The Emergence and Evolution of Social Networking Sites as an Organizational Form

Abstract

A number of new organizational structures have emerged in recent years, including peer production networks, digitally organized social movements, and social networking sites (SNSs). Researchers have devoted considerable attention to these phenomena as groups and communities. This article takes a complementary approach by conceptualizing them as organizational forms, with focus on the emergence of SNSs as a distinct organizational form. Community ecology theory is implemented to explicate the emergence and subsequent legitimation of organizational forms, providing a foundation for understanding how new forms emerge through interaction with the surrounding environment. Industry data and historical records are utilized to illustrate the development of one specific form: online SNSs. This analysis demonstrates that legitimation is an ongoing process of replication of features, but legitimacy also occurs through recognition from adjacent populations. Findings illustrate the validity of alternative processes of form legitimacy.

Keywords

social media organizational form legitimacy evolution emergence

In the past two decades, organizations that produce digital products have emerged in overwhelmingly large numbers. Simultaneously, the fluid nature of these organizations, as well as the unique skill sets required for employment in these companies, has resulted in the creation of new job roles and new processes that often set these organizations apart from traditional bureaucratic organizations (Kickul & Gundry, 2001). A duality exists within many online-based organizations, whereby many organizations have a particular internal structure and a distinct external perception that is realized through its Web interface and online presence. Often the two perceptions do not align with each other (MacCormack, Baldwin, & Rusnak, 2012). The internal structure and the nature of the organization have a central role in guiding the externally facing website, and yet much of the existing research fails to connect the two aspects of emergent online-centric organizations. Thus, this research calls attention to the organizational aspects behind these online-focused organizations. We draw upon the growing realization in organizational communication scholarship that many organizing processes take place outside of the traditional, formal organizations that have historically been the foundation of organizational communication research (Aldrich & Ruef, 2006).

In this article, community ecology is used to trace the development of social networking sites (SNSs) as a specific example of how researchers may approach the study of emergent online-centric organizations. Community ecology is becoming an important theoretical perspective in organizational communication scholarship (Monge, Heiss, & Margolin, 2008; Monge et al., 2011). We trace the emergence of SNSs as a legitimate organizational form over a 12-year period, focusing on organizational legitimacy as the degree to which a form is “socially taken for granted” (Carroll & Hannan, 2000, p. 8), and legitimation as the processes involved in attaining legitimacy for an organizational form. Legitimacy for online-oriented organizations such as SNSs is challenging, as public audiences confound the external presence (i.e., the website) with the internal structure (i.e., the organizational form). By focusing on the legitimacy of the organizational form, we outline an approach to studying SNSs that moves beyond emphasizing features of the public website, and looks at broader issues such as the types of resources an organization draws upon and how the organization gains acceptance through media coverage and through acknowledgment by competitors.

In the following sections, we first outline key concepts of community ecology, highlighting the importance of form legitimation. Organizational form legitimation occurs through two primary paths: via recognition from outside industries (e.g., advertisers or content publishers, in the case of SNSs), and by establishing a high density of organizations exhibiting a common form. Much research has pointed to growth in density (i.e., number of organizations exhibiting the form) as a primary path for legitimacy (Freeman & Audia, 2006), but more resent work suggests that news media coverage and other forms of recognition are more critical for rapidly emerging organizations (Petkova, Rindova, & Gupta, 2013; Schultz, Marin, & Boal, 2014). We present data on SNSs as a form, including density and recognition by other populations during the crucial early 12 years in which the form emerged and gained legitimacy.

By focusing on SNSs as organizational forms, we make several important contributions. For community ecology theory, we demonstrate that the traditional “institutional” path to legitimation, which begins with legitimation by outside populations such as associations that then fuels growth in the density of the form, is inverted in fast-paced, emergent entrepreneurial environments. For researchers studying processes in SNSs as groups or communities, the framing of SNS as organizations draws attention to an understudied set of processes, identities, and features, such as the impact of internal organizational strategy on external community formation on a given SNS. For organizational communication, this study advances the role of community ecology theory in the field by demonstrating the theory’s applicability for understanding a new class of organizational forms. Given the critical importance of communication about form in the legitimation of new forms, this research highlights the need to understand not only communication between organizations but also communication between populations of organizations, such as the SNS population’s communication with populations of advertisers and the media industries.

An Evolutionary Perspective on SNSs

Communication scholars have generated a wealth of insight by focusing on social networking websites as a public interface between the organization and the user, thus framing the website as the defining characteristic of SNSs (Berkelaar, 2014; Meijer & Torenvlied, 2014; Men, 2014; Steinfeld, Ellison, & Lampe, 2008). Expanding beyond this framing to analyze SNS as organizational forms offers the opportunity to examine the impact that internal organizational actions have on other entities’ interactions with SNSs. The organizational leaders behind an SNS exert significant control over information that is transmitted to users such as news (Hammad, Joy, Spears, Carlson, & Stan, 2012) and health information (Vance, Howe, & Dellavalle, 2009). Beyond their increasingly critical function as information sources, SNSs have a dual nature in that they are organizations as well as sites for organizing and communicating. The internal organizational mechanisms of an SNS organization—leadership, hierarchy, culture, and other factors—also affect the manner in which users experience an SNS. For instance, Facebook.com’s engineering team modifies its algorithm for the provision of news to users on a weekly basis (Somaiya, 2014); the organizational decision to modify what is communicated has a direct impact on external perceptions of the SNS, as well as the external experience of a user with that SNS.

