What changes online participation in business?

Research so far has dealt primarily with the question of online participation in business from an economic perspective. Thus, the principal focus has been on repercussions for the companies in question. In this it is standard practice to ask after the benefits that a company may acquire from the inclusion of its stakeholders and customers in particular. These benefits include:

  • new business models;
  • customer loyalty and customer satisfaction;
  • word of mouth propaganda;
  • increase in revenue.

Using Internet participation as a means to systematically analyse the development of new business models is particularly difficult – the main focus is on examples of successful innovation. These examples of success show that digital media do indeed enable innovative, participative business models. But these examples do not permit any statement on the spread or number of innovative initiatives.

Development of new business models by internet participation: Heineken Ideas Brewery

Example 7: The „Heineken Ideas Brewery“ allows consumers to take part in idea competitions for new products. The winners each receive prize money.

Studies suggest that the integration of customers in processes of design and creation offers companies a variety of benefits: Among customers, participation creates a sense of shared responsibility and affiliation („organizational citizenship“) (Yen et al., 2011). Customers display substantial attentiveness and also greater loyalty when brought into the design, creation or dissemination of products and services (Chaney, 2012). In these cases customers are no longer just buyers involved in a swap function in dealings with companies, which in itself is inherently characterised by a certain degree of distrust. Instead they perceive themselves as cosignors of an offering. This encourages them voluntarily and on their own initiate to endorse the product or service, for instance in the form of word of mouth propaganda or „viral advertising“ (Riegner, 2007; Chaney, 2012).

Viral advertising: Online-Kampagne "Doritos Viralocity"

Example 8: The user-driven „Doritos Viralocity“ campaign generated approx. 7 million views on YouTube. At times the channel was the most frequently viewed sponsored channel on the platform. As a result the earmarked revenues were exceeded by 24 %.

Only a few studies approach the question of participatory options that are open to other stake-holders, besides customers. And this although a number of examples are certainly available of how critical groups use new media to spread their message by word of mouth propaganda, also (Bieber & Lamla, 2005). Voluntary, viral communication is by no means always a blessing for the company concerned (Sashi, 2012). So companies are called on to respond adequately when faced with critical reports. Time and again, overreactions and attempts to mislead merely reignite criticism and ensure even wider dissemination (Campbell et al., 2012).

Protest as viral form of communication: Nestlés "Kitkat-Kampagne"

Example 9: Thanks to the high user participation, the „Kitkat campaign“ launched by Greenpeace is considered one of the most successful social media protest campaigns. The manufacturer Nestlé responded to the vigorous response by terminating its cooperation with Palmöl, the supplier that come under fire.

An international study shows that companies use their websites principally to address customers and shareholders (Adams & Frost, 2006). Thus, addressing other target groups or stakeholders, for instance to communicate sustainability, is not considered an urgent goal within online communication. In most cases, also, company websites are not seen as an instrument for interactive communication with stakeholders – instead they serve merely to unilaterally broadcast company information. Nevertheless, a broad range of opportunities to observe the behaviour of target groups on the Net, to systematically analyse their responses and hence to acquire information on the needs and demands of relevant stakeholders already exist (Elgün & Karla, 2013).

By the same token, stakeholders certainly recognise the potential that new media offer in making themselves heard (Kane et al., 2009). For instance, social media are used to share information and in this way to critically monitor how companies behave. The time available to respond in the event of perceived misconduct is shortened accordingly. At the same time, social media facilitate the dissemination of critical reports throughout a diverse and widespread community.

It is all the more astonishing, therefore, that such a small number of studies are interested in the critical analysis of possible shifts in power based on new forms of participation available on the Net. It is not even necessary to consider prominent examples of online criticism voiced towards companies (so-called „shitstorms“). The forms of co-creation and open innovation that are welcomed by companies also involve a political dimension. It is not without reason that customer „empowerment“ is mentioned in this context (Weiber & Wolf, 2012). By necessity, permitting participation by external parties in the design, creation or dissemination of products and services shifts power away from the company and toward these cooperation partners (Riegner, 2007; Chang et al., 2009). The easy accessibility of new media and the associated public platform for groups lacking in the necessary resources usually require the companies to exercise mindfulness and in some cases to engage in an interactive dialogue. This helps reduce asymmetric power structures (Sawhney et al., 2005).

Economic analyses indicate that cooperation between companies and external stakeholders also leads to a displacement in value creation potential. In other words: Customers or other partners cooperate with the company if they can extract a reward from this collaboration. Companies may indeed have to fork out the lion’s share of this reward, for instance when stages in the value creation process no longer take place within the company and are instead placed in the hands of the cooperation partners (Chaney, 2012). In most cases, though, the hope is that all parties involved will benefit from the cooperation and that new net value will be created (Franquet et al., 2011). It is likely that the increase in responsibility and affiliation on the part of the cooperation partners will cushion any risk of losses on the company side (Yen et al., 2011).

The creative industries, in particular the music and film industry and journalism, present an interesting showpiece for online participation in business and its critical repercussions (Franquet et al, 2011; Hanekop & Wittke, 2008; Neuberger et al., 2009). In this sector, innovation, driven by new media, frequently leads to „disruptive“ effects, meaning it calls into question the traditional business model. New media are characterised by their capacity to enable creative use by a wide audience and hence to facilitate the production and dissemination of media content. In the past, recording and distributing music, photos, videos or journalistic content have been the exclusive preserve of professional producers drawing on suitable and frequently expensive equipment. Now, however, virtually universal Internet access and online publication platforms have transformed any user into a potential media producer (Chaney, 2012).

New online platforms for users to publish on

Example 10: The „Contributor Portal“ at Shutterstock allows users, whether novices or experts, to transfer their photos and films to the online service and thus to reach a large circle of potential customers. The images are checked for quality and then released; the copyright holder receives an agreed amount for each purchase.

Research into the disruption of traditional business models involves looking at the examples of music piracy, self-promotion by musicians and photographers, also so-called „guerilla journalism“ (Nguyen, 2006). Above all, these activities divert revenues away from traditional providers. It would be incorrect, nevertheless, that these new forms of creative participation must always be detrimental for previous providers. Once more it is true that the activation and inclusion of customers in the creative processes will boost their attentiveness and loyalty (Chaney, 2012). This produces new value creation processes, provided the business model is modified accordingly.

In conclusion, it is worth mentioning an interesting observation made in an American study: It states that more active use of the Internet goes hand in hand with greater involvement on the capital market (Bogan, 2008). The Internet offers interested users a broad variety of relevant information to underpin any investment decision. It also facilitates access to financial institutions (online banking/brokerage). Hence, citizens find it easier to make investments. The greater the Internet use, the more the users will invest in joint stock corporations. Therefore, participation on the Internet will influence the balance of power in the world of business, provided the users perceive their financial involvement not merely as an investment and instead make use of their rights of co-determination. And this will open up a wealth of potential for researchers to investigate the repercussions of online participation in business.