Technologies That Support Marketing and Market Development in SMEs—Evidence from Social Networks

Figures & data

Figure 1. Hypotheses

Table 1. Overview of Sample Characteristics

	Austria	Germany	Liechtenstein and Switzerland	Total sample
Sample characteristics
Number of returned questionnaires	252	183	161	596
Response rate	25.2 percent	18.3 percent	16.1 percent	19.9 percent
Fully completed questionnaires	189	120	102	411
Effective response rate	18.9 percent	12.0 percent	10.2 percent	13.7 percent
Firm characteristics
Median firm size	8	66	27	17
Percentage SMEs	65.0 percent	93.1 percent	83.3 percent	82.5 percent
Percentage manufacturing companies	16.4 percent	24.2 percent	21.6 percent	20.0 percent
Percentage service companies	44.4 percent	64.2 percent	48.0 percent	51.1 percent
Percentage trading companies	27.5 percent	5.0 percent	23.5 percent	20.0 percent
Percentage hotel and restaurants	11.1 percent	2.5 percent	3.1 percent	6.8 percent
Percentage transportation companies	0.5 percent	4.2 percent	2.9 percent	2.2 percent
Legal form of organization
Individual enterprises (e.g., e.K, e.Kfm)	26.5 percent	12.5 percent	4.9 percent	17.0 percent
Business partnerships (e.g., GbR, OG, KG)	8.5 percent	8.3 percent	2.0 percent	6.8 percent
Corporate entities (e.g., GmbH, AG)	65.1 percent	79.2 percent	93.1 percent	76.2 percent
B2B/B2C orientation
B2B	65.1 percent	70.8 percent	74.5 percent	69.1 percent
B2C	34.9 percent	29.2 percent	25.5 percent	30.9 percent

Table 2. Social Network Usage

	SMEs (percent)	Large (percent)	N (percent)
Yes	196 (58)	58 (81)	254 (62)
No	115 (34)	9 (13)	124 (30)
Plan to start with the use of social networks in the next 2 years	28 (8)	5 (7)	33 (8)
Total	339	72	411

Table 3. Most Popular Social Networking Sites

Social networks	SMEs (percent)	Large (percent)	N (percent)
Facebook	150 (44)	45 (63)	195 (47)
XING	119 (35)	55 (76)	174 (42)
Twitter	62 (18)	33 (46)	95 (23)
Google+	61 (18)	24 (33)	85 (21)
LinkedIn	54 (16)	31 (43)	85 (21)
Total	446	188	634

Table 4. Measured Variables' Factor Loadings on Latent Variables (CFA)

Latent variable	Measured variable	Standardized estimate (SMEs)	SE (SMEs)	Standardized estimate (LE)	SE (LE)
Social network usage	Number of social networks used	1.000	—	1.000	—
	Frequency of usage	0.766	0.059	0.716	0.104
RMO	Understanding of customer needs	0.595	—	0.730	—
	Measure customer satisfaction	0.614	0.194	0.534	0.242
	More customer focused	0.597	0.156	0.905	0.276
	Disseminate data	0.624	0.173	0.495	0.264
EO	Risk	0.602	—	0.556	—
	Proactiveness	0.759	0.112	0.728	0.242
	Innovativeness	0.813	0.128	0.862	0.321
Firm growth	More sales	0.921	—	0.912	—
	More profit	0.877	0.047	0.919	0.079
	More market share	0.744	0.051	0.869	0.086

Table 5. Empirical SEM Results

Effects			SMEs			LE			Difference
			β	SE	p	β	SE	p	z	p
H1: EO	→	Social network usage	0.421	0.247	.000	0.151	0.485	.264	2.543	.006
H2: RMO	→	Social network usage	−0.154	0.265	.067	0.221	0.417	.017	1.809	.036
H3: Social network usage	→	Firm growth	−0.086	0.031	.146	0.303	0.059	.011	5.843	.000
H4: EO	→	Firm growth	0.240	0.137	.007	0.221	0.246	.107	0.193	.424
H5: RMO	→	Firm growth	0.237	0.148	.007	0.303	0.215	.027	0.508	.306

β, standardized path coefficient (beta); SE, standard error of beta; p, p‐value of beta; Difference z test is one‐tailed.

