Impacts of social media on business performance of vietnamese SMEs

While there isstill some mixed evidence for particular issues within our proposed model, we haveconfirmed that social media strongly improves business performance for small and mediument

Impacts of Social Media on Business Performance of

Vietnamese SMEs – Master Thesis –

to be awarded Master of Science in Economics

submitted by

Bui, Thi Phuong Hong

15th October 2018

Email: hong bu i @un i - j e n a de

Address: WG 604, Karl-Marx-Allee 1, 07747 Jena

ABSTRACT

Social media is widely accepted as one of the most effective marketing channels forenterprises Although it brings many benefits to companies, there are still some potentialrisks Furthermore, there is no comprehensive study on the impact of social media onbusiness performance, especially for developing countries such as Vietnam Based on relatedtheories and studies, we propose an ordinal three-step model explaining the way social mediainfluences business performance Accordingly, in the first step, enterprises use social media

to carry out five activities, including business branding, call for purchases, publicrelations/customer service, re- posting of customer reviews, and product introduction In thesecond step, these activities affect three crucial customer perceptions, namely customerengagement, brand awareness, and information diffusion In the last step, these three issuesdirectly affect business performance, especially sales and customer growth We used directquestions, multivariate regression and structural equation modelling (SEM) While there isstill some mixed evidence for particular issues within our proposed model, we haveconfirmed that social media strongly improves business performance for small and mediumenterprises in Vietnam by increasing customer engagement, enhancing brand awareness andpromoting information dissemination We also find that the format of social media messageshas a significant impact on customer’s perception and the effectiveness of communication.Last but not least, we discover that the respondent’s perception varies according to thetype of company they have worked for and personal characteristics

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awareness, information diffusion

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION 4

1.2 Significance of the study 8

1.3 Research questions and objectives of the study 9

CHAPTER 2: LITERATURE REVIEW 10

2.1 Overview of social media 10

2.1.1 Definition of social media 10

2.1.2 The role of social media 10

2.2 Business performance and its measurement 11

2.2.1 Definition of business performance 11

2.2.2 Measurement of business performance 11

2.3 Theoretical perspective on the relationship between social media and business performance 12

2.3.1 General theory of marketing 12

2.3.2 Marketing mix theory 14

2.3.3 Theory of buyer behaviour 14

2.3.4 Theory of decision-making 16

2.4 Empirical evidence on the impact of social media on business performance 19

2.5 Conceptual framework and hypotheses on the relationship between social media and business performance 22

2.5.1 The proposed research model 22

2.5.2 Hypotheses 23

CHAPTER 3 RESEARCH METHODOLOGY 25

3.1 Research design 25

3.2 Time and place of study 25

3.3 Population, sample size and sampling technique 25

3.4 Research instrument 25

3.5 Data gathering procedure 26

3.6 Methods of data analysis 27

CHAPTER 4: FINDINGS AND DISCUSSIONS 29

4.1 Description of respondents 29

4.1.1 Age 29

4.1.2 Gender 29

4.1.3 Marital status 30

4.1.4 Educational attainment 31

4.1.5 Work department 31

4.1.6 Employment position 32

4.1.7 Years of experience 33

4.1.8 Type of the company 33

4.1.9 Type of business activities 34

4.2 Current status of social media use of SMEs in Vietnam 35

4.2.1 Social media participation 35

4.2.2 An assessment of using social media by SMEs in Vietnam 41

4.3 Impacts of social media on business performance of SMEs in Vietnam 47

4.3.1 Quality analysis of the impact of social media on business performance 48

4.3.2 Empirical analysis of the impact of social media on business performance 62

4.3.2.1 Evidence from multivariate regression 62

4.3.2.2 Evidence from SEM 70

Chapter 5: CONCLUSION, IMPLICATION AND FUTHER STUDY 74

5.1 Conclusions 74

5.2 Implications 76

5.2.1 Policy implications 76

5.2.2 Improve participation and performance of social media 78

5.2.3 Enhancing customer engagement 80

5.2.4 Increasing business awareness 82

5.2.5 Improve information diffusion 83

5.3 Limitations and further studies 84

REFERENCES 86

LIST OF TABLES

Table 1: The Likert five-point scale 26

Table 2: The business lines of the surveyed enterprises 34

Table 3: Types of advertising and media 35

Table 4: Social networking sites 36

Table 5: Information posted on the social networking sites 38

Table 6: Purposes in using social networking sites 39

Table 7: The use of social media 42

Table 8: Social media and customer engagement 48

Table 9: Social media and brand awareness 52

Table 10: Social media and information diffusion 56

Table 11: Customer engagement, brand awareness, information diffusion and growth of sales and customers 59

Table 12: Social media and business performance 60

Table 13: Message format and social media performance 62

Table 14: The model of perceptive growth of sale (Q53) 64

Table 15: The model of perceptive growth of sale (Q53) (continued) 65

Table 16: The model of actual growth of sale (Q12) 67

Table 17: The model of perceptive growth of customer (Q54) 68

Table 18: The model of perceptive growth of customer (Q54) (continued) 69

Table 19: The model of actual growth of customer (Q13) 70

Table 20: Estimated results of structural equation modeling (SEM) 72

LIST OF FIGURES

Figure 1: The model of buyer behaviour .15

Figure 2: The buying decision process 17

Figure 3: The proposed research model 22

Figure 4: Structural equation modelling for impacts of social media on business performance .28