In the face of change, theorists, researchers, and practitioners have struggled to identify the mechanisms that drive the emergence and disappearance of organizations, including, for example, the growth of SNSs as an organizational phenomenon. This is further complicated because organizations rise and fall rapidly in online environments (Min, Caltagirone, & Serpico, 2008). To address these challenges, we use an evolutionary perspective on organizations and treat SNSs as organizations rather than simply a public website. Our approach provides a framework for understanding (a) the growth of SNSs as a class of organization, (b) the development and institutionalization of new features, and (c) the nature of competition among SNSs.

Evolutionary theory is multilevel in nature. The organization is one level of analysis; at this level, organizations compete and cooperate with other similar organizations (Nelson & Winter, 1982). For SNSs, this level includes organizations such as Facebook.com¹ or LinkedIn.com.² Populations represent a higher level. Populations consist of sets of organizations that have similar features and identities (Hannan & Freeman, 1977) and compete with other organizational populations for limited resources such as capital, human resources, and knowledge (Carroll, 1985). The population of SNS organizations includes the set of organizations focused on social networking (e.g., Facebook, MySpace,³ LinkedIn, and so on as a group of organizations). The next highest level is the community, a set of coevolving populations of organizations that interact within a common resource space or environment (Aldrich & Ruef, 2006). The social media community includes the SNS population as well as other populations such as sets of organizations focused on music sharing (e.g., Spotify, Pandora, and SoundCloud⁴) or sets of organizations focused on blogging (e.g., Tumblr, Blogger, etc.). Each of these populations competes within the broader social media ecological community for environmental resources such as users (members), advertising dollars, programmers, and content.

SNS as an Organizational Form

Defining organizational form

An organizational form is a core unit of analysis for ecological studies, yet the definition of form is somewhat contested (McKendrick & Carroll, 2001; Romanelli, 1991). In seeking a unifying definition, scholars have focused on common features as a defining element of form (Carroll, 1984), such as goals, technologies, or common markets (Rao & Singh, 1999). McKelvey (1982) defines an organizational form as “the internal structure and process of an organization and the inter-relation of its subunits which contribute to the unity of the whole organization and to the maintenance of its characteristic activities, function or nature” (p. 458). Romanelli (1991) extends these ideas to define a form as the characteristics that provide an organization with a unique identity, and that simultaneously classify it as a member of a larger population. In recent research, the focus has shifted from a focus on forms as core features to examining forms as a comprehensive identity code (Hsu & Hannan, 2005; Polos, Hannan, & Carroll, 2002). The identity approach incorporates external perceptions of a set of organizations (e.g., consumer and stakeholder perspectives) into the definition of form. Thus, the identity approach directly engages communication processes, such as public relations campaigns, that underlie the creation of external perceptions. In line with recent scholarship, we define form as a common set of organizational characteristics, readily identifiable by outside populations and clearly bounded. Our definition incorporates both common features (Carroll, 1984) and communicated identity (Hsu & Hannan, 2005; Polos et al., 2002; Shumate & O’Connor, 2010) and extends beyond the public-facing website.

The organizational form of SNSs

Social media as a class refers to digital media that allow for interaction between participants in a rich media environment. An oft-cited definition of SNSs as a type of social medium is “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of User Generated Content” (Kaplan & Haenlin, 2010, p. 61). Other definitions similarly focus on the specific public-facing features of an SNS that distinguish it from other applications (see, for example, boyd & Ellison, 2008). SNSs such as Facebook focus primarily on peer-to-peer interaction, allowing users to create directories of their social networks, and to share information through these networks, whereas the broader class of social media encompasses blogs (e.g., Gawker.com), photo sharing (e.g., Flickr.com), and music (e.g., Spotify), among others.

In addition to this user-oriented perspective, however, SNSs can be viewed from an organizational perspective, including both features and identity. As a form of organization, SNSs range from grassroots assemblages (e.g., island groups in Malaysia creating their own networks through sites such as Labuan.net), to stand-alone formal organizations with tens of thousands of employees (e.g., Facebook.com, LinkedIn.com), and to subsidiaries of large corporations (e.g., Google Plus is a subsidiary of Google). In each case, SNSs have a traditional organizational component that maintains the site and runs the online community (structure, hierarchy, and leadership). Many SNSs today have an organizational structure no different from large multinational organizations, and as with any industry, there is a wide variation in the elements of the organizational structure.

The organizational components, however, collectively provide identities for SNSs as forms. Thus, in addition to considering the public-facing features of SNSs, this suggests that consideration should also be given to the organizational features that support an external-facing portal through which consumers interact with one another. Framing SNSs as an organizational form adds a new dimension to our understanding of organizational communication in the social media realm by explicating how SNSs interact with one another in a competitive resource space over and beyond how SNSs interact with their users. Furthermore, consideration of the nature of the organization calls into question the relationship that exists between internal decisions and the external perception of a SNS. The form of an organization affects the external perception of an organization, and studying SNSs in this light will help to better understand the connection between internal decision making and user interactions with the publicly available interface.

