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Facebook effect on SMEs in Egypt

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A quantitative research that investigate the factors/drivers that influence Facebook usage among small and medium enterprises (SMEs), and also examines the impact of Facebook usage on financial and non-financial performance of SMEs in Egypt.

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Facebook effect on SMEs in Egypt

  1. 1. Social Media Effect on SMEs in Egypt Prepared by: Walid Saafan August, 2016
  2. 2.  Research model  SMEs’ survey  Research limitations  Conclusion Social Media effect on SMEs 2
  3. 3. 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. Social Media effect on SMEs 3
  4. 4. Examines the influence of compatibility, cost effectiveness, interactivity and trust on Facebook usage and its subsequent impact on organizations performance Social Media effect on SMEs 4
  5. 5. Compatibility Cost effectiveness Trust Interactivity Facebook use Non-financial performance Financial performance H1 H2 H3 H4 H5 H6 Social Media effect on SMEs 5
  6. 6. H1. Compatibility positively influences Facebook usage H2. Cost effectiveness of Facebook positively influences social media usage H3. Trust on Facebook positively influences social media usage H4. Interactivity of Facebook positively influences Facebook usage H5. Facebook usage will have positive impact on non-financial performance H6. Facebook usage will have positive impact on financial performance Social Media effect on SMEs 6
  7. 7. SMEs’ survey
  8. 8. Social Media effect on SMEs 8 https://goo.gl/forms/Mxd3aQY7ul0lRP5z2
  9. 9. Social Media effect on SMEs 9
  10. 10. Social Media effect on SMEs 10
  11. 11. Social Media effect on SMEs 11
  12. 12. Social Media effect on SMEs 12
  13. 13. Strongly Disagree Strongly Agree 1 2 3 4 5 Usage1 Advertise and promote product and services 1 0 6 2 5 Usage2 Create brand visibility 0 1 5 3 5 Usage3 Conduct marketing research 0 5 4 3 2 Usage4 Get referrals (word of mouth via likes, shares and followers in Facebook 0 2 5 2 5 Usage5 Develop customer relations 0 1 1 6 6 Usage6 Communicate with customers 0 1 4 4 5 Usage7 Conduct customer service activities 1 1 4 3 5 Usage8 Receive customer feedback on existing product/services 0 1 5 5 3 Usage9 Receive customer feedback on new/future product/services 1 0 6 5 2 Usage10 Reach new customers 2 0 1 5 6 Usage11 Search for general information 0 2 6 3 3 Usage12 Search for competitor information 4 0 3 4 3 Usage13 Search for customer information 1 3 5 2 3 Trust1 Adequate measures to safeguard information posted 1 2 9 1 1 Trust2 A robust and safe environment to transact information 1 6 4 2 1 Trust3 Adequate legal and technological measures to overcome usage problems 1 6 1 6 0 Trust4 Reliable information 1 6 4 3 0 Trust5 Dependable knowledge 0 5 8 1 0 Int1 Features for interactive communication with customers 0 3 4 4 3 Int2 Appropriate amount of interactive features (e.g. graphics, pop-up windows, animation, music, voices) 3 1 5 3 2 Int3 Features for vivid responses 1 3 6 1 3 UsageTrustInteractiv My organization use Facebook to […] Facebook provides […] Social Media effect on SMEs 13
  14. 14. Strongly Disagree Strongly Agree 1 2 3 4 5 Imp1_CR Reduced the cost of communication with customers 0 2 3 4 5 Imp2_CR Reduced the cost of advertising and promotion 0 2 3 7 2 Imp3_CR Reduced the cost of customer service and support 2 2 4 3 3 Imp4_CS Enhanced customer service 1 4 3 3 3 Imp5_CS Increased customer loyalty and retention 2 0 1 7 4 Imp6_CS Improved customer relationship 1 0 3 4 6 Imp7_BnC Improved brand visibility 0 0 5 4 5 Imp8_BnC Improved company image 0 1 2 4 7 Imp9_BnC Improved competitive position 0 1 4 5 4 Imp10_Info Enabled easier access to customer information 0 3 3 6 2 Imp11_Info Enabled easier access to competitor information 0 3 4 6 1 Imp12_Info Enabled easier access to market information 0 3 6 4 1 Imp13_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 2 Comp2 Facebook usage is consistent with the company’s beliefs and values 1 0 5 7 1 Comp3 Facebook usage is consistent with the company’s business strategy 1 1 3 8 1 CE1 Facebook is more cost effective than other types of marketing or customer service technologies 1 3 2 1 7 CE2 Organization can avoid unnecessary cost and time by using Facebook 1 1 6 4 2 CE3 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 2 Perf2 Increase in sales volume 9 3 2 0 Perf3 Increase in sales inquiries 8 1 1 4 Perf4 Increase in number of customers 6 1 2 5 CosteffecFianperfNon-FinperfCompatib Indicate the organizations’ performance after using Facebook Facebook usage in the organization had […] Compatibility and cost effectiveness of Facebook […] Social Media effect on SMEs 14
  15. 15. Social Media effect on SMEs 15
  16. 16. Indicator reliability R2 Factor loadings (>0.7) Social Media effect on SMEs 16
  17. 17. Compatibility CostEffectiveness Trust Interactivity FBUse NonFinPerf FinPerf Comp3 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 service technologies 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 FianperfCompatibCosteffecTrustInteractivUsageNon-Finperf Social Media effect on SMEs 17
  18. 18. Outer model measurement loadings CE1 not reliable indicators – Can be removed from the model Compatibility CostEffectiveness Trust Comp3 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 service technologies 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 Social Media effect on SMEs 18
  19. 19. Internal consistency internal consistency α≥0.9 Excellent 0.9>α≥0.8 good 0.7>α≥0.8 Acceptable > 0.7 Social Media effect on SMEs 19 ++ ++ ++ ++ ++ ++ +
  20. 20. Collinearity assessment Social Media effect on SMEs 20
  21. 21. Second order formative constructs Interactivity significant impact on Facebook use FBUse has significant impact on FinPerf and NonFinPerf (higher) Social Media effect on SMEs 21
  22. 22. Bootstrapping t-test Social Media effect on SMEs 22
  23. 23. Testing the hypothesis Original Sample(0) Sample Mean(M) Standard Deviation (STDEV) TStatistics (IO/STDEVI) PValues H1.CompatibilitypositivelyinfluencesFacebookusage -0.459 -0.432 0.492 0.932 0.352 H2.CosteffectivenessofFacebookpositivelyinfluencessocialmediausage 0.105 0.131 0.526 0.2 0.842 H3.TrustonFacebookpositivelyinfluencessocialmediausage 0.265 0.269 0.327 0.809 0.419 H4.InteractivityofFacebookpositivelyinfluencesFacebookusage 0.676 0.715 0.259 2.613 0.009 H5.Facebookusagewillhavepositiveimpactonnon-financialperformance 0.825 0.825 0.009 9.133 0 H6.Facebookusagewillhavepositiveimpactonfinancialperformance 0.568 0.559 0.162 3.517 0 We accept hypothesis H4, H5, and H6 at 95% confidence level Social Media effect on SMEs 23
  24. 24. Social Media effect on SMEs 24
  25. 25. 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 Social Media effect on SMEs 25
  26. 26. Social Media effect on SMEs 26  Research findings can’t be generalized due to small sample of SMEs
  27. 27. Social Media effect on SMEs 27
  28. 28. Results inline with LitRev. o SMEs not utilizing the use of the social media in their marketing activities o 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 Social Media effect on SMEs 28
  29. 29. 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] Social Media effect on SMEs 29
  30. 30. Walid.Saafan@gmail.com

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