Social Network Effects on Productivity and Job Security: Evidence from the Adoption of a Social Networking Tool

By studying the change in employees' network positions before and after the introduction of a social networking tool, I find that information‐rich networks (low in cohesion and rich in structural holes), enabled by social media, have a positive effect on various work outcomes. Contrary to the notion that network positions are difficult to alter, I show that social media can induce a change in network structure, one from which individuals can derive economic benefits. In addition, I consider two intermediate mechanisms by which an information‐rich network is theorized to improve work performance–information diversity and social communication–and quantify their effects on productivity and job security. Analysis shows that productivity, as measured by billable revenue, is more associated with information diversity than with social communication. However, the opposite is true for job security. Social communication is more correlated with reduced layoff risks than with information diversity. This, in turn, suggests that information‐rich networks enabled through the use of social media can drive both work performance and job security, but that there is a trade‐off between engaging in social communication and gathering diverse information.