Impact Of Social Media On Performance Of SMEs

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Abstract

This study was carried out on the impact of social media on performance of SMES in Lagos State using selected SMEs in Yaba Lagos State as a case study. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of SMEs in Yaba, Lagos State. In determining the sample size, the researcher conveniently selected 229 respondents and 210 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables and mean scores, while the hypotheses were tested using Pearson Correlation statistical tool, SPSS v23. The result of the findings reveals that there is a significant relationship between social media and the performance of SMEs. The study also revealed that the potential contributions of social media to the performance of SMEs in Lagos State include; it improves brand recognition, it enhances social connections, facilitates consumer participation, influences purchasing habits, promotes pre and post-sale communication, and increases sales volume. Therefore, it is recommended that SME owners should make their social media accounts more interactive and vibrant. They should read and respond to users’ comments as well as enquires concerning products and services on their pages. SME owners should not have presence on not only one social media platform. They should have accounts on variety of platforms (Facebook, WhatsApp, YouTube, LinkedIn, Pinterest, Twitter) in order to reach all demographics. This is because some prospective customers may be present some platforms but not on another. To mention but few.

Chapter One

Introduction

1.1 Background of the Study

The current 4th Industrial Revolution (4IR) has paved the way for a more improved information and communication technology (ICT). Many firms such as Amazon are able to sell worldwide through the use of their online platform. In Nigeria, several businesses leverage social media platforms to advertise and market their product to the large number of social media users around the world. Social media such as Facebook, Twitter, Whatsapp, and many others are being leveraged on to boost sales and in turn improve revenue. Social media is used in many domains hence, there is no geographical barrier or the extent to which products and services can travel. With the use of social media, information is easily accessible, trends, competitors and customers needs are easily monitored and new opportunities are harnessed.

The uninspiring performance of many SMEs had giving rise to business owners seeking diverse approach to improving business performance. One of them is the adoption of social media usage by many SMEs. Social media has proven to be an easy to use platform that connects businesses to their clients online, facilitating advertisement and helping to reach target audiences hence, a continuous rise in the usage by SMEs. Primarily, the goal of social media usage by SMEs does not rest only on its marketing capabilities. Social media has proven to be an important tool in creating brand awareness, generation of leads, customer support among others. Many SMEs see it as a viable tool of communication, sharing information on discounts, promotions, offers, order process and necessary procedures in the sales process.

Small medium enterprises according to SMEDAN (2014) refers to businesses made up of 10- 99 employees. SMEs are a veritable tool for economic growth and development. They play a key role in promoting prosperity by creating new jobs, and increasing economic prosperity of a region (Kareem, 2015; Maksimov et al., 2017). Due to the importance of small businesses, governments in developing and developed nations see them as a means of employment, innovation and wealth creation (Mills & McCarthy, 2016). Small business is important for the growth of products and services. It creates employment at a smaller financial cost, particularly in the rapidly developing service sector. In developing countries, over 50 percent of jobs are created by SMEs (Lorenz & Pommet, 2018). In addition to employment generation, SMEs have proven to be alleviators of poverty, contributing to the reduction of poverty especially in the developing nations like Nigeria. SMEs play an important role in the growth of any economy (Schumpeter, 1934; Hossain et al., 2018).

SMEs performance can be measured in different terms including: profitability, growth, market value, total return on shareholder, economic value added, customer satisfaction, and also based on the stakeholder’s expectations (Blackburn, Hart & Wainwright, 2013). Many specialists view firm performances principally from the finance perspective and so evaluating firm performance using financial basis has been a long standing traditional for many stakeholders (Delen, Kuzey & Uyar, 2013). Non-financial measurements of SMEs performance is also key in the measurement of performance such as the company goodwill, sales, employment, assets, and turnover profits and output, brand image, value created among others. In addition, most businesses regard their sales as highly important to their performance, hence the use of social media in advertising and engaging clients for more sales.