Figure 5: The age of the respondents 29

Figure 6: The gender of the respondents 30

Figure 7: The marital status of the respondents 30

Figure 8: The educational attainment of the respondents 31

Figure 9: The work department of the respondents 32

Figure 10: Employment positions of the respondents 32

Figure 11: The years of working experience of the respondents 33

Figure 12: The type of surveyed enterprise 34

Figure 14: Experiences in using social networking sites 36

Figure 15: Frequency of using social media 37

Figure 16: The growth of frequency in using social media 37

Figure 17: Numbers of followers on the social networking sites 38

Figure 18: Integration of direct sale system 40

Figure 19: Revenue from direct sales systems of online social networking sites 40

LIST OF ABBREVIATION

SEM Structural equation modeling

NAND Neither Agree or Disagree

MLMV Maximum likelihood with missing values

CHAPTER 1: INTRODUCTION

1.1 Background of the study

Social media is the communication channel in which users have the ability to shareinformation and update/respond to other peoples’ information All these media platformsconverge in such a way that they are together considered social media With this view, notonly social networks like Facebook and Twitter, but also forums, YouTube, Instagram, Zalo,and even news sites are all considered to be part of social media

Social networking is a tool that enterprises use to inform their customers about theirproduct offerings Hence, social media can enable businesses to become more prominent inthe eyes of customers Equally, using social media can help firms connect with othercompanies within their sector, research and study each other, analyse competitors anddevelop more effective media strategies Furthermore, social media is a way ofcommunicating between customers and companies and is a tool for firms to answer customerqueries and to satisfy them

Social media includes tools that combine technology and language skills to promote abrand image of a business on the Internet at a low cost with superior performance Socialmedia gives marketers a voice and new ways of communicating with customers andprospects Branding is a means for companies to deliver messages to customers throughcontent that is distributed in the most effective way Marketers view social media as a vitalelement of their business and take into account all the activities that take place on socialmedia networks

In Vietnam, with the development of Yahoo 360, the first social media platform, somebrands quickly used it to promote their image Social media marketing in Vietnam actuallybegan in the 2008-2009 period, following the success of the Close-Up branding campaign,which opened the way for social media campaigns by other big brands It can be said that themain milestone in the development of social media after the decline of Yahoo 360 from 2008-

2009 was the arrival of Facebook in 2011 With the rapid development of the number of users

in Vietnam, Facebook emerged as a “fertile land” that brands wanted to exploit

The biggest advantage to businesses in Vietnam is that there are not many popularsocial media platforms Vietnamese users still focus on major social networks such asFacebook and YouTube and major forums (some teenagers use Zalo, which is the secondlargest social network) Therefore, in Vietnam, the investment in social marketing is moreconcentrated, more resource-efficient and easier to measure

Social media marketing has the potential to be a great way for small and sized businesses in Vietnam to increase brand awareness with customers Companies can also

create a playground for the participation of customers, as well as trying to improve customerloyalty

with their products and services Alongside the positive elements mentioned, social media isalso a huge “trap”, because it can consume a lot of money for connecting the community withthe marketing campaign and advertisers can be denigrated by competitors Therefore, thisstudy considers the impact of social media on the business performance of small andmedium-sized enterprises in Vietnam and considers whether or not investment in developingsocial media activities is the right strategy Further, the question as to which policies thegovernment should use to promote the efficiency of social media for small and medium-sizedenterprises in Vietnam will be addressed

1.2 Significance of the study

This study is expected to contribute knowledge to the effective and efficientmanagement of labour exports; hence, it will benefit the following sectors:

• International employers Based on the analysis of this paper, Vietnam’sgovernment will build special action plans to improve the competitiveness ofVietnamese labour Hence, international employers will gain access to better andmore competitive labour in the future

• Vietnamese workers This study will help workers understand their strengths andweaknesses In addition, workers will be made aware of the requirements ofinternational employers in term of academic performance, technical skills,communication skills, performance ratings of previous employers, workingseniority (in previous companies) and personal characteristics Thus, Vietnameseworkers can prepare and study to improve their abilities and increase theirpotential for success; this will provide them with assessments and direction inapplying for work abroad in the future

• Managers of labour export This research will help these managers understand therequirements of international employers The research will provide them withimportant suggestions on how to build action plans for improving thecompetitiveness of Vietnamese labour The paper could help build the reputationand competitive advantage of Vietnamese labour through superior innovation andmeet the expectations of international employers

• Vietnamese government This paper will study the current status of Vietnameselabour in term of strengths and weaknesses; it will also provide useful informationabout the requirements of foreign labour importers It will be a good basis for theVietnamese government in planning labour development, especially exportactivities

Other researchers This study will help other researchers to collect necessaryinformation in relation to their research fields Other researches will also consider thelimitations of this research as they conduct future research related to this field of study

1.3 Research questions and objectives of the study

There are two important questions that need to be studied:

(1) What is the status of using social media by small and medium-sized enterprises(SMEs) in Vietnam?

(2) How does social media influence business performance?

