010), Hinds and Mortensen
(2005) and Leana and Pil (2006).
Social media conceptualized as three dimensions; social
use dimension was measured by using a five-item scale
adapted from Ali-Hassan et al. (2015). Cognitive use scale
was five-item scale and based on knowledge sharing scales,
specially Bock et al. (2005)’s ‘‘intention to share implicit
knowledge scale’’ and Van den Hooff and Huysman
(2009)’s ‘‘knowledge sharing instrument scale.’’ Some
items were depicted the collaboration creation as well as
consumption of content. Hedonic use scale was four-item
scale and adapted as per Nevo and Nevo (2011) scale on
virtual worlds and enjoyment scale by Agarwal and
Karahanna (2000).
Firm performance was measured by adopting four scales
from Langerak et al. (2004). In the questionnaire respon-
dent’s was asked to rate their own firm performance in
relation to objectives established by firms in past years in
the context of sales growth, return on investment, revenue,
market share and profitability.
3.3 Internal consistency reliability
In this article, the internal consistency of the scale was
checked by using composite reliabilities and coefficient
alphas that are depicted in Table 1. For all constructs,
composite reliabilities and Cronbach’s alphas were higher
than suggested 0.7 and therefore representing internal
reliability of scale (Hair et al. 1998).
3.4 Discriminant validity of constructs
In order to assess the validity of constructs, exploratory
factor analysis (EFA) was performed using maximum
likelihood method with Promax rotation (Moore and Ben-
basat 1991). The EFA was resulted in seven constructs
including 32 items, with KMO (Kaiser–Meyer–Olkin
Measure of Sampling Adequacy) = 0.913 and Bartlett’s
Test of Sphericity = 7428.828. All items were loaded
significantly on their corresponding factors, representing a
uni-dimensional composition of the instrument (Hair et al.
1998). As during EFA, there were no cross-loadings;
Table 1 Item-total correlations
and coefficient alphas
Social media social usage
Social media hedonic usage
Social media cognitive usage
Structural social capital
Relational social capital
Cognitive social capital
Firm performance
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Soc. Netw. Anal. Min. (2017) 7:51
hence, all adopted items were retained. The next stage was
confirmatory factor analysis (CFA). It was performed to
examine the discriminant validity of each construct (Gefen
and Straub 2005). It was revealed after CFA that each item
loaded well on their corresponding variable and there was
no item with cross-loadings. The loadings of each item
exceeded the suggested value of 0.70 (Hair et al. 1998). In
addition, the results of confirmatory factor analysis (CFA)
also depicted adequate discriminant validity.
The square root of average variance extracted (AVE) for
every construct was higher as compared to the correlation
of the same construct with others and was greater than the
suggested value of 0.50 (Gefen and Straub 2005). AVE,
Average Shared Squared Variance (ASV), and Maximum
Shared Variance (MSV) were found in suggested level
(Table 2).
3.5 Common method bias
Because all the constructs were measured using multi-item,
self-reporting scales from the same subjects, there was a
possibility of common method bias/variance which could
result if the constructs shared common measurement
methods (Podsakoff et al. 2003). Considering Podsakoff
et al. (2003) and Singleton and Straits (2005), various steps
were followed in order to minimize this risk. Firstly, during
the survey all items were written in a manner to decrease
social appeal, consisting of ignoring the phrases like
‘‘wasting time’’. In addition, all items were checked for
precision during pretesting stage. Secondly, in an online
survey the sequence of questions was randomly created and
therefore was different for all respondents. Third, all
respondents remained unnamed in order to reduce assess-
ment apprehension.
Additionally, various post hoc statistical tests were
performed to evaluate the rigorousness of common method
bias. Initially, Harman’s single-factor test was conducted,
which results into seven non-rotated factors. The greatest
degree of covariance explicated by a factor was 25.2%. The
average elucidated variance of each construct was 0.825,
with all greatly significant loadings. Thus, with all these
Mean SD Cronbach’s alpha Composite reliability
2.288 0.794 0.931 0.934
3.546 0.795 0.845 0.907
3.912 0.549 0.904 0.851
2.883 0.744 0.883 0.886
2.810 0.795 0.816 0.817
4.008 0.645 0.934 0.934
3.792 0.645 0.904 0.907
Soc. Netw. Anal. Min. (2017) 7:51 Page 9 of 14 51

Table 2 Construct validity and correlations

AVE MSV ASV Social Hedonic Cognitive Structural Relational Cognitive Firm
use use use capital capital capital performance

Social use 0.738 0.194 0.105 0.859

Hedonic use 0.710 0.272 0.202 0.271** 0.842
Cognitive use 0.535 0.446 0.252 0.267** 0.516** 0.732
Structural 0.610 0.268 0.167 0.408** 0.518** 0.418** 0.781
capital
Relational 0.528 0.203 0.131 0.441** 0.390** 0.332** 0.451** 0.727
capital
Cognitive 0.782 0.345 0.205 0.253** 0.522** 0.538** 0.345** 0.271** 0.884
capital
Firm 0.661 0.546 0.206 0.245** 0.423** 0.739** 0.266** 0.198** 0.583** 0.813
performance
N = 132, ** p \ 0.01, the diagonal is square root of AVE

findings, it is assured that common method bias did not
influence the outcomes.
4 Data analysis
In the current study, the data were examined at various
levels. Firstly, in SPSS item total correlations and coeffi-
cient alphas were calculated. Thereafter, confirmatory
factor analysis (CFA) with AMOS 20.0 was applied to the
measurement model. All items of five constructs loaded in
the measurement model significantly. The measurement
model generated a model fit with CMIN/DF = 1.829,
p \ 0.001 and acceptable values of CFI = .95, GFI = .90
and RMSEA = .05. Thereafter, a structural model was
developed and lastly, proposed hypotheses were examined
through structural equation model.
In Table 2, detail of descriptive statistics is described.
This table depicts that correlation values is significant at
the 0.01 level. In order to examine the proposed hypothe-
ses, we followed a two-stage method suggested by
Anderson and Gerbing (1988). The resulting values of
hypothesis testing are presented in Table 3.
As depicted from the table all dimensions of social
media with social usage (p \ 0.001), hedonic usage
(p \ 0.001) and cognitive usage (p \ 0.05) were found to
have an assenting and considerable influence on structural
social capital and thus support H1, H2, and H3.
Similarly, social media’s social usage (p \ 0.001) was
found to have an assenting and considerable influence on
relational social capital and therefore supports H4. Like-
wise, cognitive usage of social media also found to have a
positive and significant influence on cognitive social capital
with p \ 0.001, therefore, it also fully supports H6. Finally,
all dimensions of social capital (structural (p \ 0.001),
relational (p \ 0.05) and cognitive (p \ 0.001) were found
to have a positive and significant influence on firm perfor-
mance, and thus supports H9. All hypotheses except H5
fully supported and accepted significantly (Fig. 2).
In order to assess the mediation effect, first, the direct
effect of all social media usage dimensions on firm per-
formance was examined. We found that all three relation-
ships were significant (Table 4). Thereafter the social
capital’s three dimensions as a mediator were introduced,
then two relationships became nonsignificant, which indi-
cate partial mediation effect, as this time their values were
decreased (Baron and Kenny 1986). Thus, this study found
that social capital partially mediates among social media
usage and firm performance. Further, to test the signifi-
cance of mediation effect, Sobel (1982) test was conducted.
It facilitates to assess the significance of indirect effects. It
was found that all mediations were statistically significant
and all the cases are clearly depicted in Table 4. Thus, the
hypothesis that social capital mediates the association of
social media usage and firm performance was supported.
5 Discussion and implications
This study develops on existing empirical studies by
thoroughly exploring the relationship of social media and
firm performance; reliant on the usage of social media
technology. Our findings suggest that the social media use
have a positive influence on firm performance. It is evident
that the approach in which social media is employed in
socialization, such as entertainment, sharing of information
have influenced on firm performance. This specific finding
of our study contributes to existing empirical literature by
connecting social media with, social capital and firm per-
formance. It also delivers a thought-provoking accretion to

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Table 3 Path coefficients and hypotheses testing

Path from Path to Coefficient Significant level Supported?

Hypothesis
H1 Social media social usage Structural social capital 0.270 0.001 Yes
H2 Social media hedonic usage Structural social capital 0.364 0.001 Yes
H3 Social media cognitive usage Structural social capital 0.162 0.05 Yes
H4 Social media social usage Relational social capital 0.347 0.001 Yes
H5 Social media cognitive usage Relational social capital 0.124 ns No
H6 Social media cognitive usage Cognitive social capital 0.492 0.001 Yes
H7 Structural social capital Firm performance 0.345 0.001 Yes
H8 Relational social capital Firm performance 0.173 0.05 Yes
H9 Cognitive social capital Firm performance 0.610 0.001 Yes
Significant non-hypothesized relations
Social media hedonic usage Relational social capital 0.239 0.001 Yes
Social media hedonic usage Cognitive social capital 0.266 0.001 Yes

Fig. 2 Empirical model Social media usage Social capital

0.27***
Social Use Structural
0.36*** Social capital
0.34***
0.34***
Hedonic Use Firm
Relational
0.17* Performance
0.16* Social capital

0.61***
0.12
Cognitive Use Cognitive
Social Capital
0.49***

Note: (***p<.001, **p<.01, *p <.05)

the continuing conversation inside management groups
regarding the usage of social media in enhancing firm
performance. This study also delivers a conceptual under-
pinning for the comprehension of social media use in
companies’ surroundings by linking insights from the well-
known ‘‘uses and gratification theory,’’ ‘‘affordance the-
ory’’ and conceptualization of social capital by Nahapiet
and Ghoshal (1998).
The findings also indicated that social dimension of
social media usage, to form and manage social associa-
tions, significantly influence the development of structural
social capital. Likewise, cognitive dimension of social
media usage positively influences structural, relational and
cognitive dimensions of social capital, which affirms a
strong relationship to firm performance. It was found that
hedonic dimension of social media usage positively influ-
ences structural dimension of social capital. It was found
that the cognitive dimension of social capital positively
influences firm performance. Hence, it was found that
social media usage positively influences firm performance.
Despite the extensiveness and complication of the firm
performance measure, this paper significantly points a part
of the inconsistency in firm performance to the utilization
of social media applications and social capital, delivering a
significant accretion toward the theoretical comprehension
of this evolving area of research. Two non-hypothesized
relationships were also tested and it was found that hedonic
dimension of social media usage positively influences
relational and cognitive dimension of social capital.
5.1 Managerial implications
This study offers an important contribution to managers with
respect to social media utility and firm performance. Pre-
senting the reliant characteristics of social media use and
social capital, it reveals that social media usage could be

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Soc. Netw. Anal. Min. (2017) 7:51
Table 4 Mediation analysis
Model-1 Model-2
Social media–firm performance Social media–social capital–firm performance
Firm Structural social
performance capital
Social media social usage .036 (.04) *** .269 (.04)***
Social media hedonic usage .046 (.05) *** .359 (.05)***
Social media cognitive .708 (.07)*** .171 (.07)**
usage
Structural social capital
Relational social capital
Cognitive social capital
Model fit
Model 1: v2 (304.5), p \ 0.00; GFI = .91, NFI = .93, RFI = .92, TLI = .95, CFI = .96; RMSEA = .05
Model 2: v2 (699.0), p \ 0.00; GFI = .92, NFI = .93, RFI = .94, TLI = .96, CFI = .97; RMSEA = .04
Entries are standardized estimates (standard errors)
** p \ 0.01; *** p \ 0.001; ns p [ 0.05
regarded as an important firm level capability to enhance
performance. The importance of such social media tech-
nologies can also be supported by a survey conducted in 2013
by Microsoft of 9908 information personnel in 32 countries,
in which 34% personnel reported that organizations under-
value these tools, 37% reported that they could perform
better if companies are facilitating their use and 46% said
that their productivity increases with the usage of social
media applications (Microsoft 2013). These outcomes offer
us with direction to utilize an evolving and prevalent tech-
nology as a means to enhance firm performance.
A crucial finding is that firms have to understand well of
what kind of firm performance is significant to them and
configure their social media usage accordingly. If an organi-
zation is concerned in encouraging new and ingenious
thinking, then they should focus on developing and strength-
ening structural social capital. Hence, in such case companies
can promote social and cognitive usage of social media and
may permit specific hedonic interactions to enhance structural
social capital. If managers’ goal is to enhance the efficiency of
tasks, then cognitive usage of social media should be
encouraged and discouraging any hedonic use. Such measures
will likely facilitate the development of social capital essential
to convert social media usage into firm performance (Leidner
et al. 2010). Organizations can benefit from proper training of
employees on the ways of appropriate use of social media,
which in turn will cultivate their potential.
Page 11 of 14 51
Relational social Cognitive social Firm
capital capital performance
.347 (.06)*** .063 (.03)ns .031 (.05)**
.236 (.07)*** .283(.04)*** .065 (.05)ns
.127 (.09)ns .426 (.06)*** .648 (.11)***
.192 (.05)**
.095 (.05)ns
.223 (.07)***
6 Limitations and future research directions
The current study has certain limitations; due to the pres-
ence of systematic factors in the organizational setting,
comprising the likelihood that the sample in the specialized
situation may not represent the overall population. Another
constraint of the study is the probable threat of societal
attractiveness bias in queries concerning firm performance
and social media’s hedonic usage. However, the assurance
that all answers could remain unidentified and that person
answers would not be accredited to managers is anticipated
to reduce this threat to some extent (Singleton and Straits
2005). Furthermore, ‘‘self-reported methods’’ of firm per-
formance are verified to be as consistent as manager
assessments in further researches (Teigland and Wasko
2009).
In addition, the current research adopted ‘‘cross-sec-
tional survey’’ methodology to measure the association of
the variables used in the hypothesized model, this
methodology is limited to its capacity to confirm causality
(Singleton and Straits 2005). To overcome this limitation, a
longitudinal survey could be carried out. Extensive data
could offer further ideas, like comprehensive determinants
of social media involvement, by specific tools and appli-
cations of social media. Furthermore, surveys possess the
limited ability for elucidation (Singleton and Straits 2005),
so additional qualitative procedures might be desired to
comprehend why in this study some hypothesized rela-
tionships were supported and some were not? This research
could further be extended by concentrating on important
non-financial measures like job satisfaction (Lambert et al.
2001), morale, belief in the brand, brand tribalism,
accountability, and loyalty. Another crucial extension of
123
51 Page 12 of 14
this research can be a thorough understanding of the con-
nection between various types of social media usage and
the existing arrangement of the social nexus of the
employees by adopting ‘‘social network analysis’’ on
sociometric data. The hedonic uses of social media need to
be checked with the recent literature, such as prohibiting
the use of social media in a firm that may create some
negative consequences such as depressions and frustrations
in employees, decrease in employee productivity and pre-
vent companies from realizing business benefits (Huy and
Shipilov 2012; Miller and Tucker 2013).
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