1.2 Statement of the Problem

The performance of these SMEs particularly as related to their sales is therefore very crucial. However, fierce competition among SMEs for the same consumer base makes this a challenge for many SMEs. Conversely, the development and maturation of social media throughout time have made it possible for even the smallest businesses to employ it in their communication strategies (Kotler, 2008). According to Stauss et al, 2001, the major purpose of using social media to interact with existing and potential customers is to strengthen relationships and increase sales.

Sales and productivity can be greatly improved by customer engagement via social media marketing (Singh & Imran, 2012). Higher levels of brand awareness and productivity may be attained at lower costs through social media when compared to other conventional communication methods. Therefore, social media may be utilised by both small and medium-sized businesses, as well as by large, multi-national firms (Gengeswari, Padmashantini & SharmeelaBenu, 2013). Social media allows for practically instantaneous interaction with the global village through the concurrent creation and deconstructing brands. Brand recognition, social connections, consumer participation, purchasing habits, pre- and post-sale communication and evaluation, and lifetime value are all improved through social media (Ahmad &Buttle, 2002). With the advent of social media, everyone is able to easily and cheaply promote oneself through their extensive online networks.

This opportunity presents a golden window of opportunity for small and medium-sized enterprises to expand their operations, ultimately leading to more revenues and better overall performance. Despite social media marketing’s many advantages, there seems to be a lack of awareness and a knowledge gap among small business owners regarding how to attain effective performance.

1.3 Objectives of the Study

The main objective of this study is to examine the impact of social media on performance of SMES in Lagos State.

Other objectives of this study are:

Determine the relationship between social media and the performance of SMES.

Assess the extent social media platforms are utilized among SMEs in Lagos State.

Find out the potential contributions of social media to the performance of SMEs in Lagos State.

1.4 Research Questions

Is there a significant relationship between social media and the performance of SMEs?

To what is the extent social media platforms are utilized by SMEs in Lagos State?

What are the potential contributions of social media to the performance of SMEs in Lagos State?

1.5 Research Hypotheses

Ho: There is no significant relationship between social media and the performance of SMEs

Ha: There is a significant relationship between social media and the performance of SMEs.

1.6 Significance of the Study

This study would be highly valuable to the SME- sub-sector, especially in the area of business process improvement, office and marketing practices. Second, it would also improve their adoption rate of embracing the social media platforms in moving their businesses forward from the present state.

Third, the results emanating from this study would be a revelation to online – business operators and service providers and business students generally as it would also expose them to the vantage positions brought by the introduction and adoption of social media in the business world. Moreover, the results from this study will also help IT professionals, entrepreneurs and small business owners to facilitate the required learning opportunities in the area of social media toward onward development of their entrepreneurial skills and improvement in their business performance in future. Lastly, the study will be incomplete without mentioning its invaluable contribution to knowledge base and existing literature as well as the research libraries across the country on the subject matter as it will satisfy the knowledge quest and the need of any interested readers, lecturers and future researchers in the area of provision of some useful insight to them for any future studies in the similar area.

1.7 Scope of the Study

This study will be focusing on the impact of social media on performance of SMES in Lagos State. Geographically, this study will be delimited to Yaba, Lagos State.

1.8 Limitations of the Study

Like all human endeavour, this research work was not without some factors that tended to jeopardize the smooth completion of the study. One of the factors is on the fact that the period of time allowed for this work was short that the researcher did not have enough time to do a thorough job.

Also the researcher in the course of data collection, had to put in extra effort to interpreting interviews schedule of the respondents, some who fall within the in comprehensible age limit. Additionally, there were financial and transit constraints.

1.9 Definition of Terms

Social Media

Social media is a group of internet-based applications that build on the ideological and technological foundations of web 2.0 that allow the creation and exchange of User Generated Content (Kaplan & Haenlein 2010).

Small Businesses

Small businesses are privately owned corporations, partnerships, or sole proprietorships which have fewer employees and/or less annual revenue than a regular-sized business or corporation.

1.10 Organization of the Studies

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.

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