Social Media Adoption and Financial Sustainability: Learned Lessons from Developing Countries

Abstract

Social Media (SM) is considered one of the most discussed topics in today’s business environment, mostly because of the recent developments and improvements in computer and ICT (Information and Communications Technology) technologies. However, very little is known about Social Media’s (SM) role in creating Small and Medium-sized Enterprises’ (SMEs’) financial sustainability. Drawing upon the Technology Organisational and Environmental (TOE) framework, the authors constructed a comprehensive model that examined the role of different factors in the adoption of SM by SMEs in developing countries (using Pakistan as an example). Using a questionnaire survey of 383 owners/managers of SMEs in Pakistan, the research findings determined the different factors (i.e., organisational, technological, and environmental), which can impact the adoption of SM by SMEs. In line with previous research studies, the results of structural equation modelling show that technological factors such as perceived benefits of SM, compatibility of SM, cost, and trust have a substantial effect on SMEs’ SM adoption. Similarly, both organisational factors: top management support and technological competence, are strong predictors of SM adoption in SMEs. Finally, environmental factors (i.e., competitor pressure, customer pressure, and information intensity) positively impacted SM adoption by SMEs. The effect of SM adoption on SMEs’ financial sustainability was also tested and found to be positive and significant. Several theoretical and practical implications for owners/managers and other stakeholders regarding SM’s successful implementation by SMEs are highlighted within the paper.