An Ecological Theory Perspective on the Emergence of New Organizational Forms

Community ecology focuses on understanding the emergence of forms as a result of disruptions and as part of ongoing processes of organizational change. Significant shocks to the environment, changes in technology, or poor coordination among organizational populations serve as disruptions (Barnett & Carroll, 1995) that drive the emergence of new organizational forms (Astley, 1985) through processes of variation, selection, and retention (V-S-R). Variations occur as organizations mutate and adapt over time, generating new organizational features and identities. For instance, technological changes produce new constraints on existing resources and create new niches of opportunity for a given population (Basalla, 1988), as has been seen in the rapid growth of mobile phone applications in the 2000s. Disruptions in resource availability can drive change and create favorable conditions for organizational form emergence. For example, when venture capitalists began to invest in SNSs in the mid-2000s, the influx of capital created a wealth of fiscal resources and encouraged the growth of SNS organizations (Henricks, 2006) and encouraged entrepreneurs to launch new SNS organizations. Disruptions also can derive from changes in policy, regulation, or social values (Aldrich & Ruef, 2006). In the selection phase, variations are accepted or rejected by populations of organizations depending on the suitability for the population at hand. For instance, during the early development of SNSs, many various types of online socializing existed, including Internet Relay Chat and message boards.⁵ Existing SNSs contain elements of these early platforms, but these early types have largely been rejected over time. Indeed, organizations navigate competitive landscapes and seek out successful variations by communicating with peers (Monge et al., 2008). Communicative ties between organizations and between populations of organizations help to drive the V-S-R process, allowing organizations to gain knowledge and insight about developments within an environment.

Once a variation has been selected and reproduced, it becomes routinized in the organizational structures and identities of population members. In this retention stage of evolution, patterns of organizing and operating that benefit the population are retained and repeated over time (McKelvey & Aldrich, 1983). Through retention and selection, a community of organizational populations moves into a period of stability. Existing organizations become established and new organizations adapt to work with available resources. Early in the process of disruption and form generation, a stable population exists. Following the introduction of a disruption, new organization forms emerge creating variations that generally occupy isolated resource spaces that are uncontested by existing organizations. As organizations evolve, successful forms are retained and replicated over time. As the new form is replicated, new organizations begin to compete with existing organizations to access larger pools of resources. In determining the exact nature of an organization’s form, founders must also decide whether to adopt a generalist or specialist form; generalists compete by seeking a broad array of resources (e.g., Facebook competes for all types of consumers), whereas specialists target niche resource spaces (e.g., FarmersOnly Media Inc. runs a social networking and dating website specifically for farmers). Generalists often have a greater degree of security because they draw upon a larger pool of resources, but they have lesser ability to exploit specific pockets of resources. Specialists, however, are more susceptible to competitive changes because they focus on being able to exploit specific resources through the focused nature of the organization (Carroll, Dobrev, & Swaminathan, 2002; Hannan & Freeman, 1977).

As more organizations retain similar types of features and identity, the form becomes more established and communicated externally. However, a common form does not mean that all organizations are identical. Instead, organizations within a population often differentiate by focusing on specific pockets of resources, forming as specialists or generalists. Moreover, organizations may choose to adapt and evolve, transforming from a specialist to a generalist, or vice versa. In 2005, just prior to Facebook.com’s meteoric rise in users, Mark Zuckerberg remarked about the dilemma of determining the appropriate resource pool to target during an interview. He commented,

There is a level of service that we could provide when we were just at Harvard that we can’t provide for all of the colleges. And there’s a level of service that we can provide when we’re a college network that we wouldn’t be able to provide if we went to other types of things. (Franzese, 2005)

As this example illustrates, there are trade offs that go along with the decision to focus on resource niches, and organizations will often evolve over time. Moreover, as we describe in the next section, organizations do not simply retain specific identify markers and features autonomously in a population, but rather the identity is influenced through interaction with other populations such as regulators, suppliers, and media organizations.

Emerging Forms and SNS Legitimacy

The importance of legitimacy for emergent forms

As new forms vie to succeed in the face of disruptions and change, a key concern is legitimacy. Legitimacy is defined by Carroll and Hannan (2000) as “a social process by which organizational forms become institutionalized or socially taken for granted” (p. 8); legitimacy occurs as individuals and organizations communicate about new forms and begin to recognize a form as stable. Why does legitimation of an organizational form matter? At a practical level, organizations with recognized forms find it easier to mobilize resources and secure survival (Hannan & Carroll, 1992). From a theoretical point of view, “virtually all contemporary theories assign a privileged status to institutionalized (as opposed to uninstitutionalized) organizational forms” (McKendrick & Carroll, 2001, p. 663).

Theory and research has recognized two main approaches to achieving legitimacy: (a) institutional support from outside populations and (b) density-dependence. The institutional perspective argues that formal organizations outside of the population in which a new form is emerging, such as professional associations, trade associations, and regulatory bodies, assist in the establishment of new forms (e.g., Scott, 1995) by creating and enforcing norms and standards, building collective identity, generating and allocating resources, and helping emerging populations to communicate with a single voice to other relevant populations. Recently, studies of rapidly emerging organizations including high-tech startups and e-commerce organizations have further reinforced the importance of outside recognition in garnering legitimacy (Petkova et al., 2013; Schultz et al., 2014). The alternative density-dependence perspective argues that as increasing numbers of organizations with a similar form are born and occupy a shared resource space, the form becomes legitimated in the eyes of other populations, regardless of whether institutional actors have arisen to assist in establishing form legitimacy (Audia, Freeman, & Reynolds, 2006). In short, even without institutional actors, forms can gain legitimacy from sheer numbers, a process measured as the density of organizations within a predetermined resource space (e.g., the count of organizations within a population; Hannan & Freeman, 1977). It is also possible that an emerging form may fail without ever achieving legitimacy.

