Who Benefits More from Social Media: Evidence from Large-Sample Firm Value Analysis

This study examines the relationship between social media presence and the market value of firms. Using the creation of a Facebook Company page as a social media adoption event, we find that while firms are deriving some positive value from using social media, the effects are heterogeneous. Specifically, we find that social media adoption and use are complementary to “data skills” – the market value created by a marginal dollar of an addition skill related to data analytics increase the return to using social media. However, we find that general IT skills, which are often found to complement traditional IT systems, do not seem to offer any additional benefits when firms adopt social media. These results suggest that social media differ from traditional IT systems and requires a different set of organizational complements. Only firms who possess the necessary data analytical skills can truly take advantage of the a massive amount of data that social media can provide. In turn, they benefit from social media adoption more than firms that lack data analytic capabilities.