facebook effect on smes in egypt

Social Media Effect on SMEs in Egypt

Prepared by: Walid SaafanAugust, 2016

Research model SMEs’ survey Research limitations Conclusion

Social Media effect on SMEs 2

Investigate the factors/drivers that influence Facebook usage among small and medium enterprises (SMEs) in Egypt. Examines the impact of Facebook usage on financial and non-financial performance of SMEs.


Examines the influence of compatibility, cost effectiveness, interactivity and trust on Facebook usage and its subsequent impact on organizations performance


Compatibility

Cost effectiveness

Trust

Interactivity

Facebook use

Non-financial performance

Financial performance

H1

H2

H3

H4

H5

H6


H1. Compatibility positively influences Facebook usageH2. Cost effectiveness of Facebook positively influences social

media usageH3. Trust on Facebook positively influences social media usageH4. Interactivity of Facebook positively influences Facebook usageH5. Facebook usage will have positive impact on non-financial

performanceH6. Facebook usage will have positive impact on financial

performance


SMEs’ survey


https://goo.gl/forms/Mxd3aQY7ul0lRP5z2

Strongly Disagree

Strongly Agree

1 2 3 4 5

Usage1 Advertise and promote product and services 1 0 6 2 5Usage2 Create brand visibility 0 1 5 3 5Usage3 Conduct marketing research 0 5 4 3 2Usage4 Get referrals (word of mouth via likes, shares and followers in Facebook 0 2 5 2 5Usage5 Develop customer relations 0 1 1 6 6Usage6 Communicate with customers 0 1 4 4 5Usage7 Conduct customer service activities 1 1 4 3 5Usage8 Receive customer feedback on existing product/services 0 1 5 5 3Usage9 Receive customer feedback on new/future product/services 1 0 6 5 2Usage10 Reach new customers 2 0 1 5 6Usage11 Search for general information 0 2 6 3 3Usage12 Search for competitor information 4 0 3 4 3Usage13 Search for customer information 1 3 5 2 3

Trust1 Adequate measures to safeguard information posted 1 2 9 1 1Trust2 A robust and safe environment to transact information 1 6 4 2 1Trust3 Adequate legal and technological measures to overcome usage problems 1 6 1 6 0Trust4 Reliable information 1 6 4 3 0Trust5 Dependable knowledge 0 5 8 1 0Int1 Features for interactive communication with customers 0 3 4 4 3Int2 Appropriate amount of interactive features (e.g. graphics, pop-up windows, animation,music, voices) 3 1 5 3 2Int3 Features for vivid responses 1 3 6 1 3

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My organization use Facebook to […]

Facebook provides […]


Strongly Disagree

Strongly Agree

1 2 3 4 5

Imp1_CR Reduced the cost of communication with customers 0 2 3 4 5Imp2_CR Reduced the cost of advertising and promotion 0 2 3 7 2Imp3_CR Reduced the cost of customer service and support 2 2 4 3 3Imp4_CS Enhanced customer service 1 4 3 3 3Imp5_CS Increased customer loyalty and retention 2 0 1 7 4Imp6_CS Improved customer relationship 1 0 3 4 6Imp7_BnC Improved brand visibility 0 0 5 4 5Imp8_BnC Improved company image 0 1 2 4 7Imp9_BnC Improved competitive position 0 1 4 5 4Imp10_Info Enabled easier access to customer information 0 3 3 6 2Imp11_Info Enabled easier access to competitor information 0 3 4 6 1Imp12_Info Enabled easier access to market information 0 3 6 4 1Imp13_Info Enabled faster delivery of information to customers 0 1 6 4 3

Comp1 Facebook usage is compatible with the company’s IT infrastructure 1 2 5 4 2Comp2 Facebook usage is consistent with the company’s beliefs and values 1 0 5 7 1Comp3 Facebook usage is consistent with the company’s business strategy 1 1 3 8 1CE1 Facebook is more cost effective than other types of marketing or customer servicetechnologies 1 3 2 1 7CE2 Organization can avoid unnecessary cost and time by using Facebook 1 1 6 4 2CE3 Facebook saves costs (time and effort in marketing, branding and customer service) 1 0 6 4 3

5-10% 11-15% 16-20% >20%Perf1 Increase in sales transactions 5 4 3 2Perf2 Increase in sales volume 9 3 2 0Perf3 Increase in sales inquiries 8 1 1 4Perf4 Increase in number of customers 6 1 2 5

Cost

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Indicate the organizations’ performance after using Facebook

Facebook usage in the organization had […]

Compatibility and cost effectiveness of Facebook […]


Indicator reliability R2

Factor loadings (>0.7)