Table 6. Important Moderation Effects

Hypothesis/Effect			Group	Moderator	Coefficient			Difference
					b	SE	pb	F	pF
H1: EO	→	SN usage	SME	SN measuring	0.229	0.088	.009	7.859	.000
				No SN measuring	0.074	0.060	.221
			SME	Manufacturing	0.196	0.125	.117	15.564	.000
				Service	0.343	0.062	.000
			SME	B2B	0.345	0.069	.000	16.310	.000
				B2C	0.238	0.096	.014
H2: RMO	→	SN usage	SME	Manufacturing	0.190	0.132	.151	3.413	.034
				Service	−0.151	0.069	.029
H3: SN usage	→	Firm growth	LE	SN measuring	0.660	0.289	.027	3.790	.029
				No SN measuring	0.156	0.332	.640
			LE	Manufacturing	0.554	0.214	.012	4.874	.011
				Service	0.268	0.163	.105
			LE	B2B	0.316	0.138	.026	3.548	.035
				B2C	0.406	0.239	.094
H4: EO	→	Firm growth	SME	SN measuring	0.565	0.166	.000	11.692	.000
				No SN measuring	0.122	0.111	.272
			SME	Manufacturing	0.143	0.131	.278	16.233	.000
				Service	0.246	0.068	.000
			LE	B2B	0.411	0.184	.029	3.947	.024
				B2C	0.087	0.226	.700
H5: RMO	→	Firm growth	SME	SN measuring	0.098	0.187	.599	4.942	.008
				No SN measuring	0.353	0.110	.000
			LE	SN measuring	0.070	0.187	.711	4.037	.024
				No SN measuring	0.492	0.194	.014
			SME	Manufacturing	0.508	0.139	.000	9.022	.000
				Service	0.152	0.072	.036

SN, social network; b, unstandardized path coefficient; SE, standard error of b; p_b, p‐value of b; F, F‐value of difference test; p, p_F‐value of F; a difference is called significant only if one or both path coefficients and the difference test are significant.

