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The role of information systems to build competitive advantage: A case of LinkedIn social
network

Introduction
The following report is focused on analyzing the role of information systems to build
competitive advantage in case of LinkedIn social network. To deal with the assignment objective,
theoretical framework for competitive advantage is used to support the arguments. The report
consists of three main parts. In the first part of the assignment, theoretical framework for
competitive advantage is discussed based on resource-based concept. In the second part, social
network concept of LinkedIn is discussed and main resources and core competences of the
website are analyzed. In the final part, competitive advantage of LinkedIn is discussed using
relevant theories.
Theoretical framework
The concept of sustainable and competitive advantage has been long studied by many
researchers in the past. Barney (1991) was one of the first researchers in strategy development of
organization who developed resource-based view of competitive advantage. Barney (1991)
proposed that firm gains competitive advantage if it possesses unique resources and competences
which have the attributes of rarity, value and inimitability. This concept has been used by many
researches to develop strategies in specific industries. For instance, Hamel and Prahalad (1993)
developed strategy in manufacturing sector if firm posses resources and competences to
manufacture products at a lower cost or offer differentiated quality. Moreover, Hazen and Byrd
(2012) utilized resource-based concept to analyze the competitive advantage in logistics industry.
This implied that business model established based on resource-based concept allows logistics
firms to gain competitive advantage.
In internet-based industries, resource-based view of competitive advantage is also analyzed by
number of researchers. Javalgi and Radulovich (2005) analysis is focused on developing
strategic framework for internet-based companies to gain sustainable competitive advantage.
According to the author, internet firms can achieve sustainable competitive advantage if they
develop interactive capability of their website. Javalgi and Radulovich (2005) proposed that
interactive capability increases customer relationship management because it enhances
companys customer targeting, effectiveness of marketing communication, results in better
customer share and retention which, in fact, increase the companys revenue potential.
Competitive advantage in the internet can be achieved by offering unique products that create
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value to customers, trust in the digital source or marketplace and fulfilling customer expectations
through medium of exchange and better internet interactive capability.
LinkedIn social networking concept
The concept of LinkedIn is build upon creating digital platform for social networking including
entertainment and education. In this regard, business model of LinkedIn is designed to build
social networking for customers who learn, educate, share information and entertain with close
people and professionals. Davis et al (2003) stated that social media tools and applications in the
internet can serve as a learning experience for customers. In this sense, internet social networks
plays significant role in creating atmosphere for interconnecting various people to exchange
ideas, feelings and sharing experiences.
In case of LinkedIn, social networking of the company established collaboration and
entertainment for customers better than competitors. This, in fact, created competitive advantage
for the firm. First of all, internet-based platform of the company provided customers enriched
learning experience by fostering collaboration. Therefore, numerous educational institutions and
companies used LinkedIn to enhance interaction with students in the digital platform. Secondly,
LinkedIn became entertainment tools for corporate clients who share interests, ideas and
experiences. Therefore, competitive advantage of the LindkedIn is based on the unique platform
developed in online social networking which has the following attributes:

Collaboration. LinkedIn business concept is based on enhancing collaboration digitally.

In this case, social network primarily focused on corporate clients. LinkedIns business
model is to enhance collaboration between employees and organization in the digital
social networks so that they become more empowered and performs in full potential. For
instance, it was widely used in education sector where it enhance collaboration between
teacher and students by encouraging dialogues outside the classrooms to develop student
skills including problem-solving more effectively than classrooms. Davis (2012) stated
that LinkedIn enhanced collaboration between parties in the digital social networks by
offering micro-blogs where customers can immediately access online tools, techniques
and methods. Therefore, this LinkedIn is considered one of the best interactive,
technological and effective corporate social networks.

Education. LinkedIn was one of the first online social networks which launched Web 2.0
in its platform. This web platform created value to corporate clients for social networking
for education and accelerating learning process. Moreover, Lewis (2010) stated that
LinkedIn tried to be an outlet for self-expression. Therefore, its social networking aim

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was to establish virtual community where customers learn, share interests, opinions,
thoughts and ideas among academics, professionals and managers.

Entertainment. LinkedIn is considered educational social networking for corporate

clients. However, it added tools to its platform so that education and collaboration in the
networking become entertaining. Social blogs in LinkedIn not only became learning
experience but also transformed passive consumers into active participants. LinkedIn has
its timelines and allows each client to create their own newsletter, videos and methods to
create, publish and broadcast educational materials. This interactive social networking
allowed to be more interactive and entertaining in learning.