To answer these two questions, this thesis focuses on assessing the current status ofsocial media use by Vietnamese SMEs by analysing the results of an enterprise survey,drawing out good and bad points about the application of social media for marketing by theseenterprises In particular, the thesis evaluates the impact of social media on the businessperformance of Vietnamese SMEs Based on the results of the analysis, the thesis providessuggestions for businesses to improve the effectiveness of using social media in marketing

The thesis is organised into five chapters Chapter 1 explains the importance of socialmedia to businesses, as well as the current issues in the social media debate, researchobjectives, and the scope of research

Chapter 2 focuses on the basics of social media and business performance andbusiness performance indicators, as well as research on the relationship between social mediaand business performance both theoretically and practically From this literature review, theauthor presents the proposed research model

Chapter 3 introduces the research methodology, sample selection and samplingprocedures, as well as the analytical methods used to answer the research questions

Chapter 4, based on the results of the survey, analyses the current use of social media

in marketing by SMEs in Vietnam In addition, it uses multivariate regression to assess theimpact of social media on the business performance of Vietnamese SMEs

Chapter 5 summarises the results of the research and provides solutions to improve theeffectiveness of using social media for SMEs in Vietnam

CHAPTER 2: LITERATURE REVIEW

2.1 Overview of social media

2.1.1 Definition of social media

What is social media? Social media is a subject of concern to many enterprises,executives and policymakers, but the concept of social media and the way corporations cantake advantage of social media are very limited (Kaplan & Haenlein, 2010) Social media isgenerally described in relation to Web 2.0 and ‘user-generated content’ In their study, Kaplanand Haenlein (2010) attempted to divide social media into groups, namely: collaborativeprojects, social networking sites, virtual games worlds, social worlds, blogs, and contentcommunities Social networking sites are the largest and most important part of social media.The term social media has tended to be used interchangeably with the term “Web 2.0”, andcan be identified by the following principal categories (Constantinides & Fountain, 2008):

• Blogs: Encompassing individuals’ or enterprises’ online journals and often

combined with audio or video podcasts

• Social network: Applications allowing users to build personal websites accessible

to other users for exchanging content

• Content communities: Websites organising and sharing particular types of content.

• Forums: Sites for exchanging ideas usually around special interests.

• Content aggregators: Applications allowing users to customise fully the web

content they wish to access

2.1.2 The role of social media

The importance of social media lies in the interaction between people and in thefacilitation of asynchronous, immediate, interactive, and low-cost communications So, what

is the role of social media in business? There are three reasons why it becomes necessary

Firstly, social media helps a business raise awareness of its brand Branding is alwaysone of the top goals in many marketing campaigns When focusing on this goal, the problemfor many brands, especially e-commerce brands, is that it is not possible to create links thatconnect with customers by emotion Fortunately, social media can solve this problem Withcreative approaches and consistent content, a brand can be brought to life

Secondly, social media helps to increase traffic Social media platforms areincreasingly playing a role in bringing users to business websites There is a view thatFacebook has overtaken Google in terms of influence on the Internet Increased traffic isgenerally proportionate to improving sales effectiveness

Thirdly, social media is the place to go to for information and knowledge With socialnetworks, users can update a lot of information and knowledge without having to go to thenewspaper networks This information is what businesses collect in order to understand users

or new trends that are of interest in the community To do this, businesses can use sociallistening tools, to listen and watch what is happening in social networks From theinformation and knowledge gathered, firms can improve their campaigns and processes

2.2 Business performance and its measurement

2.2.2 Measurement of business

performance

Business performance is a very broad topic and measuring it is not easy In terms ofenterprise resources, a firm's business performance is determined by the efficiency of usingresources and transforming them into increased competitiveness advantage (Barney, 1991;Day,

1994) Notable factors that reflect business performance are financial capacity, operationaloptimisation and social performance (Carroll, 1979; Venkatraman & Ramanujam, 1986).Financial performance focuses on the growth of sales and customers, or profitability.Operational performance reflects operating efficiency, market share or customer satisfaction.Social performance relates to reputation, brand awareness or the public image of thecompany

Needly (2002) and Taticchi (2010) synthetize some business performance indicatorsand their formulas as follows:

Net Profit

Return on Asset = Total Assets × 100%

- Return on Equity (ROE):

- Rate of Return:

NetProfitReturn on Equity = Total Equity × 100%

NetProfitReturn on Equity =

Net Revenue × 100%

* Market performance and Business Growth:

- Sales, growth of sale

- Customers, growth of customer

- Market share

* Shareholder return:

- Total shareholder return

- Economic value added

Due to time and budget constraints, this study focuses on aspects of financialperformance, particularly the growth of sales and customers, which are the two mostimportant issues that determine the survival of an enterprise

2.3 Theoretical perspective on the relationship between social media and business

performance

In general, the use of social media is a widely recognised part of marketing To beprecise, social media, in this context, is a tool in marketing that is used to deliver messagesand connect with customers Marketing is broad as “a discipline uniting activities aimed atenhancing the potential for sales of goods and services” Social media, although part ofmarketing, is not fully researched in relation to business performance This section analyses anumber of related theories to establish how social media affects business performance

2.3.1 General theory of marketing

The theory of marketing was first developed and introduced by an AmericanMarketing Association (AMA) conference in Pittsburgh in 1946 It aimed to describe theessence of marketing as well as create a framework for modern economics Alderson and Cox(1948) put forward the need for a common marketing theory and provided a comprehensiveapproach on the basis that marketing theory should be general and appropriate for all areas.Bartels (1968) shares the same view as Alderson and Cox (1948) on the importance ofdeveloping marketing theory He used a “cumulative approach” to suggest that generalmarketing theory should be synthesized from seven theories:

• The theory of social initiative; economic separations

• The theory of market roles, expectations, interactions

• Flows and systems

• Behaviour constraints

• Social change

• Marketing evolution

• The theory of social control

Two years later, Bartels (1970) restated his view of marketing in terms of fivetheories, which all remain relevant:

• Theory of marketing functions

• Historical institutional evolution

• Small versus large-scale activity

• Integration

• Theory of specialisation

Hunt (1983, p 24) continued to develop the theory of marketing with a combination offour important theories:

• Theory of buyers’ behaviours

• Theory of sellers’ behaviours

• Institutional framework

• Behaviours of buyers, sellers and institutional frameworks

Marketing is described as “a behavioural system of exchange” (Bagozzi, 1979) or

“exchange process” of the company to the market and what is exchanged here can beproducts, services, ideas, messages and even emotions

However, there are many other approaches to marketing Kuhn (1996) definesmarketing as a “set of sales and distribution practices.” Levitt (1960) and Keith (1960)describe marketing as “customer-centred rather than product-centred” In addition, there aremany other paradigms of marketing (Fournier 1998; Palmer & Ponsonby 2002)

The American Marketing Association first officially defined marketing in the 1960s as

“performance of business activities that direct the flow of goods and services from theproducer to the consumer or user” (AMA 1960, in Keefe 2004) In 1985, the concept wasrefined into “Marketing is the process of planning and executing the conception, pricing,promotion, and distribution of ideas, goods, and services to create exchanges that satisfyindividual and organizational objectives” (AMA 1995, in Keefe 2004) The recent marketingconcept was introduced in 2004, in which marketing is defined as “an organizational functionand a set of processes for creating, communicating, and delivering value to customers and forthe benefit of the organization and its stakeholders” (AMA 2004, in Keefe 2004) In the field

of business, Belz (2005), Tomczak and Brexendorf (2005) emphasise that the tasks ofmarketing include

public relations, branding, marketing communications, customer relationship and saleschannel development.

As a part of marketing, social media may be used to deliver company messages withvarious contents for numerous purposes, i.e call for purchases, public relations, businessbranding or product introduction These messages may influence customers’ perceptions andinteractions, and they also potentially increase information diffusion about the company andits products and services

2.3.2 Marketing mix theory

Marketing mix is often considered as a tool to help businesses determine whichproducts or brands to offer Kotler (2000) defines it as “the set of marketing tools that thecompany uses to pursue its marketing objectives in the target.” Initially, McCarthy (1964)introduced marketing mix with 4 Ps: Product (product needs to meet demands andexpectations of customers); Place (customers must have easy access to the product); Price(price must be reasonable); Promotion (companies need to use advertising, public relation,sales promotion, social media to reach potential customers)

Booms and Bitner (1981), Kotler (2012) expanded the marketing mix model and added

4 Ps: People (the company needs to ensure the quality of human resources and build positiverelationships with customers); Processes (delivery of goods, services to customers need to bedone well, and customers are ready to return to use the products and services of thecompany); Physical Evidence (what the customer receives must have a “physical” attribute,whether that is a service or a product, i.e with the insurance service, the customer still needs

to get back the insurance contract, manual, document…); Performance (this P represents thegoal that the business should aim for in order to bring its core values and real benefits tocustomers)

2.3.3 Theory of buyer behaviour

The theory of buyer behaviour was first introduced by Howard in 1963 as a consumerdecision model The model was developed by Howard and Sheth (1969) and aims to provide

“a sophisticated integration of various social, psychological and marketing influences onconsumer choice into a coherent sequence of information processing” (Foxall 1990, p 10) Tofully reflect the factors influencing buyers’ behaviours, Loudon and Della Bitta (1993)present the theory and model of buyer behaviour in detail as shown in the diagram below:

Figure 1: The model of buyer behaviour (Loudon and Della Bitta (1993)

The factors that influence the behaviour of buyers can be grouped into two categories:perception constructs and learning constructs Perception of components consist of threeissues: (i) Sensitivity to information, which reflects the ability to capture stimulus

information

(ii) Perception of bias, which reflects changes and disturbances of prior perception.(iii) Search for information, which reflects the proactive search for information

onselected products or services

Perception of constructs defines the process by which buyers approach informationand filter and process the information received Learning constructs reflect the impact ofindividual factors on purchasing decisions, including:

(i) Motive, which reflects the motivation or purpose of the purchase

(ii) Evoked set, which is the buyer’s assessment of the ability to meet the

expectations, objectives when using the product or service

(iii) Decision mediators, which reflect buying psychology and alternatives.

