Social media adoption through product diversification and market diversification: The dynamic capabilities perspective

The literature highlights social media as an effective communication platform for firms to connect with potential customers. Although scholars have investigated various benefits of social media, limited studies have explored the antecedences of social media adoption for firms. Particularly, we lack an understanding of which firm strategies could affect social media adoption and how. Drawing on the dynamic capabilities perspective, this study utilizes logistic regression to analyze data from 1,392 public firms to investigate how particular strategies could influence social media adoption. The results indicate that a firm’s market diversification strategies are a significant determinant of social media adoption, while product diversification strategies play a relatively less important role. A diversification strategy involving social media may be more favorable when entering new markets as opposed to launching new products. The findings of this study contribute to the existing research on social media and shed light on strategic implementations that lead to social media usage by firms.