Historically, many organizational forms have achieved legitimacy through the institutional route. In the next section, we argue that for fast-paced, entrepreneurial environments, such as those occupied by the SNS form, legitimacy from increasing density is likely to precede legitimacy from institutions. Such environments can encourage the growth of new forms that do not have the benefit of institutional support, highlighting the importance of creative imitation and rapid form diffusion.

SNSs and entrepreneurial environments

Internet-based organizations are able to modify business practices more efficiently due to lower operating costs than so-called brick and mortar forms (Kauffman & Wang, 2008); for example, it is easier for Internet-based organizations to redevelop code than it is for an automobile factory to reconfigure its manufacturing line. In addition, the online resource space occupied by SNSs is marked by low barriers to entry, or what Audretsch (1991) calls an “entrepreneurial regime”—an environment that encourages startups; a website as an organization can be started out of a home office, with a minimal cost. The large number of startups online results in lower survival rates (Ofek & Richardson, 2003), which is ecologically indicative of limited resources (Hannan & Freeman, 1989).

Given the low barriers to entry, organization forms in the online environment can emerge in dense numbers in very short periods of time; at the same time, it can be difficult to establish a stable and sustainable form due to the rapid births and deaths and the fast pace of change that instigates modification to both features and identities. Furthermore, there are three reasons why the pace of change complicates the process of legitimation by outside populations. First, rapid changes hinder the ability of outside populations to identify that a new form is emerging; this slows down the institutional legitimation processes. Brown and Eisenhardt (1997) point to the rapid changes in the computer industry in the 1990s as an example, with firms such as Hewlett Packard changing from instrument producers to computer firms through a process of continuous and rapid change. Second, outside populations that evolve at a slower pace are less likely to recognize rapid innovation. For instance, a host of e-commerce sites emerged in the mid-1990s. Amazon.com was founded in 1994 primarily as a book retailer, and was profitable in that segment within a year. However, it was not until 1997, when Barnes & Noble sued Amazon.com, that there was a clear recognition of Amazon.com as a legitimate retailer in the eyes of traditional competitors. Third, emerging forms may not conform to the existing standards used by outside populations to assess legitimacy.

The role of adjacent populations in legitimation

Institutional legitimacy is constrained further in the case of Internet-based forms of organizations because there is no single standard-setting association or regulatory body to participate in the legitimation process. As with other technology sectors, the newness and rapid pace of change in the technologies and organizational forms outpace efforts to develop traditional institutional sources of legitimacy such as associations and regulatory bodies.

Given these constraints, we argue based on community ecology theory that in the absence of association and regulatory bodies that can facilitate legitimacy, recognition can be conferred by other established populations within the same community that interface with the emerging population, what community ecology theory labels as adjacent populations. Adjacent populations have been established as sources of legitimacy for emergent organizations (Weber, 2012; Weber & Monge, 2014). Adjacent populations can direct resources to the emerging population, which helps to sustain it directly, but these resource flows also communicate to other populations about the features and identity of the form, thus contributing to legitimacy.

In the case of rapidly innovating SNSs, the most relevant adjacent populations are media organizations that confer legitimacy through press coverage and populations of advertisers that confer legitimacy through the expenditure of revenue. Advertisers and news organizations are long-standing institutions that are clearly recognized as legitimate, and thus, they can in turn confer legitimacy onto Internet-based forms through their expenditures and coverage. Users also serve as a resource, and the rapid growth of users attracts advertising dollars and press coverage; at the same time, users do not guarantee success. MySpace.com is an example of an organization that attracted a large number of users over a short period of time, but ultimately failed to stabilize and to grow in the long run.⁶ Thus, for SNSs, legitimacy appears to also depend on recognition from adjacent populations, reinforcing that communication about a form must resonate with external dialogues regarding the form’s nature (Aldrich & Fiol, 1994). Legitimation of SNSs is considered in the remaining portion of this article through analysis of alternate paths to legitimacy from adjacent populations in comparison with the growth in density of SNSs.

To recap, we have argued that in rapidly emerging entrepreneurial environments, the conferral of legitimacy is likely to lag legitimacy by density. By contrast, in traditional organizational forms that have emerged more slowly and with a less rapid pace of innovation, the conferral of legitimacy by other populations will fuel a growth in density. This distinction is important for communication research because legitimation by other populations relies heavily on communication processes not only within the population but also with outside populations. Such communication is impaired in entrepreneurial environments, we have argued, for a variety of reasons such as difficulty in categorization, the changing nature of the form itself that challenges the much slower pace of regulation, and the lack of established labels and terminology that allow outside parties to identify an emerging form. Discussion here has focused on understanding the growth of SNSs based on advertising dollars, media coverage, sustainability, and replicability, and has shifted away from examining user interactions. SNSs have emerged in an entrepreneurial environment and, if our thesis holds, should exhibit a pattern in which significant growth in density predates conferral of legitimacy by adjacent populations.

Research Design

The following examines a case study of the density and subsequent legitimacy of SNSs during the emergence of the SNS form. The emergence of the SNS as organizational form and its subsequent legitimation were estimated through organizational density and interaction with other populations. Building on the definition of SNS given earlier, a census of organizational density over time was created to determine the growth of the population. Subsequently, advertisers and press organizations were identified, and a measure of legitimation by these outside populations was established to determine the timing of conferral of legitimacy.

