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This paper aims to focus on the effect of intranet‐based social networking services (SNS) on the activity of the firm, in particular on the change in the number of business connections and on the time and cost‐savings brought about by such SNS.

The authors hypothesize that the use of intranet‐based SNS positively influences “social network productivity” defined as the relationship between interconnectedness and knowledge performance, whereby an increase in the number of business contacts may result in a shortened and less costly retrieval of work‐relevant knowledge. Drawing on a large sample of Japanese respondents, a taxonomy based on levels of organizational social capital and innovativeness was used to assess the moderating effects of social capital and innovativeness on social network productivity.

SNS were found to mildly improve efficiency in accessing knowledge or in increasing the number of business contacts. More importantly, this study reveals that in using intranet‐based SNS, companies with both higher social capital and innovativeness displayed higher social network productivity.

The use of SNS was treated implicitly and should therefore be measured independently, and detailed data on the respondents' organizations would be useful to reveal organizational clusters.

Because fostering social capital and innovativeness rests largely on the firm's organizational culture, leaders who want to implement SNS effectively should pay special attention to the culture of their organization.

In the use of business SNS, practitioners need to consider particular organizational characteristics that may affect the effectiveness of intranet‐based SNS.