(v) Inhibitors, which reflects the limitation of resources to meet procurement needs (vi) Satisfaction, which is a reflection of satisfaction from previous purchase

decisions or from other buyers

Loudon and Della Bitta (1993) emphasise the importance of customer perception inthe purchase decision, and this depends a lot on customer knowledge In particular, thedissemination of information and interaction with customers will be a very important input tothe purchase process, while other customer reviews are an important channel for reference

In addition, Loudon and Della Bitta (1993) deal with a number of other factors thatinfluence the behaviour of buyers, including the importance of the purchase, personalityvariables, social class, culture, organisation, time pressure and financial status They saidthat the output variable buyers respond to follows five steps:

(i) Attention – access to information about goods and services

(ii) Comprehension – the process of selection and processing of information.(iii) Attitudes – customer perceptions and evaluations of specific brands

(iv) Intention – the perception and forecast about the to-be-purchased products.(v) Purchase behaviour – making an actual purchase

2.3.4 Theory of decision-making

Decision-making theory was firstly introduced by Edwards (1954), and it reflects

“how people make choices among desirable alternatives.” This theory was later developed byNicosia (1966) and other scholars In essence, the purchase decision involves a number ofsub-decisions that require a great deal of time and effort A sales outlet, for instance, might bethe department store and other places The purchase decision involves risks that vary indegree according to the product and purchase conditions Consumers seek to reduce thepossibility of risk in the decision they take (to the best of their knowledge)

The buying decision is a series of choices made by a consumer prior to making apurchase that begins once the consumer has established a willingness to buy The consumermust then decide where to make the purchase, what brand, model, or size to purchase, when

to make the purchase, how much to spend, and what method of payment will be used Themarketer attempts to influence each of these decisions

According to Engel et al (1968) and Kotler (2012), the buying decision process can beexplained as below five steps:

Figure 2: The buying decision process (Kotler, 2012)

* Need recognition and problem awareness:

The buying process starts when the buyer feels that they have a problem or need Theneed can be triggered by internal or external stimuli, e.g a person may feel hungry internally

or the sight of a sumptuous meal or smell of delicious food might act as an external stimulus

to arouse the want of food The marketer tries to stimulate need and help people identifythese needs by intelligent use of market offerings such as product, packaging, pricing orpromotions

* Information search:

A customer who realises their need for the product will try to gather informationregarding the product Information search helps the customer understand the product betterand also creates awareness about competing brands Past purchase experiences will reduce thetime required for the information search The information can be gathered from severalsources, including:

• Personal sources – family, friends, neighbours, acquaintances

• Commercial sources – advertising, salespersons, dealers, packaging, displays

• Public sources – mass media, research organisations

• Experiential factors – past experiences, free trials

Generally, the customer receives most information from commercial sources.However, the most effective information comes from personal sources As the customergathers more and more information, the awareness level about the product and competingbrands and their features will increase The marketer must identify the relative importance ofdifferent information sources, and this will help in designing effective marketingcommunication

* Evaluation of alternatives:

In this stage, the customer analyses the information available to select the rightproduct or brand The criteria to evaluate a product may differ depending on the buyingsituation, level of involvement etc The evaluation is based on rational and conscious thinking

as well as mental processes such as perceptions, attitudes or predispositions

During this stage, the customer assigns relative importance to different attributes ofthe brand or product on the basis of accumulated information and draws conclusions about itsrelative potential to satisfy desired needs By developing an understanding of how a customerevaluates the product, the marketer can improve or develop the product and segment themarket on the basis of product attributes The communication mix can be designed toprominently highlight those benefits which are most sought after by the target markets

Evaluation leads to the formation of buying intention that can either be to purchase orreject the product or brand

* Purchase decision:

Purchase intention may lead to a purchase decision There are three factors whichintervene between buying intentions and a buying decision:

(i) Attitudes of others such as spouse, friends and relatives The intensity of a

negative attitude and buyer’s tendency to comply with this attitude are themost significant contributors

(ii) An anticipated situational factor such as family income, cost of buying and

expected benefits of the product

(iii) Unanticipated situational factors like accidents, sickness etc

* Post-purchase behaviour:

After purchasing and consumption, the customer will experience some level ofsatisfaction If the performance of the product meets expectations, the consumer will besatisfied If the performance of the product exceeds expectations, the consumer will bedelighted, and if it falls below expectations, the consumer will be dissatisfied Post-purchasebehaviour refers to the behaviour of the consumer after the purchase and depends on thecustomer’s experiences of using the products and degree of satisfaction A satisfied customermay be involved in repeat purchases, and a delighted customer becomes a brand advocatespreading the positive image of the brand A dissatisfied customer not only abstains fromrepeat purchasing but may also be a critic of the product or brand Post-purchase behaviouralso includes learning about the ways the product is used and disposed of, and this may revealnew usage of the product or threats caused to the environment by wrong disposals It may alsohelp the company to design a marketing mix, e.g the company may develop eco-friendlypackages

or buy back schemes to improve the sales of a new product The company may also launchrefillable packs.

2.4 Empirical evidence on the impact of social media on business performance

Dutta (2010) found that social media has changed the way we do business, not just forsmall companies but also for large enterprises, from employees to CEOs There are manyreasons why companies now focus on social media First, social media has remarkableadvantages, such as low cost, easy access, and the ability to cover a wide area with nolimitation These advantages make it easy for companies to reach potential customers, as well

as build brand recognition Secondly, participation in social media is extremely easy anddiverse, and includes corporate employees, clients, colleagues and the public; this helpscompanies build relationships and promote public relations Third, the online platformenables two-way feedback between the company and its customers or partners in a fast,convenient way; this will be helpful for both parties

It is not only a place to post information on products and company events; socialmedia is also a great place for companies to recruit staff Hunt (2010) states that social media

is where companies can post recruitment information, and also where job seekers can findemployment opportunities LinkedIn is an example; this is a social networking site dedicated

to human resources Its widespread influence and the possibility of two-way communicationare important reasons for using it for recruitment Hunt (2010) argues that if a company doesnot participate in these sites, it may miss out on a lot of talented people who fit in with thecompany but are unaware of the recruitment information