Data

Direct tracking of SNSs is complicated because no single source monitors the number of SNSs. A list of SNSs was generated from three sources: Yahoo! Directories, Google Directories, and Open Social Directories. These are the three primary search engines for the Internet that provide categorical listings of websites. This study focuses on the primary period of SNS emergence. A 1996 start date was selected because it covers the emergence of the first SNS, SixDegrees.com, in 1997.⁷ In addition, 2008 was used as the end date as it captures the primary period of SNS births, as demonstrated in Figure 1. The search terms social networking, social network, and social networking site were entered into the three search engines and the results were tabulated. Duplicates and spam sites were removed, resulting in 213 SNSs. Use of media coverage was intended to capture recognition of the term associated with the organizational form, as opposed to coverage of a single organization. An illustration of the growth in media coverage is presented in Figure 2; we have included media coverage of a number of key organizations, in addition to mentions of key identity terms.

Figure 1.

Entries and exits of SNSs from 1996 to 2008.

Figure 2.

Mentions of “social networking site” in the U.S. press from 1996 to 2008.

Attributes for each SNS were collected including birthdate, exit date (if appropriate), and type (generalist or specialist). Birthdate represents the approximate date on which a given site launched. Birthdate was determined by searching the Internet Archive (archive.org provides a historical record of websites on the Internet dating back to 1996). Target sites were examined via the Internet Archive, and the earliest record available was matched to the site; because websites often went through many iterations of development, coders verified the point at which a website was established as a SNS. Graduate students served as coders for this research, and each website’s launch date was verified by hand. Where coders disagreed, they met with the lead researcher to discuss, and a consensus agreement was reached. The date was then recorded as the birthdate. An exit date was recorded if the website ceased operation or if the domain changed away from social networking as the primary function. Of the original 231 websites, 191 were available in the Internet Archive. The full list of 191 websites is provided as an online appendix to this article. Coders also assessed the goals of each website and recorded if the website was positioned as a generalist or a specialist. Organizations were coded as specialists or generalists, based on the definitions established by Carroll and Hannan (2000). Coders focused on consumers as the target resource; generalist organizations were defined as those seeking broad populations of users (e.g., “adults,” “adults older than 30,” or “all business professionals”) without specifying subtargets. Specialists are those organizations with specific subtargets (e.g., “classic rock enthusiasts” or “scuba divers”). Two graduate students participated in coding and agreed in 83% of cases; in the cases where there was disagreement, the coders met with the lead researcher and settled on a final categorization.

Data on the advertising population also were collected. Within the advertising industry, two organizations monitor the emergence of new types of websites. TNS Media Intelligence is an advertising industry-tracking agency that monitors spending by millions of advertising brands across 18 different forms of media. Within the Internet category, TNS Media Intelligence monitors advertising spending across 51 categories of websites. Websites are added on an ongoing basis as advertisers purchase space on a given site. ComScore Inc., however, monitors performance of websites based on users visiting a given site. ComScore currently monitors more than two million websites, tracking the number of users to a site, the average length of a visit, and information on demographics and behavioral attributes of viewers. Data also were collected on press coverage of the emergence of SNS sites. A number of prior studies have utilized press mentions as an indicator of legitimacy (Deeds, Mang, & Frandsen, 2004; Kennedy, 2008). Using Westlaw, a Thomson Reuters research database, press coverage of “social networking sites” was tracked across 620 major newspapers and wire services; in addition, related terms were tracked including “social network site,” “social media,” and “online community.” A subsample was reviewed to insure that the terms referred to the same general class of websites. Kennedy (2008) suggests that although media coverage is important, such coverage needs to make reference to a common industry or idea and not just a single organization to convey recognition. A raw count of news searches was recorded as a method for establishing legitimacy of form (Kennedy, 2008).

SNSs and the Emergence of Form: Establishing Legitimacy

Birth and Early Years

SNSs are a variation of early online communities. Boyd and Ellison (2008) trace the birth of SNSs to the founding of SixDegrees.com in 1997; SixDegrees.com allowed users to post profile information, connect to lists of friends, and readily view lists of connections. Early online communities competed within specific niches, but the growth of the Web spurred an acceleration of broader website development (Preece, Maloney-Krichmar, & Abras, 2003). During the late 1990s, entrepreneurs launched numerous networking websites with little start-up capital and minimal business objectives. The emergence of SNSs was aided by a host of technological disruptions, including increases in Internet data transmission rates in the late 1990s, the development of new programming languages, and rapid decreases in the cost of technological infrastructure to host and maintain data. The dot-com bubble burst in 2000 created a significant technological disruption; Web 2.0 protocols led to the development of applications that supported an increased amount of control over content and interactivity by users (Wilson & Peterson, 2002). This disruption led to the rise of SNSs as users, and advertiser resources shifted away from older online communities to emerging SNSs.

From an evolutionary perspective, Web 2.0 technology is what Anderson and Tushman (1990; see also Schumpeter, 1934) define as a competence-destroying disruption in that new Web 2.0 protocols created a new mode of online business and rendered previous iterations of web-based coding less relevant. Ryze.com launched in 2001 targeting office coworkers and capitalized on early Web 2.0 technology to provide an easy to use format for posting information and connecting with others. Although Ryze had minimal success, it marked the first in a new wave of socially oriented Websites (boyd & Ellison, 2008; Tedeschi, 2004). Friendster launched in 2002 with a format similar to Ryze but with an orientation toward consumer networking. The site initially targeted niche user audiences but grew through word of mouth to reach larger audiences (O’Shea, 2003). These organizations carved out resource niches, including specific groups of users; in doing so, they created protected spaces that allowed them to grow rapidly. In 2003, three major sites, Friendster, Tribe.net and LinkedIn Inc., secured US$13 million, US$6.3 million, and US$4.7 million in funding, respectively (Liedtke, 2004). Subsequently, the social networking industry began to grow dramatically (see also Weber & Monge, 2011). Thus, during this period, financial resources and resource niches were both important to the growth of SNS as organizations and to the legitimacy of SNSs as an organizational form.