LinkedIn competitive advantage

According to Miller (2013), social networking generated $16.9 million mainly from the websites
Facebook, Twitter and LinkedIn in 2012. This implied that social networking has become more
popular internet tool for generating profits for number of companies. These companies, in fact,
established specific target market, product categories and interactive tools to boost the number of
customers visit the social networking and generate revenue. Moreover, more and more
companies are using social networking tools for increasing education efficiency and improving
employee collaboration and skill development. Stelzner (2011) findings showed that 93% of
companies have already utilized social networking for marketing tool. This implied that social
media improved the marketing tools for organization as the number of customers is increasingly
using these websites for various purposes.
Main competitors of LinkedIn are considered Facebook and Twitter. These companies have
already established brand reputation in social networking in global scale. Conversely, each of
competitors has specific business models, marketing strategy and web-site contents which make
each of them unique. The following table summarizes key characteristics of business strategy
and profit generating activity of each competitor.
Business concept

LinkedIn
Increasing
collaboration

Facebook
Social network
and designed

on

Twitter
is Social network
the much

learning online tool concept of providing entertaining

for

customers

is

daily
and

who every customers for building relationship

share ideas, interests their daily interaction,

and

thoughts

for sharing

better efficiency and emotions

entertaining

feelings,
and

experience
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Products
Target customers
Marketing

ID

Micro-blogs
Timeline
Corporate clients
Individuals
Corporate
blogs Corporate

Micro-blogs
Individuals
blogs Corporate

blogs

developed

in developed

in developed in Twitter.

LinkedIn.

Facebook.

For For instance, Banana

instance,
blogs

on

MSN

has Republic has blog on

Facebook Facebook

which

which shares news, shares news, timeline

Profit-generating

timeline and history

and history
Advertising on social Advertising on social Advertising on social

activity

network

network

network

Table above illustrated that business concept of the LinkedIn, Facebook and Twitter. According
to the analysis, business concept of Facebook and Twitter was developed for building social
network website for everyone for their daily entertainment, sharing emotions, feelings and
thoughts. In contrast, LinkedIn is focused on developing online social networks for education
and increasing collaboration among corporate clients. In this sense, LinkedIn business model
differ from those of Facebook and Twitter. However, main profit-generating activity of all of the
social network websites was from advertising on the social network through micro-blogs.
The business model of LinkedIn provided specific learning tools and methods for corporate
clients that make it no. 1 social network for corporate clients. Therefore, social network became
prominent among students, academics and corporate clients for learning, education and
collaboration efficiently.
Porter (1991) proposed three different strategies that company in any industry can use in order to
gain competitive advantage. This included cost leadership, differentiation leadership and focus
strategy. Porter (1991) stated that these strategies can be utilized in any form or size of the
organization. Thus, according to these strategies, LinkedIn utilized focus strategy. Important
characteristics of this strategy are that LinkedIn targeted specific segments and it developed
specific interactive social network tools and blogs to differentiate it from Facebook and Twitter.
In this regard, LinkedIn used differentiation of the focus strategy. However, Facebook and
Twitter utilized cost leadership strategy. This implies that both social network websites focused
on serving all or most of the segments of the market and offering the services at lower or
minimum costs.
In fact, LinkedIn gained competitive advantage over its competitors because it create unique
platform for education and learning for corporate clients while its competitors are more
entertaining and for pleasure.
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Conclusion
To summarize the main points it can be stated that LinkedIn has competitive advantage over its
competitors Facebook and Twitter. LinkedIn established collaboration and entertainment for
customers better than competitors. This, in fact, created competitive advantage for the firm. First
of all, internet-based platform of the company provided customers enriched learning experience
by fostering collaboration. Therefore, numerous educational institutions and companies used
LinkedIn to enhance interaction with students in the digital platform. Secondly, LinkedIn became
entertainment tools for corporate clients who share interests, ideas and experiences. To
summarize LinkedIn gained competitive advantage over its competitors because it create unique
platform for education and learning for corporate clients while its competitors are more
entertaining and for pleasure. This was achieved thanks to role of information systems in the
organization.

References
Barney, J.B., (1991). Firm resources and sustained competitive advantage. Journal of
Management, 17, 99 120.
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Davis, L, Dehning, B, and Stratopoulos, T., (2003). Does the market recognize IT-enabled
competitive advantage? Information & Management, 40, 705716.
Davis, C.H.F. (2012). Social Media in Higher Education: A Literature Review and Research
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http://www.academia.edu/1220569/Social_Media_in_Higher_Education_A_Literature_Review_
and_Research_Directions [Accessed 20/04/2015]
Javalgi, R.G. and Radulovich, L.P. (2005). Sustainable competitive advantage of internet
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Hazen, B and Byrd, T., (2012).Toward creating competitive advantage with logistics information
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Hamel, G and Prahalad, C.K. (1993). Strategy as stretch and leverage.Harvard Business
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Hoffman, N.P. (2000). An Examination of the Sustainable Competitive Advantage Concept:
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Lewis, B. (2010). Social Media and Strategic Communication: Attitudes and Perceptions Among
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http://www.prsa.org/Intelligence/PRJournal/Documents/2010Lewis.pdf [Accessed 20/04/2015]
Porter, M.E. (1991). Thecontributions of industrial organization to strategic management.
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