Social media: An essential capability for business effectiveness?

Abstract

The issue of social media is rather new and unexplored in comprehending how this capability can improve effectiveness in emerging economies, in particular, that of the companies classified as micro, small and medium-sized (MSMEs). It is argued that some company and manager characteristics may affect the role of social media in business performance, therefore this research attempts to answer the following questions: Does the use of social media contribute to improving performance of MSMEs? How does the relationship behave according to the characteristics of the company and those of the manager? For this purpose, the resource-based view of the firm is used as a framework of the analysis, which was carried out with data collected before the COVID pandemic. To validate the proposed hypotheses, we used Structural Equation Model (SEM) with a sample of 229 Mexican enterprises. The main contribution of this study is twofold: providing empirical evidence on the existence of influence from social media capability to the business performance and effectiveness of MSMEs in a Latin American emergent economy, even before the imposition of radical constraints by the pandemic; and the key theoretical implication is a better understanding of the nature of this influence.