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Until recently, social media, from Facebook to Twitter, has largely been seen as a form of personal communication for young people, with little relevance to the boardroom. However, over the past couple of years that attitude has begun to change rapidly, and with good reason, according to the latest research from Stanford Graduate School of Business.

While most consumers (89 per cent) use search engines to research products and services that they might buy, 42 per cent also follow or “like” a brand on a social networking website, point out David Larcker, professor of accounting, and researchers Brian Tayan and Sarah Larcker. This could be valuable in setting the strategy of the company say the authors in their research.

For corporate board members, social media might also give early warning signs of potential risks they say, such as how exposed the company is to disruptions in its operations, the reputational risk to brands and risks associated with compliance.

Social media has also been in the spotlight recently over the extent to which recruiters are looking at the information on the Facebook accounts of potential employees as a way of assessing their suitability. This is easy to understand, says a professor at the Wharton school at the University of Pennsylvania. Associate professor Adam Grant says that the typical job interview is a poor tool for predicting which candidates will succeed. “Applicants are very motivated to put their best foot forward in an interview,” says Prof Grant. “It is very difficult to spot the people who will represent an organisation well. But on Facebook, you can see the applicant making day-to-day decisions - it is a window into how an individual is likely to act.”

Writing in Knowledge@Wharton, Prof Grant references research conducted by Donald Kluemper of Northern Illinois University College of Business, Peter Rosen from the University of Evansville, and Kevin Mossholder from Auburn, which studies 518 undergraduate students and their Facebook profiles. It showed that online profiles can be very revealing about specific personality traits. The research found that the Facebook profiles were a good predictor of the so-called “big five personality traits”: conscientiousness, agreeableness, extroversion, emotional stability and openness.

“There is strong evidence that social networking is a valid way of assessing someone’s personality,” says Prof Kluemper. However, he warns that an unstructured perusal of a Facebook account will not necessarily result in better hiring decisions. “Until a method is validated in a number of ways, including a study of adverse impacts and the legal issues, I wouldn’t recommend companies rely on social networking profiles.”

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