The Impact of Social Media and Innovation on SME Business Performance: The Mediating Role of Competitive Advantage in West Java, Indonesia

Sunarni; Ernani Hadiyati; Endang Suswati; Rosidi

doi:10.70716/ecoma.v4i3.658

Authors

Sunarni Doctoral Program in Management, Gajayana University, Indonesia
Ernani Hadiyati Doctoral Program in Management, Gajayana University, Indonesia
Endang Suswati Doctoral Program in Management, Gajayana University, Indonesia
Rosidi Study Program of Management, Brawijaya University, Indonesia

DOI:

https://doi.org/10.70716/ecoma.v4i3.658

Keywords:

Social Media, Innovation, Competitive Advantage, Business Performance, SMEs

Abstract

Small and Medium Enterprises (SMEs) play a critical role in Indonesia's economic development; however, increasing market competition and rapid digital transformation require SMEs to enhance their competitiveness and business performance continuously. This study examines the effects of social media and innovation on SME business performance, with competitive advantage serving as a mediating variable. A quantitative explanatory research design was employed using survey data collected from 400 SME owners in West Java Province, Indonesia, selected through purposive sampling. The data were analyzed using descriptive statistics and Partial Least Squares Structural Equation Modeling (PLS-SEM) to examine both direct and indirect relationships among the variables. The findings reveal that social media and innovation have positive and significant effects on competitive advantage. Innovation exhibits a stronger influence on competitive advantage than social media, indicating its strategic role in creating differentiation and sustaining competitiveness. Furthermore, social media, innovation, and competitive advantage positively and significantly influence business performance. The coefficient of determination indicates that social media and innovation explain 56.3% of the variance in competitive advantage, while social media, innovation, and competitive advantage jointly explain 63.4% of the variance in business performance. These findings support the Resource-Based View (RBV), suggesting that digital capabilities and innovation-oriented resources constitute important sources of sustainable competitive advantage and superior organizational performance. The study contributes to the literature on SME development and digital transformation by demonstrating the strategic importance of integrating social media utilization and innovation to enhance business performance.

Downloads

Download data is not yet available.

References

Ainin, S., Parveen, F., Moghavvemi, S., Jaafar, N. I., & Shuib, N. L. M. (2015). Factors influencing the use of social media by SMEs and its performance outcomes. Industrial Management & Data Systems, 115(3), 570–588. https://doi.org/10.1108/IMDS-07-2014-0205

Al-Adwan, A. S., & Kokash, H. (2019). The driving forces of Facebook social commerce. Journal of Theoretical and Applied Electronic Commerce Research, 14(2), 15–32. https://doi.org/10.4067/S0718-18762019000200103

Bariza, F., & Dellyana, D. (2023). The Impact of Innovation Drivers and Innovation on Business Performance: Coffee Shops in Bekasi. International Journal of Social Science Research. https://ijssrr.com/journal/article/view/1319

Blut, M., Chowdhry, N., Mittal, V., & Brock, C. (2015). E-service quality: A meta-analytic review. Journal of Retailing, 91(4), 679–700. https://doi.org/10.1016/j.jretai.2015.05.004

Bustinza, O. F., Gomes, E., Vendrell-Herrero, F., & Tarba, S. Y. (2019). Product-service innovation and performance: The role of collaborative partnerships and R&D intensity. R&D Management, 49(1), 33–45. https://doi.org/10.1111/radm.12269

Cheung, C. M. K., & Lee, M. K. O. (2012). What drives consumers to spread electronic word of mouth in online consumer-opinion platforms. Decision Support Systems, 53(1), 218–225. https://doi.org/10.1016/j.dss.2012.01.015

Cheung, C. M. K., & Thadani, D. R. (2012). The impact of electronic word-of-mouth communication: A literature analysis and integrative model. Decision Support Systems, 54(1), 461–470. https://doi.org/10.1016/j.dss.2012.06.008

Clauss, T., Abebe, M., Tangpong, C., & (2019). Strategic agility, business model innovation, and firm performance: an empirical investigation. IEEE Transactions on https://ieeexplore.ieee.org/abstract/document/8726152/