Resource Flows

In July 2005, News Corp. bought MySpace for US$850 million, signaling a rapid influx of capital being invested into SNSs as an organizational form. The influx of financing from an adjacent population, media conglomerates, served to increase resource availability and simultaneously signaled legitimacy through the inferred recognition of the importance of MySpace. Since then, SNSs have developed into a leading consumer-oriented online enterprise.

Users as Resources

Facebook.com, which launched in 2004, had more than 500 million active users by July 2010, representing a doubling in the number of users in a 1-year period since 2009. In July 2008, Twitter had roughly three million visitors; 2 years later, traffic to the site had grown 1,033% to an estimated 34 million users (Quantcast, 2009). Growth was fueled partly by an abundance of users: As of the end of 2014, the International Telecommunication Union estimated that more than 2.9 billion individuals were using the Internet (International Telecommunications Union, 2014). In 2010, nearly 60% of Internet users in the United States used a SNS at least once a month (Williamson, 2010). Growth is not uniform, however, and many organizations in the social media industry declined during the same period. MySpace lost nearly half its audience from October 2009 to October 2010, mirroring a dramatic US$156 million decline in revenue (Spanier, 2010).⁸ Other sites such as Bebo.com, Xenga.com, and Hi5.com also declined (Quantcast, 2009). The Internet era has been marked by a succession of new ventures, but many new businesses have also failed (Min et al., 2008).

Recognition From Other Organizations

Scholars have retroactively applied the term social networking site to this category of websites, but this segment of organizations was void of any regulations or monitoring until 2001 when TNS Media Intelligence added two new categories of websites: meeting places and common interests. In addition, online directories on Yahoo!, Google, and Open Social did not begin categorizing these sites under their own heading until 2006. Yet deeper analysis is needed to understand the mechanisms of form emergence and legitimation in the case of SNSs, beyond simple mechanisms of naming and list generation. The data shown in Figure 1 illustrate that there was increasing growth in the number of organizational births after 1997. As SNSs gained popularity, the number of births spiked in 2001, just as the dot-com bubble burst. Following the industry-wide slowdown, the number of births declined in 2002. By 2006, the birthrate slowed, and a number of organizations began to exit. In line with ecological theory (Carroll & Hannan, 2000), the resource space was able to sustain continued growth overall, but at a slowing rate as competition for resources increased. Looking within the population of SNSs, the density count and growth trend suggests that a legitimate form existed despite lack of formal legal recognition by the North American Industry Classification System (NAICS codes are formal identifiers utilized by the federal government to classify organizations into industries.).

Advertising Revenue

As the form developed, SNSs were increasingly reliant on revenue from advertisers as a sustaining resource (Enders, Hungenberg, Denker, & Mauch, 2008). In 2001 and 2002, coinciding with the launch of Ryze and Friendster, TNS reported an increase in the number of advertisers marketing on SNS in the meeting place and common interest categories; it is not clear, however, as to whether all mentions in these categories refer specifically to SNSs. The lack of early coherence points to the fact that legitimacy was still uncertain at this point. Figure 3 illustrates the clear increase in advertising revenue as a resource. Advertising dollars increased the most in the first 3 years in terms of percentage growth. In terms of raw dollars, the greatest period of growth was from 2005 to 2006, when advertising revenue of SNSs increased by roughly US$40 million, with 900 additional advertisers entering into the space, and again in 2008, when revenue increased nearly US$70 million. Despite the fact that growth of SNSs had skyrocketed between 2005 and 2007, the TNS tracking service had still not recognized more than 300 SNSs the company tracked at the time as a coherent population, as evidenced by the lack of a custom code for SNSs.

Figure 3.

Advertising revenue for the SNSs population—1996 to 2008.

Media Coverage

Press coverage of the emerging SNS industry provides a sharper illustration of the shift toward social networking as a legitimate form. As previously noted, Figure 2 shows the number of press mentions of key terms beginning in 1996 just prior to the founding of sixdegrees.com and continuing through 2008. The first occurrence of the term was in 1998 in reference to an online venture, SocialNet.com, which endeavored to launch a network of online meeting places. While there was slight growth in the number of references to SNSs in both 2004 and 2005, the clear tipping point was 2005. This followed the launch of Facebook.com in 2004, and Bebo, YouTube.com, and Ning in 2005. Acquisitions and launches helped drive an external perception of the SNS as a form that was capable of thriving as an organizational entity.

SNS Becomes the Name of the Form

As both media coverage and advertising revenue increased dramatically, SNSs appeared to emerge as a legitimate form. Yet TNS continued to categorize SNS such as MySpace.com and Facebook.com as “meeting places.” In July of 2007, ComScore Inc. was the first major agency to formally establish a category titled “social networking sites.” In doing so, the majority of sites tracked by TNS as “meeting places” and “common interests” were combined into a single category.⁹ As of March 2008, U.S. sites categorized by ComScore as “social networking sites” reached 127 million unique users.