Table

Author(s)	Research question	Results	Research method	Sample size
Seo and Lee (2016)	The paper analyzes different types of initiatives pursued by companies to start a social media presence and their impact on an organization's later use of these technologies from a long‐term perspective.	Concurrently preparing both technological and organizational initiatives is important for social media success, along with a correct and precise understanding of the firm's core value proposition. The results show a moderate level of dependence between the organizations' initiatives and their performance 5 years later.	Qualitative	5
Kudeshia, Sikdar, and Mittal (2016)	The study analyzes the effectiveness of social media as a communication tool for SMEs and small‐scale entrepreneurs.	The study reveals a positive relationship between “liked” brands on Facebook and brand love. Further, the study finds that liking fan pages is essentially converted into word‐of‐mouth, which results in purchase intentions.	Quantitative	311
Jiang et al. (2016)	The study focuses on how heterogeneous consumer interactions in social media impact brand adoption decisions.	An agent‐based model is introduced to replicate the evolution process of market share for multiple brands competing online. The model shows among other things that electronic word‐of‐mouth has a significant effect on online shoppers' buying decisions and therefore on a brand's market share.	Conceptual/simulation	n/a
Hothi, Saleena, and Prakash (2015)	The paper investigates if there is a link between a company's usage of Facebook and company reputation.	Interacting with users by posting relevant updates on Facebook helps to upgrade reputation.	Quantitative	7
Gandhi and Muruganantham (2015)	The study investigates an approach to identify influencers within social networks.	A research framework is proposed to estimate the influencers in a social media site using Multi‐Criteria Decision Making (MCDM) methods.	Conceptual	n/a
Du and Jiang (2015)	Is the usage of social media associated with higher firm performance as measured by stock price and return on assets?	The study finds that firms with a social media presence are more highly valued by the market and have higher future financial performance and therefore provides evidence of the positive impact of social media technologies on firm performance.	Quantitative	1414
Kim, Lim, and Brymer (2015)	This paper investigates how managing online reviews affects hotel performance, measured as the average daily rate and revenue per available room.	The results indicate that overall ratings are the most salient predictor of hotel performance, followed by response to negative comments. The better the overall ratings and the higher the response rate to negative comments, the higher the hotel performance.	Quantitative	128
Kesting and Günzel‐Jensen (2015)	The paper investigates business model sophistication as a tool for new ventures and SMEs to increase their pool of resources and competitiveness.	A framework is developed that introduces five business model sophistication strategies, one of them being the involvement of users and the crowd through social media.	Conceptual	n/a
Braojos‐Gomez, Benitez‐Amado, and Llorens‐Montes (2015)	Investigates the variables through which small firms can learn to adopt social media.	IT infrastructure capability, social competitor pressure, marketing management, and innovation management are key mechanisms through which small firms learn to develop a social media competence.	Quantitative	100
Harrigan et al. (2015	The paper investigates the role of social media within social CRM.	Findings show that an underlying customer relationship orientation is needed to drive social media technology use and customer engagement initiatives. Customer relationship orientation also has a direct impact on customer relationship performance, measured as the performance relative to competitors in keeping current customers.	Quantitative	159
Tomaras and Ntalianis (2015)	The paper analyzes the impact of advertisements on social media.	A novel, unsupervised social computing approach is proposed, which algorithmically estimates the importance of each advertisement by considering both explicit interactions between advertisements and social media users and users' popularity.	Conceptual	n/a
Sun, Chen, and Fan (2014)	The paper develops a model to identify active and valuable customers on social media to enable an efficient allocation of marketing resources.	A framework for customer response modeling in social media is developed.	Qualitative	n/a
Martínez‐Núñez and Pérez‐Aguiar (2014)	The paper introduces a model to analyze the relationship between the usage of online social networks and production efficiency, measured as responses to social media campaigns, sales, as well as pre‐tax profits.	Results reveal that companies are able to use social networks as a key factor in improving their productive efficiency. The newly developed model is able to assess the strategic performance of social networks.	Quantitative	149
Jussila, Kärkkäinen, and Aramo‐Immonen (2014)	The paper investigates opportunities and challenges of social media use in industrial business‐to‐business companies.	There is a significant gap between the perceived potential of social media and social media use with customers and partners in business‐to‐business companies. Potentially effective ways to reduce the gap are identified.	Quantitative	125
Wu, Lirn, and Dong (2014)	This study investigates the correlation between the placement of corporate ads on social media platforms and sales performance.	It was found that both page hit popularity and target group agreement on effective advertisement characteristics relate positively to sales.	Quantitative	not dis‐closed
Arman (2014)	What is the state of research in social media and CRM integration?	Integration of social media and CRM is imperative for organizations in conducting business. More research has to be conducted to blend the two approaches.	Conceptual	n/a
Trainor et al. (2014)	The study examines how social media technology usage and customer‐centric management systems contribute to a firm‐level capability of social CRM.	The study develops a way to conceptualize and measure social CRM capability. Further, it finds that both customer‐centric management systems and social media technologies influence social CRM capability. These two resources are found to have an interactive effect on the formation of a firm‐level capability that is shown to positively relate to customer relationship performance.	Quantitative	308
Paniagua and Sapena (2014)	The study explores the link between resources generated from social media sites and business performance, measured as stock prices.	Four channels are conceptualized by which social media impacts financial, operational, and corporate social performance: social capital, customers' revealed preferences, social marketing, and social corporate networking. An empirical test of the framework shows that “followers” and “likes” positively influence a firm's share value, but only after a critical mass of followers is attained.	Quantitative	26
Rodriguez, Dixon, and Peltier (2014)	The purpose of this study is to summarize interactive marketing literature in the context of personal selling and sales management.	The use of social media platforms in a professional selling context is receiving increased exposure in the literature. However, several research questions are proposed, including among others “How can salespeople and the selling organization best utilize evolving social media technologies?,” “What are the most effective strategies and tactics for enhancing customer engagement?,” “How might sales managers use social media to engage their sales force?,” “Which types of social media platforms are most effective and at which stages in the selling process?”	Content analysis of research papers	106
Lau, Li, and Liao (2014)	The paper investigates ways to extract market intelligence from social media platforms to generate information to improve product designs and marketing strategies.	A novel social analytics methodology is designed that leverages large volumes of consumer reviews archived on social media sites to perform a fine‐grained extraction of market intelligence.	Conceptual	n/a
