Impacts of social media on business performance of vietnamese SMEs

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.bui@uni-jena.de Address: WG 604, Karl-Marx-Allee 1, 07747 Jena Student ID: 163398 Supervisor: 1st: Prof Dr Uwe Cantner 2nd: Dr Maximilian Göthner Friedrich-Schiller-Universität Jena Fakultät für Wirtschaftwissenschaften Lehrstuhl für Mikrkonomik Carl-Zeiß-Str 07743 Jena ABSTRACT Social media is widely accepted as one of the most effective marketing channels for enterprises Although it brings many benefits to companies, there are still some potential risks Furthermore, there is no comprehensive study on the impact of social media on business performance, especially for developing countries such as Vietnam Based on related theories and studies, we propose an ordinal three-step model explaining the way social media influences business performance Accordingly, in the first step, enterprises use social media to carry out five activities, including business branding, call for purchases, public relations/customer service, re- posting of customer reviews, and product introduction In the second step, these activities affect three crucial customer perceptions, namely customer engagement, brand awareness, and information diffusion In the last step, these three issues directly affect business performance, especially sales and customer growth We used direct questions, multivariate regression and structural equation modelling (SEM) While there is still some mixed evidence for particular issues within our proposed model, we have confirmed that social media strongly improves business performance for small and medium enterprises in Vietnam by increasing customer engagement, enhancing brand awareness and promoting information dissemination We also find that the format of social media messages has 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 the type of company they have worked for and personal characteristics Keywords: Social media, business performance, customer engagement, brand awareness, information diffusion TABLE OF CONTENTS CHAPTER 1: INTRODUCTION 1.2 Significance of the study 1.3 Research questions and objectives of the study 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 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 share information and update/respond to other peoples’ information All these media platforms converge in such a way that they are together considered social media With this view, not only 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 their product offerings Hence, social media can enable businesses to become more prominent in the eyes of customers Equally, using social media can help firms connect with other companies within their sector, research and study each other, analyse competitors and develop more effective media strategies Furthermore, social media is a way of communicating between customers and companies and is a tool for firms to answer customer queries and to satisfy them Social media includes tools that combine technology and language skills to promote a brand image of a business on the Internet at a low cost with superior performance Social media gives marketers a voice and new ways of communicating with customers and prospects Branding is a means for companies to deliver messages to customers through content that is distributed in the most effective way Marketers view social media as a vital element of their business and take into account all the activities that take place on social media networks In Vietnam, with the development of Yahoo 360, the first social media platform, some brands quickly used it to promote their image Social media marketing in Vietnam actually began 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 the main milestone in the development of social media after the decline of Yahoo 360 from 20082009 