Corconran and Feugere (2009) has provided information that in the US, brands andretailers are currently using social networks to promote sales and enhance brand awareness Inparticular, high-end brands focus on building loyalty with customers through Facebook Userratings and successful online transaction rates are important tools for enhancing customerengagement

Social media, in fact, has had a tremendous impact on business activities, particularlyFacebook and Twitter (Granovetter, 1973; Jansen et al 2009) The Small Business Saturdayprogram is an example In 2010, when the program was first introduced by American Express,

it reached more than one million Facebook “likes” and around 30,000 tweets Markowitz(2013) estimates that this program has brought growth to 28% of small businesses By 2013,this program had generated $5.5 billion USD in sales

In addition, social media influences market orientation, which has a direct and positiveimpact on business performance (Ellis, 2006; Kirca et al., 2005), especially for SMEs aroundthe world (e.g UK (Appiah-Adu & Singh, 1998), US (Baker & Sinkula, 2009)) It is not only

manufacturing firms that benefit; service companies do as well (Kara et al., 2005) That said,this relationship is mixed in some cases Alvarez et al (2000) found no correlation betweenmarket orientation and business performance.

Bruhn et al (2012) compared social media and traditional media They concluded that,

in the short-term, social media cannot replace traditional media because each method has itsown advantages and disadvantages In the long-term, however, this shift is possible, andbusinesses should approach and use social media

The relationship between the Internet and social media and business performance isgenerally complex Chen (2011) gives some reasons for this complexity First, thisrelationship depends on a number of factors, including internal factors (product type, productcharacteristics) and external factors Brands have different roles for each specific case, and sothe impact of social media is different from case to case Second, there are many differentinternet technologies or different types of social media, so their impact on companyperformance is not identical

Social media is not always good; it is sometimes a threat and a risk to the reputation ofthe company Aula (2010) provides an analysis of some of the situations on Facebook andsome other social networks that reflect the extent of the public’s negative impact on acompany’s reputation Social media, in general, broadens the scope of the company’sactivities, and therefore it also expands the risk to the company’s reputation

In addition, Kietzmann et al (2011) introduced a framework for describing socialmedia with seven facets that need to be addressed when researching social media and itsimpact: identity, conversations, sharing, presence, relationships, reputation, and groups Atthe same time, companies need to have strategies for each social media activity to achieve thebest results

Overall, the exploitation of social media is an important trend and a high priority forenterprises, especially commercial and services enterprises Hanna et al (2011) and Parent et

al (2011) argue that social consumers are very skilful and generous They are willing to buy

or attend social media events if they are really satisfied Their preferences are greatlyinfluenced by social media This is a huge market, and companies need to capture it

However, social media is not yet given enough attention and budgets are limited;comprehensive research on the impact of social media on business performance is lacking.This leads to enterprises conducting social media campaigns primarily based on subjectiveexperience, in the absence of a strong scientific basis (DesAutels, 2011; Weinberg & Pehlivan,2011) Therefore, the comprehensive study of the influence of social media on businessperformance is necessary and urgent

Customer engagement and business performance

Customer engagement is an important factor influencing customer purchasingdecisions It is defined as a two-way, repeatable and satisfying interaction between thecustomer and the company This interaction also increases the connection and favour ofcustomers with the company’s products and services (Shevlin, 2007) Neff (2007) claim thatcustomer engagement drives revenue growth as well as helping the company reach morecustomers Thus, we expect customer engagement to have a positive impact on businessperformance

Brand awareness and business performance

Aaker (1996) and Keller (2008) describe brand awareness as memory, recall of abrand, or just knowing it It is the reminder of a trademark or the name of a company orservice product in the mind of the customer Brand awareness can enhance businessperformance Huang and Sarigollu (2012) studied 11 brands in the US and found evidence ofthe positive impact of brand awareness on business performance Brand awareness bringsmany advantages to the company For example, it can help the enterprise prioritise customerdecision-making among many alternatives and in competition with other brands (Macdonald

& Sharp, 2000) For small businesses and start-ups, this is more important because customerstend to trust big brands and question the quality of service provided by small businesses (Kim

et al., 2002) Brand awareness can increase the trust of customers in a business Therefore,this is a factor that can significantly affect the performance of the business

Information diffusion and business performance

Information diffusion is a very important factor that can affect business performance.According to demand theory and decision-making theory, customer choice relies on amultitude of factors, in particular, consumer demand and brand awareness The spread ofinformation about products and services will first help customers know about the company.Through the process of researching and considering alternatives, customers will find out aboutthe suitability and quality of the product If the product or service is good, the customer willtrust the business and make a purchase decision Conversely, if the customer does not knowabout the products and services of the business, every effort by the company will becomeuseless That is why information diffusion significantly enhances business performance

2.5 Conceptual framework and hypotheses on the relationship between social media

and business performance

2.5.1 The proposed research model

Here we consider how the use of social media can help a company improve itsbusiness performance Based on previous theories, we have proposed the followingconceptual framework where the use of social media is the independent variable and businessperformance is the dependent variable (especially the ability to reach out to more customersand increase

Public relation andcustomer service

Productionintroduction

Customerengagement

Brand Awareness

InformationDisffusion

Sale Increases

Reaching out to more customers

Figure 3: The proposed research model

How will social media impact business performance? Firstly, the goal of social media

is to convey the message, especially the message about the product and promotion Whencompanies have new products or sales promotion campaigns, social media is one of the mosteffective channels to call for purchases and provide product information This information isnot limited to the introduction of the product but also includes information about thecompany, company events, etc Furthermore, this is where the company can easily receivefeedback on products and services so that it can make adjustments and enhancements to suitcustomers Price information is also easily accessible to customers

Secondly, social media is an effective channel for public relations and customerservice This is an easy way for companies to exchange, share, listen, consult, and servecustomers at

very low cost or even free of charge With the development of information technology,instead of having to invest in costly sales systems to sell products and reach customers, firmscan afford to sell online with no boundaries to potential customers Programmes and activitiesfor public relations will spread to many people.