Jiang et al. (2014)	The paper explores ways to identify and focus on the most important stakeholders within a social media content.	A stakeholder‐based event analysis framework is proposed that segments forum participants by stakeholder groups and partitions their messages into different time periods of major firm events. Results show that some stakeholder groups identified by the system had stronger relationships with firms' market/stock performance, compared to the entire set of web forum participants.	Quantitative	6
Giannakis‐Bompolis and Boutsouki (2014)	The study attempts to estimate the degree to which (traditional) CRM practices are an effective tool to enable customer/social engagement.	Among other things, an active social media presence can be considered a significant determinant of customers' willingness to get involved in a new type of relationship with the company.	Quantitative	330
Thoumrungroje (2014)	The paper proposes a model linking the intensity of social media use with consumers' reliance on electronic word‐of‐mouth (EWOM) and their consumption of conspicuous products.	The results reveal both direct and indirect influences (i.e., via EWOM) of social media intensity on conspicuous consumption. Social media and EWOM are effective tools for enticing demand for conspicuous products.	Quantitative	1142
Öztamur and Karakadılar (2014)	The paper analyzes how SMEs engage with their customers online and use social media as a strategic tool of social network marketing. Performance is assessed in terms of social media‐inherent measures such as unique visitors, interaction rates, and relevant actions taken.	Using formal language during the customer's communication process and creating unattractive content cause problems in social network marketing.	Qualitative	4
Jang et al. (2013)	The study investigates ways how customer feedback on social media can be efficiently analyzed.	An automated method of estimating causality between user profiles, value structures, and attitudes based on the replies and published content managed by open social network systems is introduced.	Conceptual	n/a
Fitzgerald et al. (2014)	How do businesses succeed or fail in using digital technology to improve business performance, such as enhancing customer experience, streamlining operations, or creating new business models?	The study identifies several company‐internal challenges and opportunities firms are confronted with when trying to realize the potential of new technologies.	Quantitative	1559
Pöyry, Parvinen, and Malmivaara (2013)	The study investigates consumers' underlying motivations to use companies' social networking sites and links them with business success.	This study distinguishes between consumers' hedonic and utilitarian motivations for using company‐hosted Facebook pages and relates them to two types of community usage behavior: browsing and participation. Hedonic motivations indicate a higher propensity to participate in the community whereas utilitarian motivations relate more strongly to merely browsing the community page. The participating members do not display intentions to buy from the host company or refer it to others, wherea the browsers do.	Quantitative	1162
Gecti and Dastan (2013)	The study investigates the effects of social media usage on business turnover.	Social media usage positively affects business performance. Two variables mediate this link: (marketing) cost savings and marketing‐based outputs, such as increased brand recognition and customer loyalty.	Quantitative	152
Malthouse et al. (2013)	The paper examines how CRM needs to adapt to the rise of social media.	The concept of the “social CRM house” is introduced, followed by a discussion on how social media engagement affects the house's core areas (i.e., acquisition, retention, and termination) and supporting business areas (i.e., people, IT, performance evaluation, metrics and overall marketing strategy).	Conceptual	n/a
Rapp et al. (2013)	The study investigates social media contagion effects across business suppliers, retailers, and consumers and their impact on multiple performance measures such as brand performance, retailer performance, and consumer‐retailer loyalty.	Social media use positively contributes to brand performance, retailer performance, and consumer‐retailer loyalty. The effect of supplier social media usage on retailer social media usage and in turn on customer social media usage is moderated by brand reputation and service ambidexterity. The study provides a framework to promote usage by supply channel partners which ultimately influences performance‐related outcomes.	Quantitative	617
Gensler et al. (2013)	The study investigates key challenges related to managing brands in social media environments.	A framework of social media's impact on brand management is introduced. Among other things it argues that consumers are becoming pivotal authors of brand stories due to new, dynamic networks of consumers and brands formed through social media and the easy sharing of brand experiences in such networks. Key research questions are identified.	Conceptual	n/a
Carim and Warwick (2013)	Explores the use of social media as a communications tool.	Most sample firms have adopted social media, building a dialogue with stakeholders is a prime reason for using social channels, although one‐way “broadcasting” of information is widespread.	Quantitative	111
Qu et al. (2013)	This study investigates whether online retailers' social activity on e‐commerce platforms improves their business performance, and if so, aims to identify the underlying mechanisms. Business performance is measured as revenue and transaction volume.	Online retailers' social activities for friend‐making improve their business performance, regardless of the directional attribute of the activities. Social activities for advice‐seeking decrease online retailers' business performance. Social activities for advice‐giving increase online retailers' business performance.	Quantitative	7380
Nickell, Rollins, and Hellman (2013)	The study aims to investigate the marketing actions that companies performed during the recession of the late 2000s and the resulting effect on firm performance, measured as profits, sales growth, market share, and cash flow.	All companies in the sample report an increase in their use of digital marketing during the recession. Business‐to‐business companies have responded to digital marketing slower than consumer companies. However, “social media use” does not discriminate between high‐ and low‐performing firms.	Quantitative	190
Schniederjans, Cao, and Schniederjans (2013)	The paper addresses social media as a platform within impression management and asks if social media impact a firm's financial performance, measured as stock returns. The types of social media strategies that impact a firm's financial performance are also explored.	Social media usage, as part of a company's impression management, leads to increased financial performance if strategies of ingratiation, intimidation, organizational promotion and supplication are followed.	Quantitative	150
Yu, Duan, and Cao (2013)	The study investigates the effect of social media and conventional media, their relative importance, and their interrelatedness with short‐term firm stock market performances.	Overall, social media has a stronger relationship with firm stock performance than conventional media. Social and conventional media have a strong interaction effect on stock performance. Also, the impact of different types of social media varies significantly. Different types of social media also interrelate with conventional media to influence stock movement in various directions and degrees.	Quantitative	824
Schultz, Schwepker, and Good (2012)	This paper proposes and empirically assesses a model of social media usage among business‐to‐business (B2B) salespeople. Performance is assessed through measures such as sales, profits, and customer acquisition.	Age of the salesperson negatively affects social media usage, whereas social media norms positively affect it. Social media usage positively affects sales performance. Customer‐oriented selling, although not found to be positively related to social media usage, does have a positive effect on sales performance.	Quantitative	273