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 popular social media platforms Vietnamese users still focus on major social networks such as Facebook and YouTube and major forums (some teenagers use Zalo, which is the second largest social network) Therefore, in Vietnam, the investment in social marketing is more concentrated, more resource-efficient and easier to measure Social media marketing has the potential to be a great way for small and mediumsized 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 customer loyalty with their products and services Alongside the positive elements mentioned, social media is also a huge “trap”, because it can consume a lot of money for connecting the community with the marketing campaign and advertisers can be denigrated by competitors Therefore, this study considers the impact of social media on the business performance of small and medium-sized enterprises in Vietnam and considers whether or not investment in developing social media activities is the right strategy Further, the question as to which policies the government should use to promote the efficiency of social media for small and medium-sized enterprises in Vietnam will be addressed 1.2 Significance of the study This study is expected to contribute knowledge to the effective and efficient management of labour exports; hence, it will benefit the following sectors: • International employers Based on the analysis of this paper, Vietnam’s government will build special action plans to improve the competitiveness of Vietnamese labour Hence, international employers will gain access to better and more competitive labour in the future • Vietnamese workers This study will help workers understand their strengths and weaknesses In addition, workers will be made aware of the requirements of international employers in term of academic performance, technical skills, communication skills, performance ratings of previous employers, working seniority (in previous companies) and personal characteristics Thus, Vietnamese workers can prepare and study to improve their abilities and increase their potential for success; this will provide them with assessments and direction in applying for work abroad in the future • Managers of labour export This research will help these managers understand the requirements of international employers The research will provide them with important suggestions on how to build action plans for improving the competitiveness of Vietnamese labour The paper could help build the reputation and competitive advantage of Vietnamese labour through superior innovation and meet the expectations of international employers • Vietnamese government This paper will study the current status of Vietnamese labour in term of strengths and weaknesses; it will also provide useful information about the requirements of foreign labour importers It will be a good basis for the Vietnamese government in planning labour development, especially export activities Q81 ass uE q Q82u ass uE q Q83u ass uE q Q84u ass uE q Q85u ass uE q Q86u ass uE q u 87 E 08 94 62 145 00 09 74 63 83 62 00 36 13 09 2145.8 78 69 72 00 33 11 09 27 78 99 63 85 00 33 12 09 5145.7 27 15 17 29 12 11 1 04 35 0- 57 38 28 12 11 4145.6 04 24 049 11 16 2 20 28 0- 34 26 48 11 16 4145.9 20 14 04 27 13 01 25 28 00 43 11 04 27 13 01 4145.1 25 18 19 00 62 18 26 1 20 11 39 53 32 00 62 17 26 4145.1 20 97 68 49 10 14 1 20 76 97 73 82 71 01 33 52 22 29 02 03 43 36 78 13 68 56 56 34 47 43 38 53 50 98 01 39 37 E q Q88 ass uE q Q89 ass uE q Q90 ass uE q Q91 ass uE q Q92 ass uE q 28 90 49 8145.3 9- 39 56 92 01 12 17 57 34 92 01 12 1145.6 17 60 3- 26 03 17 24 17 1 58 98 04 17 24 17 4145.2 58 90 60 13 04 33 16 01 94 57 19 04 33 16 00 2145.5 94 76 77 - 66 69 07 21 12 90 01 13 07 21 12 6145.3 90 11 2- 45 64 17 25 18 08 28 117 25 18 08 34 61 21 19 31 