Popularity in social media and company growth: evidence for local banks

Abstract

Purpose – we investigate models of social media activity of small local banks (SLBs) in Poland and the consequences of their adoption for SLBs’ growth. Research methodology – with the use of k-medoid clustering, we differentiate between types of SLBs’ social media activity. Then, after controlling for bank specificity and local environment, we employ these activity types in regression models explaining a bank’s popularity in social media and bank growth. Findings – although SLBs draw attention if they concentrate their social media activity on local affairs, conversion of such popularity into a bank growth is difficult to achieve. Research limitations – a relatively limited number of SLBs (111 entities) adopted an active social media policy. As a result, we have to look for social media activity models instead of describing the activity directly with numerous variables employed simultaneously in regressions. Practical implications – in order to reach the highest recognition in social media, a small bank should widely discuss local affairs. Nevertheless, SLBs’ managers should carefully enter the social media world as even suitably selected social media strategy does not automatically lead to economic outcomes. Originality/Value – first, we extend the scarce evidence on social media adoption by financial companies. Second, we clearly define different types of social media activity of local firms. Third, we differentiate between the attention drawn through social media activity and its economic repercussions.