Introduction to the Special Issue:

Business Value Creation Enabled by

Social Technology
Karl R. Lang and Ting Li, Guest Editors

ABSTRACT: Viewing social commerce as settings that offer users an electronic commerce
platform to specifically support participation and co-creation activities, we present five
rigorously conducted empirical research studies that quantitatively measure business
value contributions generated from consumer co-creation activities. The studies are based
on business data from five different social commerce settings: a social gaming site, an
e-book recommendation system, a social news site, a social network fan page, and a
social buying platform. The specific co-creation activities examined consist of, respectively,
user collaboration in playing online games, user-driven book recommendations, implicit
relationship building in social network communities, online discussions in a consumer
brand community, and consumer coordination in social shopping.

KEY WORDS AND PHRASES: business value, co-creation, consumer participation, empiri-
cal research, social commerce.

Social commerce has recently emerged as a key area within the larger field
of electronic commerce, both in academic research and business practice.
Liang and Turban have defined social commerce as electronic commerce ar-
rangements that use a Web 2.0 infrastructure and social media technology
applications to support online interactions and user contributions to assist in
the acquisition of products and services [1]. Similarly, but more specifically,
Zwass views social commerce as electronic commerce settings that offer users
an online platform to support participation and co-creation activities [2]. Such
social commerce platforms are designed to connect businesses with consum-
ers in new ways that enable businesses to develop interactive relationships
with their customers that are community oriented and primarily based on
conversation and collaboration. Consumer co-creation activities include open
discussion forums, user-generated content creation, product ratings, reviews
and recommendations, and various forms of user participation and coordina-
tion. Zwass [2] argued that consumer co-creation not only offers direct benefits
to consumers but also presents businesses across industries with a significant
new source for gaining competitive advantage. Consequently, social commerce
innovation and management have become strategically important business
concerns.
From a conceptual and theoretical perspective, the emerging literature on
social commerce agrees that co-creation has the potential to create business
value. Until now, there has been a lack of rigorous empirical work using busi-
ness data that would show exactly how value is created and also measure in
quantitative terms just how much value co-creation delivers to both businesses
and consumers. This special issue aims to close this gap by presenting five
rigorously conducted empirical studies that advance our understanding of
how organizations can use social technologies to create business value.

International Journal of Electronic Commerce / Winter 2013–14, Vol. 18, No. 2, pp. 5–10.
Copyright © 2014 M.E. Sharpe, Inc. All rights reserved. Permissions: www.copyright.com
ISSN 1086–4415 (print) / ISSN 1557–9301 (online)
DOI: 10.2753/JEC1086-4415180200
6 Lang and Li

With the advances of social commerce, new possibilities of social interaction

among electronic commerce customers as well as social interaction between
consumers and organizations have rapidly emerged. Organizations are
exploring these new opportunities in various ways to create business value.
The papers we offer in this special issue examine the question of how social
technology can create value and how it can be measured. All five papers use
theoretically grounded empirical analysis to investigate the impact of social-
technology-enabled consumer co-creation processes on different performance
metrics. Three studies employ experimental methods, and the other two apply
econometrics to analyze user behavior and consumer decisions in different
social commerce settings. We also emphasize the multidisciplinary nature of
social commerce research by including studies that bring different theoretical
backgrounds to their empirical work, including economics, computer science,
and marketing.
The papers included here were selected and extensively revised from the
presentations at the 14th Annual International Conference of Electronic Com-
merce held at the Singapore Management University in August 2012. Studying
innovative business applications of social technology tools was one focus of
the conference that drew a lot of attention and featured a number of strong
papers. After a thorough screening of all the papers on social commerce top-
ics, we invited the authors of the five best empirical papers to develop their
conference presentations into full journal papers. After the authors submitted
their revised and extended papers, each went through an additional three
rounds of extensive revisions. We proudly present five works that we believe
will make a strong contribution to the social commerce literature.
Our lead paper, “Valuation of Participation in Social Gaming,” by Kim,
Yoo, and Kauffman, contributes to the research on hedonic value modeling
in economics by analyzing consumer co-creation in terms of collaborative
user participation in online games. Based on their analysis of the value of
participation, the authors are able to recommend a pricing scheme that
demonstrably improves service profitability. It has been widely recognized
in social commerce research that user participation in terms of time and effort
spent offers the companies supported by social technology a critical source
for potential value creation. However, there have been only scant attempts
on how to measure the value of user participation. Kim et al. present here an
original and very creative approach that uses hedonic valuation to establish
a basis for valuing the time a user spends participating in an online gaming
activity. They use empirical analysis based on a cross-sectional data set from
a massive multiplayer online role-playing game (MMORPG) site as well as
analytical modeling to derive optimal pricing policy at the firm. With some
knowledge of hedonic value for game-playing time, the authors are able to
estimate willingness to pay, and they take this as a basis to propose an initial
participant value subsidy; as willingness to pay goes up over time with the
user’s involvement with the game, a fee can be charged without subsidy. The
paper presents a very innovative example of applied economic research that
demonstrates how empirical analysis and analytical modeling can be used to
help firms analyze social interactions on their user platform for the purpose
of improving the pricing structure they offer to their customers. The paper
 International journal of electronic commerce 7