Dwivedi, Y. K., Ismagilova, E., Hughes, D. L., Carlson, J., Filieri, R., Jacobson, J., Jain, V., Karjaluoto, H., Kefi, H., Krishen, A. S., Kumar, V., Rahman, M. M., Raman, R., Rauschnabel, P. A., Rowley, J., Salo, J., Tran, G. A., & Wang, Y. (2021). Setting the future of digital and social media marketing research: Perspectives and research propositions. International Journal of Information Management, 59, 102168. https://doi.org/10.1016/j.ijinfomgt.2020.102168

Ekon. (2023). Dorong UMKM Naik Kelas dan Go Export, Pemerintah Siapkan Ekosistem Pembiayaan yang Terintegrasi. Ekonomi. https://www.ekon.go.id/publikasi/detail/5318/

Erkan, I., & Evans, C. (2016). The influence of eWOM in social media on consumers’ purchase intentions. Journal of Research in Interactive Marketing, 10(1), 47–67. https://doi.org/10.1108/JRIM-05-2015-0007

Filieri, R. (2015). What makes online reviews helpful? A diagnosticity-adoption framework to explain informational and normative influences in e-WOM. Journal of Business Research, 68(6), 1261–1270. https://doi.org/10.1016/j.jbusres.2014.11.006

Fitriani, N., Setiawan, D., Aryani, Y. A., & Arifin, T. (2023). Does social media affect performance in e-commerce business? The role of customer management. Journal of Open Innovation: Technology, Market, and Complexity, 9(4), 100171.

Hajli, N. (2014). A study of the impact of social media on consumers. International Journal of Market Research, 56(3), 387–404. https://doi.org/10.2501/IJMR-2014-025

Harel, R. (2021). The impact of COVID-19 on small businesses’ performance and innovation. Global Business Review. https://doi.org/10.1177/09721509211039145

Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of social media. Business Horizons, 53(1), 59–68. https://doi.org/10.1016/j.bushor.2009.09.003

Kim, A. J., & Ko, E. (2012). Do social media marketing activities enhance customer equity? An empirical study of luxury fashion brand. Journal of Business Research, 65(10), 1480–1486. https://doi.org/10.1016/j.jbusres.2011.10.014

Legowo, M. B., Indiarto, B., & Prayitno, D. (2022). A Conceptualization of The Sme Digitalization Model To Support The" SME-Go Digital" Program in Indonesia. Journal of Business and Entrepreneurship (IJBE).

Lou, C., & Yuan, S. (2019). Influencer marketing: How message value and credibility affect consumer trust of branded content on social media. Journal of Interactive Advertising, 19(1), 58–73. https://doi.org/10.1080/15252019.2018.1533501

Parveen, F., Jaafar, N. I., & Ainin, S. (2015). Social media usage and organizational performance: Reflections of Malaysian social media managers. Telematics and Informatics, 32(1), 67–78. https://doi.org/10.1016/j.tele.2014.03.001

Rita, P., Oliveira, T., & Farisa, A. (2019). The impact of e-service quality and customer satisfaction on customer behavior in online shopping. Heliyon, 5(10), e02690. https://doi.org/10.1016/j.heliyon.2019.e02690

Sokolova, K., & Kefi, H. (2020). Instagram and YouTube bloggers promote it, why should I buy? How credibility and parasocial interaction influence purchase intentions. Journal of Retailing and Consumer Services, 53, 101742. https://doi.org/10.1016/j.jretconser.2019.01.011

Srimulyani, V. A., Hermanto, Y. B., Rustiyaningsih, S., & (2023). Internal factors of entrepreneurial and business performance of small and medium enterprises (SMEs) in East Java, Indonesia. Heliyon. https://www.cell.com/heliyon/fulltext/S2405-8440(23)08845-X

Venciute, D., Mackeviciene, I., Kuslys, M., & Correia, R. F. (2023). The role of influencer–follower congruence in the relationship between influencer marketing and purchase behavior. Journal of Retailing and Consumer Services, 75, 103506. https://doi.org/10.1016/j.jretconser.2023.103506

Zeithaml, V. A., Parasuraman, A., & Malhotra, A. (2002). Service quality delivery through websites: A critical review of extant knowledge. Journal of the Academy of Marketing Science, 30(4), 362–375. https://doi.org/10.1177/009207002236911

Zhang, H., Gupta, S., Sun, W., & Zou, Y. (2020). How social-media-enabled co-creation between customers and the firm drives business value? The perspective of organizational learning and social Capital. Information & Management. https://www.sciencedirect.com/science/article/pii/S0378720618305901