Towards New Marketing Era: Social Media Marketing Adoption by SMEs

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Abstract

Despite the recent growth in usage and adoption of social media as a marketing tool in globally to support firm operations through offering unique opportunities, very little empirical research focuses on Small and Medium Enterprises. The study is mainly focused to identify factors affecting towards adoption of social media marketing by SMEs in Sri Lanka. In particular, it measured the impact of top management perception, ease of use, facilitating conditions, and social influence on social media marketing adoption by SMEs. To test the proposed research hypothesis, it was administered a structured questionnaire to 150 SME managers. Results of the study concluded that top management perception, ease of use, and social influence significantly impact towards on social media marketing adoption by SMEs.

Keywords

Small and Medium Enterprises, Social Media, Social Media Marketing

Introduction

Small and Medium Enterprises (SMEs) are the novices in the business cycle and are identified as one of the main contributors to economic, development, and employment growth (Dahnil, Marzuki, Langgat, & Fabeli, 2014). The large-scale organization had a history of its childhood which it was in a small scale. The growth of the population cannot be handled with government careers. Consequently, the unemployment rate is going up in Sri Lanka. In 2017, it is indicated a 4.2 percent unemployment rate and first and second quarters of 2018 unemployment was 4.50 percent and 4.60 percentages respectively (Sri Lanka, 2018). It was acknowledged SMEs as the backbone of the economy of Sri Lanka and it is recorded as more than 75 fractions of the total number of enterprises which is provided 45 percent of the employment opportunities and 52 fraction contributions towards the Gross Domestic Production (GDP). As well as SMEs endorse broad-based on equitable development and deliver more opportunities for Women and Youth participation in the economic development of Sri Lanka (Ministry of industry commerce, 2017).

Despite it plays a major role in today’s world economy and the revolution of the internet and communication channel has transformed the way of conducting business today, SMEs is well known for having limitations and acceptance barriers in adopting new technology (Dahnil, Marzuki, Langgat, & Fabeli, 2014). Recently, a number of consumers engage with Social Networking Sites such as Facebook, Instagram, Twitter, and YouTube getting higher and Social Media has become a new marketing communication tool in a rapid and dynamic pace (Godey, 2016). Furthermore, it is highlighted that internet usage of digital citizens in Sri Lanka going up at a weighty rate from 20 percent to 25 percent in every year, and starting from mid – 2016, the number of Facebook users increased from 4 million to 5 million and today it is 6 million users (Sorav Jain, 2018).

While having the technology adoption barriers, applying Social Media Marketing by SMEs might produce not only a lot of openings but can change the shape and nature of their trade all over the world (Dahnil, Marzuki, Langgat, & Fabeli, 2014). Moreover, it is highlighted that Businesses can reach to their targeted customer more easily with the advance of social media. In Sri Lanka, most of the top management in companies have a traditional marketing mindset and pose resistance to adopting a social media marketing strategy (S. Sabraz Nawaz, 2015). Accordingly, the technology-driven era guide to answer the question what are the factors affecting the Social Media Marketing adoption by SMEs? Hence, the study mainly focused to identify factors affecting towards adoption of social media marketing by SMEs in Sri Lanka.

Literature Review

Small and Medium Enterprises

Small and Medium Enterprises (SMEs) haven’t been universally accepted definition and it is defined in a variety of ways using the benchmarks such as the total number of employees, annual turnover, and total investment. Not only the different countries but also different regions used different definitions within the country (Gamage, 2003). In the Sri Lanka context, Medium enterprises are defined as organizations that have less than 300 employees and earned 251 million to Rs.750 million turnovers per year. Furthermore, it is defined that Enterprises which is earned less than 250 million turnovers, and if the number of employees is between 11 to 50 it is called a small type organization (Ministry of industries and commerce, 2017). As well as SMEs has a significant contribution to many countries’ economies to achieve sustainable and inclusive growth (Dahnil, Marzuki, Langgat, & Fabeli, 2014). According to Wickramathilaka (Wickramathilaka, 2018), 75 percent of SMEs contribute 52 percent to the GDP and 45 percent contribute to employment.