Thirdly, social media is a very useful channel for building images and brands.Broadband, unlimited connections and social media combine to create a powerful channel forcompanies to build a professional image with high-quality products, reasonable prices andexcellent customer service One of the main ways to build a brand is re-posts of positivebuyers’ reviews This activity will increase the trust of customers in the products and services

of the company

In general, through the message, the company will be able to improve the interactionand engagement with customers and raise awareness of the brand as well as spreadinformation about products and the business, thus improving sales and reaching morepotential customers

2.5.2 Hypotheses

H1 Social media messages will improve customer engagement

H1.1 Business branding message will increase customer engagement

H1.2 Call for purchase message will increase customer engagement

H1.3 Re-posts of customer reviews will increase customer engagement

H1.4 Public relations and customer service will increase customer engagement

H1.5 Product introduction will increase customer engagement

H2 Social media messages increase brand awareness

H2.1 Business branding message will improve brand awareness

H2.2 Call for purchase message will improve brand awareness

H2.3 Re-posts of customer reviews will improve brand awareness

H2.4 Public relations and customer service will improve brand awareness

H2.5 Product introduction will improve brand awareness

H3 Social media messages promote information diffusion

H3.1 Business branding message will promote information diffusion about the company

and products

H3.2 Call for purchase message will diffuse information about the company and its

products/services

H3.3 Re-posts of customer reviews will promote information diffusion about the company

and products

H3.4 Public relations and customer service will improve the diffusion of information on

the company and its products/services

H3.5 Product introduction will promote information diffusion about the company and

products

H4 The format of social media message influence customer engagement

H5 The format of social media message influence brand awareness

H6 The format of social media message influence diffusion of information about the

company and its products/services

H7 Customer engagement will improve sales

H8 Customer engagement will reach out to more customers

H9 Brand awareness will improve sales

H10 Brand awareness will reach out to more customers

H11 Information diffusion about the company and products will improve sales

H12 Information diffusion about the company and products will reach out to more

customers

H13 Social communications will increase sales

H14 Social media will reach out to more customers

H15 Social media increase business performance

CHAPTER 3 RESEARCH METHODOLOGY

3.1 Research design

The paper uses both descriptive and correlation methods of research Descriptiveresearch was very useful for gathering, classifying, analysing and making an adequate andaccurate interpretation of data with or without the aid of statistical methods

On the other hand, an econometric method is valuable in determining the impacts ofsocial media on business performance of SMEs in Vietnam

The researcher found these methods appropriate in the study The quantitative researchwas based on data collection through a questionnaire Data collected was processed by thesoftware SPSS and Stata

3.2 Time and place of study

The study assesses the impact of social media on business performance of SMEs inVietnam The survey was conducted in Vietnam both online and offline during July and August

2018

3.3 Population, sample size and sampling technique

Because the number of SMEs in Vietnam is very large, the researcher could not apply

techniques to select the sample size Hence, the study used a convenient sample technique to

select 147 respondents

The respondents were managers of the company or at least the sales department

3.4 Research instrument

The research was conducted with a questionnaire checklist, which included five parts:

• Part I is the profile of the respondents in terms of age, gender, marital status,educational attainment, work department, employment position and years ofexperience

• Part II is the profile of the company (type of company, number of employees, type

of business activity) and their major financial indicators (revenue, cost, profit,total assets, total equity)

• Part III explains the participation of the company in social media, including types

of social media the company has used; the purpose of using social media; how thecompany used social media; the cost of social media and the benefits it cangenerate

• Part IV determines the impact of social media on business performance It includesgeneral evaluations of social media activities of the company, how social mediamessages influence customer perceptions (engagement, brand awareness and

information diffusion) and how customer perceptions influence businessperformance.

• Part V determines the impact of the social media message format on customerperceptions

The observed variables in the composition used various evaluation methods, includingthe Likert five-point scale, with choices ranging from 1 to 5 as follows (part IV and part V):

Table 1: The Likert five-point scale (Likert, 1932)

3.5 Data gathering procedure

The study used a combination of questionnaires and interviews in acquiringinformation from the respondents It also acquired information from books, published andunpublished local and foreign studies, and from the Internet

After the researcher prepared the questionnaire, it was counterchecked by the adviser.Questionnaires were sent to SMEs in Vietnam and then retrieved The results were tallied,tabulated and processed statistically Finally, the results were interpreted, and findings andconclusions drawn

The data was input to statistical software (SPSS and Stata) for analysis andinterpretation

3.6 Methods of data analysis

The author employed three methods to analyse the data

The first was the use of descriptive statistics such as mean, standard deviation, rank,per cent distribution, and frequency counts to analyse the profile of the respondents, thecompany profile and general assessments of the use of social media by the companies