contributes to our understanding of the economic value users derive from

what can be understood as co-creation.
Our second paper, “From Accuracy to Diversity in Product Recommenda-
tions: Relationship Between Product Diversity and Customer Retention,” by
Park and Han, combines economics and marketing thinking to argue that cur-
rent consumer-product recommendation systems should be extended to incor-
porate more predictions oriented toward product diversity. Recommendation
systems have emerged as a powerful social technology that has been widely
adopted on electronic commerce platforms. Park and Han present a study that
explains how product diversity affects long-term bottom-line performance of
recommendation systems. They examine the relationship between number of
product categories offered on an e-book sales platform and customer churn
incidence. They collected a large-panel data set that includes product category,
revenues, and customer churn information from a large retailer. They find
that as the recommender system increases the number of product categories
recommended to the customers, the customer churn rate goes down, after
controlling for the number of individual products being recommended. Their
results suggest that companies can achieve better outcomes with their recom-
mendation systems by explicitly incorporating the diversity of products being
offered to their customers. Based on additional scenario analysis the authors
suggest that their proposed diversity-based recommendation strategy can be
a significant revenue driver by reducing customer churn.
The third paper in this special issue, “Identifying Implicit and Explicit
Relationships Through User Activities in Social Media,” by Yang, Tang, Dai,
Yang, and Jiang, offers a different perspective on studying the value of user
co-creation processes, which in this case refers to the sharing and rating of
news stories among the platform users. Using a data set collected from a
leading social news site and by applying computational models and meth-
ods from computer science research, the authors show how social network
ventures can augment their knowledge about their user base by uncovering
important user relationships that are not explicitly represented in the social
network structure. They argue that by integrating explicit and implicit user
relationships, a social-network-oriented business can more effectively leverage
user participation for purposes of business intelligence and marketing. As we
know, social network analysis and mining has been a powerful tool for elec-
tronic commerce vendors and marketing companies for understanding user
behavior and for identifying potential customers. However, the capability of
social network analysis and mining diminishes when the social network data
are incomplete, especially when there are only limited explicit ties available.
While social network representations can be routinely extracted from explicit
relationships in social media environments, they are usually quite sparse. For
example, many social media users may have no direct interactions with one
another, and yet share similar interests or purchase the same products. Such
cases suggest an implicit relationship based on like-mindedness and behav-
ioral similarities that are not captured in social network structures. Yang et
al. propose a computational approach using techniques from temporal analy-
sis to identify implicit relationships for enriching the understanding of the
underlying social network structure. They have also conducted an experiment
8 Lang and Li

on Digg.com, a social media site for content discovery and content sharing,
that shows that their model outperforms the standard techniques that rely
only on explicit relationships. They conclude that richer social network rep-
resentations provide business value by enhancing business intelligence and
consumer knowledge.
The next paper, “Corporate Twitter Channels: The Impact of Engagement
and Informedness on Corporate Reputation,” by Li, Berens, and de Maerte-
laere, looks at microblogging (e.g., Twitter), which has quickly developed as
one of the most popular forms of social media and has been widely adopted
among both professional users and regular consumers. Many businesses are
using microblogging to connect more directly with their customers. However,
the question of how to leverage microblogging user interactions and user data
to create business value has been difficult to answer. The authors address this
question by examining information sharing on Twitter and its effects on corpo-
rate reputation and corporate image. They designed an experiment and found
that informedness and engagement play an important role in the corporate
reputation. The authors find that the depth of the relationship among users,
the level of corporate involvement, and the purpose of the channel interac-
tively affect user engagement and informedness. Their results suggest that
deeper relationships among users of a corporate Twitter channel increase user
engagement when the level of corporate involvement with the channel is high
and when the channel has a specific purpose. However, surprisingly, they find
that when the channel has a generic purpose, a high corporate involvement
decreases user engagement. Their results imply that, under certain circum-
stances, firms should reduce their involvement in their social media channels.
Li et al. proceed to discuss business implications of their findings, valuable
to companies that want to make effective use of microblogging technology as
well as to the future researchers of microblogging.
Our fifth paper, “Social Buying: The Effects of Group Size and Communica-
tion on Buyer Performance,” by Pelaez, Yu, and Lang, concludes this special
issue by offering a study of the impact of a new form of consumer coordination
based on the adoption of social technology tools. Viewing social communica-
tion on group-buying platforms as a new form of IT-enabled coordination
mechanisms, the authors examine the impact of group size and communication
capacity on buyer performance on a group buying platform design in which
consumers coordinate product choice and product price among themselves
using social tools. Drawing on theories from economics and information sys-
tems, the researchers posit that larger buyer groups should be able to obtain
better prices and extract higher surplus from sellers and that more communi-
cation capacity should help buyers with coordinating their actions, and go on
to more nuanced results. Using an economic experiment, the authors found
that introducing a private communication channel for buyers had a nega-
tive effect on a group’s surplus. They explain this unexpected finding by the
increased task complexity that arises from the additional needs for informa-
tion processing of the exchanged messages. In general, adding communica-
tion capacity slowed down task completion, and this effect was stronger for
larger groups than smaller ones. This research methodology is consistent with
the principles of design science—designing an IT artifact (e.g., an IT-enabled
 International journal of electronic commerce 9

market mechanism for electronic group buying platforms), implementing it,

and then evaluating it (using economic performance measures). This work
demonstrates that combining design science with experimental economics
offers a useful approach to systematically design and evaluate new social
commerce mechanisms and technology features, applicable for a large range
of specific questions. Using market experiments in the laboratory presents a
powerful method to evaluate new market designs before deploying them in the
real economy. Their approach is particularly appropriate in social commerce
research that studies the economic value from incorporating social technology
features and mechanisms in electronic business platform designs.
We believe that each of the five studies included in this special issue makes a
unique contribution to the social commerce literature. As they differ in specific
context, theoretical perspective, and choice of analytic and empirical methods,
they share a focus on looking at specific consumer co-creation processes and
apply empirical analysis to establish a link between co-creation activities on
social commerce platforms and business value creation.
Last but not least, we want to acknowledge the outstanding help that we
have received in preparing this special issue. First, we would like to give our
special thanks to Rob Kauffman, who had the original idea of putting together
a special issue of social commerce research. In numerous interactions via e‑mail,
phone calls, and personal meetings, he shared his editorial experience, his
deep knowledge about e-commerce research, and his views on the research
process in general, which all contributed a great deal to the development of
all five papers that we present in the final product. We also thank Editor-in-
Chief Vladimir Zwass, who responded enthusiastically to our initial proposal
to guest edit a special issue on social commerce. His support was incredible.
He also offered invaluable input on all the papers. We are grateful to Chris
Westland, who helped us as a special adviser on technical issues regarding
empirical research methodologies. Finally, we are indebted to the anonymous
reviewers who volunteered to do accelerated reviews on short notice. Their
insights and suggestions were a key element in developing the five papers to
the level the reader finds published in this issue.

References

1. Liang, T.P., and Turban, E. Introduction to the special issue: Social com-
merce: A research framework for social commerce. International Journal of
Electronic Commerce, 16, 2, (winter 2011–12), 5–14.
2. Zwass, V. Co‑creation: Toward a taxonomy and an integrated research
perspective. International Journal of Electronic Commerce, 15, 1 (fall 2010),
11–48.

KARL R. LANG (karl.lang@baruch.cuny.edu) is a professor of information systems at

the Zicklin School of Business, Baruch College, City College of New York. He holds
a Ph.D. in management science from the University of Texas at Austin. His research
interests include management of digital businesses, experimental economics, and issues
related to the informational society. He held previous positions at the Free University
of Berlin and the Hong Kong University of Science and Technology (HKUST). His
10 Lang and Li

findings have been published in diverse journals, including Journal of Management

Information Systems, Communications of the ACM, Decision Support Systems, Long Range
Planning, Computational Economics, and Annals of Operations Research. He is an associate
editor of Decision Support Systems, Information & Management, and Electronic Commerce
Research and Applications.

TING LI (tli@rsm.nl) is an assistant professor of decision and information systems

at the Rotterdam School of Management, Erasmus University, the Netherlands. Her
research interests include strategic and economic impacts of IT, Internet commerce and
social media, and consumer decision making in the online and mobile channels. Her
work has been published in Decision Support Systems, International Journal of Electronic
Commerce, European Journal of Information Systems, and in several edited books. Her
research is supported by the Dutch National Science Foundation (NWO). She won the
second prize for the 2011 Prof. Aard Bosman Dissertation Award and was a runner-up
for the 2010 Accenture-PIM Marketing Science Dissertation Award. She obtained her
Ph.D. in management science at Erasmus University and her M.Sc. in computational
science at the University of Amsterdam. Prior to joining academia, she worked for
General Electric and IBM.