Social Media

Social Networking Sites have become an interrelated phenomenon with the human blood because millions of social networking sites users tend to stay on their sites as a part of their daily lifecycle. And Social Networking Sites have turned into an important point of online communication rather than face-to-face communication (Kujath, 2011). As well as Friendster, Trible, LinkedIn, MySpace, Facebook, and Twitter are the most popular social networking sites which can be identified in the world. Among them, Facebook is the most famous social networking site with the largest database that can be available to anyone through a valid e-mail address (Fonseka & Sakalasooriya, 2015). ). Furthermore, it is stated that Social Media is a medium to people intermingle to create, share, and exchange information in virtual social networks through internet-based applications. As a marketing tool, Social Media has significant differences such in quality, reach, usability, and frequency among others rather than other forms of media such as Television, Newspapers, Film, etc. Social Media not only reaches to centralize to one place or region like traditional media but also a variety of people to reach, attract and retain (Kaplan. A. M. & Haenlein M, 2010).

Social Media Marketing

Social media marketing can be viewed as a new field and new business practices involved with marketing goods, services, information, and ideas via online social media (Dahnil, Marzuki, Langgat, & Fabeli, 2014). According to (Eagleman, 2013), Social Media offers a unique marketing communication method and social media is used as an extension of traditional marketing via online applications which allow to the production of information and collaboration among users (Kaplan. A. M. & Haenlein M, 2010). Besides, Social media influence mobile and web-based technologies to create a cooperative medium where users and groups member share, co-creating, discuss and modify known as user-generated content (Kietzmann, Hermkens, Mccarthy, & Silvestre, 2011). As well as through manipulating the user-produced content has enabled businesses to forecast the future purchasing behavior of their customers more accurately (Kim & Ko, 2011), heighten brand post popularity (Vries, Gensler, & Leeflang, 2012), attract new customers (Michaelidou, Siamagka, & Christodoulides, 2011), build consciousness, increase sales and build loyalty. Furthermore (Michaelidou, Siamagka, & Christodoulides, 2011) distinguished that using social media does not require an excessive financial investment relatively low cost.

Related Theoretical Model of Technology Adoption

Technology Acceptance Model (TAM)

Davis et al (1989) originally formulated Technology Acceptance Model (TAM) in an endeavor to understand why people agree or throw away information Systems (Davis. F.D, 1986). TAM is one of the most popular and widely used theoretical models for predicting and explaining whether users will accept the development and application of new IT or other systems. Furthermore, the previous meta-research highlighted that TAM is a flexible tool for measuring user acceptance as well as examining and evaluating strategies that promote user acceptance (Y.Lee, 2003). Moreover, Bernadette szanjna (Szanjna, 1996)confirmed that TAM is a valuable tool for predicting the intention to use an Information system. According to Fanny, 2015 TAM is most utilized and powerful framework for understanding and predicting on technology adoption when relating to other models. To determine the behavioral intention towards technology applications, which consequently affect the persons’ behavior TAM postulates that people’s attitudes towards various behaviors and subjective criteria (Davis. F.D, 1986). TAM indicates that technology adoption is based on two constructs: perceived ease of use and perceived usefulness (Davis. F.D, 1986).Figure 1: Technology Acceptance Model Source: (Davis. F.D, 1986)

Unified Theory of Acceptance and Use of Technology (UTAUT)

The Unified Theory of Acceptance and Use of Technology model (UTAUT) was formulated with linking eight dominants and frameworks which is included Dispersal of Innovations Theory, Decomposed Social Cognitive Theory, Motivational Model, Model of PC Utilization and Technology Acceptance Model (Venkatesh. V. & Morris. M, 2013). Social influence, facilitating condition, performance expectancy and effort expectancy are four main influential elements in UTAUT. According to Gunther & Krasnova, 2009 UTAUT and Technology Acceptance Model is used to define social media adoption in the business environment and it is discussed the adoption factor as personal intention or the usage behavior of an entrepreneur towards a system. Figure 2: UTAUT Model Source: (Venkatesh. V. & Morris. M, 2013)

Social Media Marketing Adoption Factors by SMEs

It was reviewed the literature by determining the preliminary databases that could be considered as possible publications outlets in the field of Electronic Marketing, Internet Marketing, and Social Media Marketing. As the theories and methodologies applied in the literature related to domains such as E-Marketing, Internet Marketing, E-Business, and E-commerce are mostly highlighted the following factors such as top management perception (Sarah Tsitsi Chikandiwa, 2013), ease of use (Davis. F.D, 1986), social influence (Venkatesh. V. & Morris. M, 2013), and facilitating conditions (Venkatesh. V. & Morris. M, 2013) as the factors impact on social media marketing adoption.

Top management perceptions

Porter and Miller formulated an integrated model of information system (IS) adoption of SMEs and determined that top management perception or characteristics are mainly impact to the SMEs adoption (Michael E. Porter, 2016). Furthermore, it was used top management support as a factor that significantly impacts the IS adoption of the business (GPremkumar, 1999). As well as (Ministry of industry and commerce, 2017)stated that promoting, facilitating and supporting entrepreneurship development, conducting awareness programs and building capacity at schools, universities, technical and vocational training institutions and focusing on Youth and Women, and strengthening the capacity of institutions providing a training and skills development on entrepreneurship and SME development for enhancing the businesses managers perception towards gaining competitive advantages within the modern world. Accordingly, the first hypothesis is formulated as,

H1: There is a significant impact of top management perceptions towards social media marketing adoption by SMEs.

Ease of use

In 1986 Technology Acceptance Model (Davis. F.D, 1986) highlighted that Ease of use affected towards on using or adoption of information systems. Moreover, it was emphasized that ease of use is the vital thing that is why people use Social media marketing for their marketing activities (Gbadeyan. R. A, 2010). Accordingly, the second hypothesis is formulated as,

H2: There is a significant impact of ease of use on social media marketing adoption by SMEs.

Social influence

(Venkatesh. V. & Morris. M, 2013) As stated in their study social influence as a condition that needs to be considered at the technology adoption framework. Moreover, it is highlighted that when using social media, online network service information sharing attitude and Internet end user’ behavior is highly affected by Social influence and it acts as the main role that influencing adoption of social media as well as social media marketing (Kim & Ko, 2011).

H3: There is a significant impact of social influence on social media marketing adoption by SMEs.

Facilitating condition

(Venkatesh. V. & Morris. M, 2013) Formulated that UTAUT framework with facilitation condition which is the impact to users’ behavioral intention of using new technology.

H4: There is a significant impact of facilitating conditions for social media marketing adoption by SMEs.

Methodology

In order to conduct a study for social media marketing adoption by SMEs, the primary data collection method was applied to collect data relating to “top managers;’ requirements, perspectives about the social media marketing adoption by SMEs”. A structured questionnaire with 27 questions and consisted with close-ended and five Likert scale questions were filled by 150 respondents from Small and Medium Enterprises (SMEs) in Sri Lanka. Scarified method was used to select the sample from 81,531 (Statistics, 2015) population. The five Likert scale questions it was measured the adoption of Social Media Marketing. In behalf of that, an examination of research articles, books, and websites regarding the factors affecting the adoption of social media marketing was used as a method of secondary data collection.

Finding and Discussion

The sample of the study was made up with 73 firms from the manufacturing sector, 55 firms from the service sector and the remaining from the retailer sector. The contribution from the male portion is 62 percent and 38 percent from the female part. Furthermore, the demographic profile highlighted that most of the respondents are owned to age 20 to 30 category (56.7%) and 51 to 60 category is denoted least participation (0.7%) as the Small and medium entrepreneur.

The reliability of the construct was confirmed that the items are most suitable to test the social media marketing adoption by SMEs by exceeding all Cranach’s alpha values by more than 0.7.

The correlational results of table 1 clearly show that social media marketing adoption factors such as top management perceptions, social influence, facilitating conditions, and ease of use have significantly positively correlated with social media marketing adoption by SMEs at the 0.01 level.

According to the multiple regression results presented in table 2, all the predictors of the model (Top management’s perception, Social Influence, Facilitating conditions, and Ease of use) explained 40.4 percent variation in social media adoption behavior. F value, 26.254, with p

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