Evolution of Forms

As the above analysis demonstrates, SNSs evolved over time in competition for scarce resources and in a struggle to gain legitimacy. By 2008, a relatively common form had emerged and sufficient resources in terms of both users and advertisers existed. Organizations competed for these resources both by seeking legitimacy and by establishing themselves as either generalists or specialists (thus targeting specific pockets of resources). The wide variety of instantiations of SNSs illustrates the various strategies taken by SNSs to secure resources. Figure 4 illustrates the evolution of a number of specific sites in the broad resource space of SNSs, and demonstrates the evolving nature of specialists and generalists as they targeted different resource types. The figure provides an example of trajectories of evolution. As Figure 4 illustrates, there is no one common path of evolution; rather the path of evolution is dependent on the nature of the overall population, as well as characteristics of the individual organization. The figure shows that websites such as AsianAvenue and BlackPlanet emerged as niche sites and maintained that strategy throughout the course of the focal time period. However, Ryze.com emerged as an SNS for business connections and evolved over time to focus specifically on connecting entrepreneurs. Elsewhere, sites such as LinkedIn.com and Facebook.com moved to compete for broader resource spaces as they evolved.

Figure 4.

Evolution of SNSs as generalists and specialists.

Discussion

This study outlined an ecological approach to understanding form emergence and legitimacy. We detailed the development of SNSs as an organizational form within a broad community of resources. SNSs coexist with other populations, including media-sharing (e.g., Flickr.com) and blogging sites (e.g., tumblr.com). The pattern of growth of SNSs follows a traditional pattern of form emergence seen across industries (Carroll & Hannan, 2000). First, new forms experience a period of slow growth, followed by a rapid increase in form density. Social networking experienced a period of rapid growth through 2006, at which point, there was a clear drop off in the number of new SNSs, suggesting the population was shifting toward maturity. The financial crash beginning in 2007 is a clear punctuated event, and in all probability contributed to the decline in births illustrated in Figure 1.¹⁰ Thus, although the community was moving toward maturity, growth rates were also influenced by environmental events affecting the availability of resources. The evolution of web-based organizations exhibits a significant acceleration of the traditional evolutionary cycle.

In the case of SNSs, it is clear that as an organizational form was emerging although the overall population was still evolving. From 1995 through 2001, the organizational form of SNSs emerged in a number of different incarnations. At first, SNSs closely resembled online communities, but later, incarnations were much more interactive and featured richer graphic interfaces. The multiple iterations of a new organizational form are typical of entrepreneurial and emergent environments, where competitors often cycle through multiple iterations and ideas before a common population wide form emerges (Aldrich & Fiol, 1994). Subsequently, following the launch of Friendster, a common type of SNS began to take hold in the industry, and the density of SNSs increased substantially. SNSs, developing from preceding iterations of online meeting places and information portals, emerged as organizations that provide a place to socialize and connect.

Despite an exponential growth in density of this form from 2005 to 2007, there was little recognition of the burgeoning population by outside observers. Early on, the lack of press coverage is particularly noteworthy. As Kennedy (2008) observes, organizations utilize press coverage as a means for seeking external legitimacy of their identity. The lack of coverage suggests that outside populations as of 2006 had not yet recognized the SNS form, but lagged the growth in density of the form. As press coverage increased in 2006 and 2007, so did the apparent legitimacy of the form, echoed by trends in the advertising population. The decision in 2008 by ComScore to recognize and track the industry as a specific category was a decisive, intentional move by another population in the community to recognize the SNS form. The continued development of the organizational form has contributed to legitimacy, particularly as competition for resources such as consumer attention and advertiser dollars has become increasingly concentrated.

In aggregate, the data presented here suggest that in populations marked by rapid innovation new forms stabilize in density prior to legitimation by adjacent populations. For SNSs, this was found to be true as popularity of the form preceded its acknowledgment by relevant populations including advertisers and news media. Despite reaching a critical mass in terms of density, which peaked in 2006, legitimacy of SNSs lagged in a context that lacked outside recognition, regulatory bodies, or other cues that would indicate legitimation. This analysis also demonstrates the trajectory by which neighboring populations at various times and speeds recognized SNSs as a legitimate form of organization, highlighting the fact that the density of the population of SNSs was quite substantial before this recognition. Both advertisers and newspapers operated as adjacent populations, but the decision of each industry to recognize social networking organizations as legitimate was not necessarily dependent on the replication of SNS forms in terms of density.

Implications

Why treat SNSs as an organizational form? Framing SNS as an organizational form focuses scholarship on a set of processes distinct from research that views SNSs as communities of users. Viewing SNSs as a form provides a more nuanced means for understanding what is, and what is not, a part of the population of SNSs. Furthermore, this perspective provides a baseline for examining this important social phenomenon as it develops through future iterations. As this analysis has illustrated, SNSs have not followed a trajectory of legitimacy that adheres with what would be expected of traditional formal organizations, but an ecological view allows scholars to trace the path of emergence.

In addition, SNSs have emerged as a locus of organizing and organization; despite this emergence, researchers have failed to delve into the nature of SNSs as an organizational form. Framing SNSs as organizations provides a basis for understanding what matters to the development of SNS; in this case, media coverage, advertising, and growth of the form were important to the legitimacy of SNSs. Furthermore, approaching SNSs as organizations broadens the scope of inquiry to better allow scholars to understand the interactions that occur between users of an SNS and the site itself. For instance, consider the earlier example of engineers at Facebook.com constantly modifying the algorithm that delivers news articles to users. Following our approach, researchers studying news media and SNSs should consider the internal organizational interactions that led to the development of the news media algorithm, considering how critical decisions were made and how those decisions affected the delivery of content.

