Business strategies for managing the legal risks of social media

The recent growth of social media has dramatically changed interactions between the personal, business, and legal spheres of society. Corporations now use social networks, blogs, and even virtual worlds for marketing, recruiting, customer service and brand management purposes. Moreover, through the establishment of corporate pages, companies can reap increased web exposure, traffic, and popularity, while acquiring valuable insight into consumer perceptions. Despite the multitude of tangible benefits provided by social media, organizations are now beginning to recognize the legal and business risks that accompany these opportunities. Legal scholars and practitioners are increasingly examining the effects of social media on organizational strategy, with particular attention being paid to social media’s involvement in the struggle between the negligent hiring theory and anti-discrimination laws. Although social media policies and employee training have been proposed as methodologies to address the legal costs associated with this conflict, these legal-centric approaches largely fail to examine the issue from a comprehensive strategy-oriented perspective. Accordingly, in this paper I will contribute to the academic literature by outlining how organizations can manage litigation costs derived from social media activities through the use of best practices and risk analysis.

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