The second was a qualitative approach to assess the impact of social media onbusiness performance This method uses direct questions to reflect the perceptions ofrespondents on the impact of social media on customer perceptions and business performance

The third was a quantitative approach to measuring the impact of social media onbusiness performance The ordinary least squares (OLS) or linear least squares method wasused to estimate the unknown parameters in a linear regression model This methodminimises the sum of squared vertical distances between the observed responses in thedataset and the responses predicted by the linear approximation The resulting estimator can

be expressed by a simple formula, especially in the case of a single repressor on the hand side (Greene,

right-2002)

The OLS estimator is consistent when the repressors are exogenous and there is

no multicollinearity, and optimal in the class of linear unbiased estimators whenthe errors are homoscedastic and serially uncorrelated Under these conditions, the method

of OLS provides minimum-variance mean-unbiased estimation when the errors havefinite variances (Greene, 2002)

The multivariate regression equation is expressed as follows:

Yi = b0 + b1Q35Noi + b2Q36i + b3Q37i + b4Q38i + b5Q39i + b6Q40i + b7Q42i + b8Q44i +

b-9Networkti + e

In which,

Y Business Peformance (Q53, Q12, Q54, Q13)

Q35No Number of social networking sites is used (Q.35)

Q36 Experience of using social networks (Q.36)

Q37 Frequenty of using social networks (Q.37)

Q38 Growth of frequency in using the social networking sites (Q.38)

Q39 Engagement of social networks (Q.39)

Q42 Direct sale system integrated in social networks (Q.42)

Q44 Social media quality of the company (Q.44)

Network Facebook, Twitter, YouTube, Instagram, LinkedIn, What's App,

Pinterest, Other networks (Q.35)

In addition, the author used T-test and ANOVA one-way to measure the potentialvariance of the respondents’ perceptions following the personal profile and companycharacteristics.

Since the proposed research model includes multidimensional aspects, multivariateimpacts and structural influence, the structural equation modelling (SEM) was seen as thebest method for finding evidence about the impact of social media on businessperformance comprehensively and accurately (Hoyle, 1995; Bagozzi and Yi, 2011)

SEM is implemented as shown in the figure below and estimated using the maximumlikelihood with missing values (MLMV)

Figure 4: Structural equation modelling for impacts of social media on business performance

CHAPTER 4: FINDINGS AND DISCUSSIONS

This chapter analyses the results from the survey of 147 enterprises that use socialmedia This chapter consists of four major sections The first section analyses the profiles ofrespondents Section two analyses through the survey the status of social networking use bySMEs in Vietnam The next section determines the impact of social media on businessperformance through qualitative analysis using direct questions Section four evaluates theimpact of social media on business performance through multivariate linear analysis andSEM Each section also compares the differences between the perceptions of the respondentsaccording to individual and business characteristics

Figure 5: The age of the respondents

According to the above chart, most of the respondents were young (age 26-33(55.10%), middle-aged 34-41 (26.73%)) New graduates accounted for only 6.12% (age 18-25), while the elderly (42-49 years) accounted for only 2.05% Thus, the respondents matchthe characteristics of enterprises that use social networks, namely that they are mostly young,dynamic and like to use advanced technology

4.1.2 Gender

The gender of the respondents is shown in the chart below:

34.69%

65.31%

Male Female

Figure 6: The gender of the respondents

The chart shows that 65.31% of respondents were male, while 34.69% were female

As can be seen, most of the leaders and responsible individuals for business operations aremale, in line with current practice

Figure 7: The marital status of the respondents

The survey results show that 75.51% of respondents were married and only 24.49%were single The marital status distribution of the respondent is comparable with the actualsituation of SMEs in Vietnam

High School Vocational College Bachelor Master Doctor

Figure 8: The educational attainment of the respondents

The survey results show that 67.35% of the respondents had a university degree,22.45% had a master’s degree, 2.04% had a PhD, 4.08% graduated from a vocational school,and 4.08% graduated from high school only In general, qualifications with certificates arestill very important in the human resource management of a company Degree qualificationsare one of the important factors demonstrating competence and knowledge

4.1.5 Work department

The work department of the respondents is shown in the graph below:

Figure 9: The work department of the respondents

The results show that the surveyed respondents were diverse and held importantpositions in the companies Accordingly, 18.36% of respondents were general managers,26.53% worked in the sales and marketing department, 20.41% worked in executivedepartments and HRM, 18.37% worked in the finance and accounting department and 16.33%

in the production department The diversity of experience and roles is important in theinvestigations to ensure accurate and objective results

The chart shows that the numbers of surveyed managers and employees were quitesimilar (53.06% managers and 46.94% employees); this indicates that the results of the surveyare objective and consistent with reality.

1-3 years 3-5 years 5-7 years 7-9 years 10 years and above

Figure 11: The years of working experience of the respondents

The chart shows that the survey included participants who had a wide range ofexperience in terms of years worked The highest percentage was for the new employee group(1-3 years (26.53%)), followed by long-serving staff (10 years and above (24.48%)) Theemployee group with 3-5 years of experience accounted for 18.37%, the group with 5-7 yearsaccounted for 14.29% and the group with 7-9 years accounted for 16.33% The ratio betweengroups is reasonable, which makes the assessment comprehensive and accurate

4.1.8 Type of the company

Information about the type of surveyed enterprise is shown in the below diagram: