Do friends influence purchases in a social network

Do friends influence purchases in a social network

by Raghuram Iyengar

Part of Working paper / Harvard Business School -- 09-123

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Social networks, such as Facebook and Myspace have witnessed a rapid growth in their membership. Some of these businesses have tried an advertising-based model with very limited success. However, these businesses have not fully explored the power of their members to influence each other's behavior. This potential viral or social effect can have significant impact on the success of these companies as well as provide a unique new marketing opportunity for traditional companies. However, this potential is predicated on the assumption that friends influence user's behavior. In this study we empirically examine this issue.

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