Compatibility CostEffectiveness Trust Interactivity FBUse NonFinPerf FinPerfComp3 Facebook usage is consistent with the company’s business strategy 0.966 Comp2 Facebook usage is consistent with the company’s beliefs and values 0.951 Comp1 Facebook usage is compatible with the company’s IT infrastructure 0.725 CE3 Facebook saves costs (time and effort in marketing, branding and customer service) 0.921 CE2 Organization can avoid unnecessary cost and time by using Facebook 0.741 CE1 Facebook is more cost effective than other types of marketing or customer servicetechnologies 0.495 Trust3 Adequate legal and technological measures to overcome usage problems 0.915 Trust2 A robust and safe environment to transact information 0.880 Trust5 Dependable knowledge 0.832 Trust4 Reliable information 0.746 Trust1 Adequate measures to safeguard information posted 0.712 Int3 Fearu res for vivid responses 9.919 Int2 Appropriate amount of interactive features (e.g. graphics, pop-up windows; animation,music, voices) 0.965 Int1 Features for interactive communication with customers 0.769 Usage5 Develop customer relations 0.910 Usage6 Communicate with customers 0.776 Usage8 Receive customer feedback on existing product/services 0.707 Usage9 Receive customer feedback on new/future product/services 0.704 Usage10 Reach new customers 0.693 Usage4 Get referrals (word of mouth via likes, shares and followers in Facebook 0.692 Usage11 Search for general information 0.683 Usage7 Conduct customer service activities 0.413 Usage3 Conduct marketing research 0.356 Usage1 Advertise and promote product and services 0.113 Usage12 Search for competitor information 0.010 Usage13 Search for customer information (0.011) Usage2 Create brand visibility (0.140) Imp4_CS Enhanced customer service 0.829 Imp13_Info Enabled faster delivery of information to customers 0.800 Imp6_CS Improved customer relationship 0.788 Imp10_Info Enabled easier access to customer information 0.702 Imp9_BnC Improved competitive position 0.667 Imp3_CR Reduced the cost of customer service and support 0.636 Imp2_CR Reduced the cost of advertising and promotion 0.578 Imp12_Info Enabled easier access to market information 0.578 Imp5_CS Increased customer loyalty and retention 0.574 Imp1_CR Reduced the cost of communication with customers 0.538 Imp11_Info Enabled easier access to competitor information 0.475 Imp8_BnC Improved company image 0.448 Imp7_BnC Improved brand visibility 0.300 Perf3 Increase in sales inquiries 0.912 Perf2 Increase in sales volume 0.869 Perf4 Increase in number of customers 0.708 Perf1 Increase in sales transactions 0.339 Fi

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Outer model measurement loadings

CE1 not reliable indicators – Can be removed from the model

Compatibility CostEffectiveness TrustComp3 Facebook usage is consistent with the company’s business strategy 0.966 Comp2 Facebook usage is consistent with the company’s beliefs and values 0.951 Comp1 Facebook usage is compatible with the company’s IT infrastructure 0.725 CE3 Facebook saves costs (time and effort in marketing, branding and customer service) 0.921 CE2 Organization can avoid unnecessary cost and time by using Facebook 0.741 CE1 Facebook is more cost effective than other types of marketing or customer servicetechnologies 0.495 Trust3 Adequate legal and technological measures to overcome usage problems 0.915 Trust2 A robust and safe environment to transact information 0.880 Trust5 Dependable knowledge 0.832 Trust4 Reliable information 0.746 Trust1 Adequate measures to safeguard information posted 0.712


Internal consistency

internal consistency α≥0.9 Excellent0.9>α≥0.8 good0.7>α≥0.8 Acceptable

> 0.7


++++

++++++++

+

Collinearity assessment


Second order formative constructs

Interactivity significant impact on Facebook useFBUse has significant impact on FinPerf and NonFinPerf (higher)


Bootstrapping t-test


Testing the hypothesisOriginal

Sample (0) Sample

Mean (M)Standard Deviation (STDEV)

T Statistics (IO/STDEVI)

P Values

H1. Compatibility positively influences Facebook usage -0.459 -0.432 0.492 0.932 0.352H2. Cost effectiveness of Facebook positively influences social media usage 0.105 0.131 0.526 0.2 0.842H3. Trust on Facebook positively influences social media usage 0.265 0.269 0.327 0.809 0.419H4. Interactivity of Facebook positively influences Facebook usage 0.676 0.715 0.259 2.613 0.009H5. Facebook usage will have positive impact on non-financial performance 0.825 0.825 0.009 9.133 0H6. Facebook usage will have positive impact on financial performance 0.568 0.559 0.162 3.517 0

We accept hypothesis H4, H5, and H6 at 95% confidence level


Compatibility, cost effectiveness and trust are

not significant to Facebook usage

Interactivity positively impact Facebook usage

Facebook usage had a positive impact of

Egyptian SMEs in terms of financial and non-

financial performance



Research findings can’t be generalized due to small sample of SMEs

Results inline with LitRev.o SMEs not utilizing the use of the social media

in their marketing activitieso Compatibility has a negative impact on

Facebook usage o SMEs don’t see the Facebook as a cost

effective as other types of marketing o Trust of the channels and reliability of

information provided are not significant to Facebook usage


Recommendations

Improve compatibility and IT system [ interconnectivity]

Pay more attention to the cost effectiveness of Facebook usage

[financial performance]Put more emphasize on the information

and systems’ security [ trust, financial performance]


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facebook effect on smes in egypt

Small Business & Entrepreneurship