Business reputation and social media: A primer on threats and responses

With the emergence of the interactive web (or Web 2.0), social media applications gained enormous popularity among internet users, forcing businesses to adapt their marketing strategies and engage with social media as part of their marketing toolbox. Social media has empowered the public and weakened the position of businesses by exposing them to negative publicity, customer attacks and reputation damage. This study analyses the threat of social media to corporate reputation, which can be damaged by three different actors: the customer, the employee and the corporation itself. We review the literature on the impact of each of these actors and assess the findings by means of real-life cases. On the basis of these findings, social media reputation threats are discussed in light of corporate response strategies. The results indicate that organizations need to develop a portfolio of response strategies with several approaches, specifically relating to each of the three actors of reputation damage — the best policy for businesses to successfully manage their reputation is to create an organization capable of managing the risks to corporate reputation arising from employees and the corporation itself. The real-life cases indicate a lack of organizational knowledge on how to manage social media risks effectively, highlighting the need for businesses to update their knowledge on using social media as part of their marketing toolbox. Finally, the various response strategies are classified according to the source of the reputation threat.