As noted in the introduction, approaching SNSs as organizations and examining the competition between SNSs suggests a path of scholarship for examining the management of SNSs. For example, as SNSs grow in prominence and become critical sources of day-to-day information, managers within these organizations must make increasingly critical decisions regarding the type of information that is provided to consumers (e.g., news, music, political commentary). In turn, content decisions will affect access to resources and the potential for growth. For example, the decision to provide particular types of political commentary (e.g., conservative viewpoints) could alienate certain advertisers and users, driving away a portion of resources. Future research will benefit from studying the rapid pace of interaction between managerial decision making and external perception that is seen in SNSs.

An ecological approach to tracing legitimacy could also be extended to studies examining the emergence of other communities of populations such as online brand communities and consumer groups or more traditional organizations such as trade groups or management consulting firms. Framing SNSs through evolutionary ecology provides researchers with a basis for delineating what belongs in a given study and what is tangential. For example, the growth of the online presence of brick-and-mortar organizations such as Wal-Mart, Target, and Best Buy certainly brought legitimacy to the online space for retailers but ultimately was not central to the rise of SNSs. Indeed, ecology helps to frame this point as an ecological resource perspective indicates that these organizations are occupying entirely separate resource spaces.

Our theoretical approach illustrates the delay between legitimation acquired by increased population density and conferral of legitimation by adjacent populations. Furthermore, this discussion points to the importance of adjacent populations in the case of rapidly emerging forms. The results suggest that media coverage may serve as a central indicator of the legitimacy and stability of rapidly emerging organizational forms. This examination of SNSs presents a detailed analysis of alternative mechanisms of legitimation beyond density counts. Astley (1985) observes that new population forms often emerge in resource spaces ignored by established populations. While SNSs emerged in a steady trickle in the founding years of the population, increased press coverage and attention from advertisers coincided with entrance into the market by media conglomerates and technology manufacturers. The form emerged in a resource space outside the bounds of media conglomerates and technology manufacturers, yet the recombination of these populations coincides with increased press coverage and recognition by advertisers. Future research will need to consider the subsequent interrelationship of populations, although this work suggests recombination of populations may trigger a formal legitimation process.

Limitations

The data used for this analysis have a number of limitations that affected this study. TNS Media Intelligence data are restricted primarily to markets within the United States, and thus, this study was not able to consider the growth of SNSs beyond the United States, nor the influx of advertising dollars from outside the United States. In addition, the number of users visiting a site was estimated using approximations from Alexa.com. By using data from only Alexa.com, the research was able to establish a baseline, but there is some uncertainty as to the accuracy of these numbers. These types of limitations are inherent to Internet research; TNS is accepted as a standard data source, and Alexa is considered to be reliable, but these data sources are imperfect.

Future research

This study framed SNSs as an organizational form and outlined the utility of the ecological approach as a means of understanding processes of form emergence and legitimacy. From a communicative perspective, the framing of SNSs as organizations opens up new avenues of research. For instance, scholars should focus on the tension created by the duality of the internal and external dynamics of SNSs as organizations. Moreover, with regard to bringing attention to new organizational forms, the relationship between the media and consumers should be further explored as a mechanism of legitimacy.

Building on the ecological approach, scholars should consider additional issues of form emergence and population growth. For instance, this work focused on the establishment of an organizational form based on a common identity and a stable density. Yet in doing so, we did not consider the mechanisms of selection and retention that led to certain elements of the organizational form being omitted where others were retained. In addition, organizational populations coalesce around a common form, but niches often exist within a population. For example, within social networking populations, there are subsets of organizations focused on geographic regions, minorities, or specific social issues such as gay rights or pay equality. For instance, change.org has established a vibrant community of users and partner organizations connected via SNSs and oriented toward a wide range of social change issues. Likewise, music artists have successfully leveraged SNSs to establish strong communities of users within specific sites such as Facebook.com. Future research should consider how these niches developed and how they interact within one another within the common resource space of a population.

Conclusion

The ecological approach to organizations has become an established theoretical perspective in organizational theory. As this application to SNSs illustrates, there is considerable potential for applying ecological premises to significant communication phenomena and much to be learned about communication behavior in the process of such applications. Also, as the acceleration of transformation within the social networking population illustrates, contemporary communication processes pose interesting and important challenges to the theory as well, suggesting a rich opportunity for modification and development of community ecology.

Footnotes

Acknowledgements

The authors wish to acknowledge Sandi Evans for her assistance in collecting and coding the data used in this article, as well as Drew Margolin and Cuihua Shen for their feedback on an earlier version of this article.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The authors wish to thank the Reuters Institute for the Study of Journalism, USC Annenberg School for Communication and Journalism, and the Annenberg Networks Network, for providing funding and support for this research.

Supplemental Material

The online appendix is available at .

Notes

Author Biographies

Matthew S. Weber (PhD, University of Southern California) is an assistant professor of communication in the School of Communication and Information at Rutgers University. His research focuses on processes of organizational change in relation to the introduction of new information communication technology.

Janet Fulk (PhD, The Ohio State University) is professor of communication in the Annenberg School for Communication, and professor of management and organization at the Marshall School of Business at University of Southern California. Her research interests include social and network aspects of knowledge and distributed intelligence, online communities, and technology-supported interorganizational networking by nongovernmental organizations.

Peter Monge (PhD, Michigan State University) is professor of communication in the Annenberg School for Communication, and professor of management and organization at the Marshall School of Business at University of Southern California. His research focuses on the evolution of communication networks and other ecological processes in organizational communities.

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