Entrepreneurship and Social Media: A Grounded Theory Investigation of Three New Ventures

Abstract

Social media is being discussed as one of the biggest shifts in how people interact and conduct business since the Industrial Revolution. While few disagree that social media is impacting business, very few empirical studies exist to substantiate the claims of social media´s influence and none exist that investigate the role of social media in new venture creation. This paper attempts to begin a conversation about social media´s influence on new ventures through a Grounded Theory investigation of three new businesses. The three companies are engaged in different types of businesses (mobile wireless service, entertainment and consulting), have different sizes (60 employees, 7 employees, 1 employee) and operate in different countries (Spain, the United States, and Belgium), yet all attempt to engage with social media in some way. Based upon nine months of observations and several interviews, this paper describes each case in some detail and offers six themes that appear across the cases: 1) muddling through as a strategy; 2) the challenge of working ON a business versus working IN a business; 3) the importance of creating interactions between online and offline media; 4) how companies build a modular online structure; 5) the advantages of an open brand architecture; 6) positioning the business as an expert. To explain the emergence of these six themes, the study concludes by suggesting future research in three key areas that might help theorize the existence of these themes: 1) communities of practice; 2) the relationship of online and offline media; 3) the importance of a conversational model of social media.