32 02 01 81 81 31 10 20 14 84 26 09 59 96 67 11 45 85 61 34 Means Comparision between Employment Position group Employm ent Emplo Int ep Mana Int ep Total Int ep Employm ent Emplo Int ep Mana Int ep Total Int ep Employm ent Emplo2.6 Int 08 ep 3.2 Mana Int 30 ep 2.9 Total Int 38 ep Q 45 Q 46 Q 36 Q 36 4 4 Q 37 Q Q 38 3.8 Q 83 3 3 3 Q 35 Q 38 APPENDIX One-way ANOVA Analysis for Years of Experience Sum of Square Q44 Wi thi To Q45tal Wi thi To Q46tal Wi thi To Q47tal Wi thi To Q48tal Wi thi To Q49tal Wi thi To Q50tal Wi thi To Q51tal Wi thi To Q52tal Wi thi To Q53tal Wi thi To Q54tal Wi thi To Q55tal Wi thi dM f ea 10 14 14 11 72 F S i 3 4 11 14 111 214 46 12 96 94 14 67 10 214 6104 01 14 11 012 214 0114 64 12 14 14 13 5114 31 77 14 67 88 214 984 11 39 91 14 85 10 214 39 74 14 23 2 82 14 52 85 214 9244 10 14 711 214 6144 37 14 12 514 214 0244 39 12 14 14 14 86 T 84 14 00 144 Q56 Wi 69 59 14 thi 80 14 To 74 49 46 Q57tal Wi 75 14 thi 18 To 80 214 Q58tal 824 Wi 71 48 14 thi 57 To 49 214 69 46 Q59tal Wi 71 14 thi 04 To 79 214 69 134 Q60tal Wi 70 50 14 thi 25 14 To 63 96 46 Q61tal Wi 84 14 thi 97 To 92 214 5824 Q62tal Wi 54 14 thi 21 To 60 214 00 154 Q63tal 04 14 Wi 89 thi 35 To 10 214 45 Q64tal Wi 65 14 thi 44 To 71 214 20 104 Q65tal Wi 28 52 14 thi 11 To 62 214 Q66tal 394 Wi 47 10 14 thi 410 214 To 56 Q67tal Wi 71 14 thi 36 To 77 214 55 46 Q68tal Wi 85 14 thi 37 To 91 214 69 46 Q69tal 01 W 82 14 33 To 88 214 53 Q7 tal Be 114 Wi tw 68 14 78 thi 44 To 90 214 12 46 Q71tal Wi 66 14 thi 04 14 To 68 82 46 Q72tal 2 Wi 84 14 thi 63 To 89 214 Q73tal 554 Wi 67 67 14 thi 04 To 68 214 82 46 Q74tal Wi 85 14 thi 33 To 93 214 84 46 Q75tal Wi 61 14 thi 54 14 To 67 24 46 Q76tal 2 10 14 210 214 36 10 14 010 214 41 76 14 86 77 214 1 Wi thi To Q77tal Wi thi To Q78tal Wi thi To Q79tal Wi thi To Q80tal Wi thi To Q81tal Wi thi To Q82tal Wi thi To 85 14 23 86 214 3824 47 14 65 50 214 39 46 69 14 21 72 214 00 46 83 14 71 14 89 20 46 Q83 Wi thi To Q84tal Wi thi To Q85tal Wi thi To Q86tal Wi thi To Q87tal Wi thi To Q88tal Wi thi To Q89tal Wi thi To Q90tal Wi thi To Q91tal Wi thi To Q92tal Wi thi To tal 134 23 55 14 16 68 214 394 15 72 12 14 514 214 17 6 88 14 08 96 214 67 46 18 14 91 14 2 18 8224 45 93 14 36 11 214 66 77 14 71 84 214 00 144 25 14 16 15 917 214 4134 02 13 14 14 15 0144 84 63 14 83 78 214 67 224 13 15 14 31 717 214 Means Comparision between Years of Experience group Years of Experienc3 1-3 Int 3-5 ep Int 5-7 ep Q 34 Q 34 Q 34 Q 53 Q 53 3 I 7-9 2 2 3 3 Q 35 Q 53 Q 54 Q 54 Q 54 Q 4.6 Q 64 Q 64 Q 64 Q 64 3 Q 46 Q 63 Q 73 Q 73 Q 73 Int 10 ep an Int d ep Total Int ep Years of Experienc3 1-3 Int 3-5 ep Int 5-7 ep Int 7-9 ep Int 10 ep an Int d ep Total Int ep Years of Experienc4 1-3 Int 3-5 ep Int 5-7 ep Int 7-9 ep Int 10 ep an Int d ep Total Int ep Years of Experienc4 1-3 Int 3-5 ep Int 5-7 Int 7-9 ep 4 Int 10 ep 4 an Int d ep 3 Total Int ep Years of Q Experienc4 3.7 1-3 Int 3-5 ep 3 Int 5-7 ep 4 Int 7-9 ep Int 10 ep an Int d ep Total Int ep Years of Q Experienc 82 1-3 76 Int 3-5 ep 75 Int 3 5-7 ep 28 Int 3 7-9 ep 55 Int 10 ep 83 an Int d ep 3 Total 00 Int ep Q Q Q Q 84 38 83 38 Q 93 84 Q 93 Q 92 69 3 50 2 37 85 42 3 66 44 3 08 00 3 57 95 APPENDIX One-way ANOVA Analysis for Type of Company Sum of Square Q44 s Wi thi To Q45tal Wi thi To Q46tal Wi thi To Q47tal Wi thi To Q48tal Wi thi To Q49tal Wi thi To Q50tal Wi thi To Q51tal Wi thi To Q52tal Wi thi To Q53tal Wi thi To Q54tal Wi thi To Q55tal Wi thi dM F f ea 23 111 180 411 4180 71 155 83 563 85 4158 224 34 011 165 1480 11 6193 571 12 014 4184 34 11 782 13 714 4195 85 1 11 211 4179 81 310 151 1473 10 63 1 211 612 4181 34 10 573 12 413 4187 5173 5241 1 71 374 88 4149 898 143 4 609 88 6161462 10 36 877 942454 S i T 84 000 34 Q56 Wi 769 thi 2421448 To 74 449 34 Q57tal Wi 376 thi 568 To 80 4153 3082 34 Q58tal Wi 746 thi 342 To 49 4132 469 34 Q59tal 1 Wi 72 thi 068 To 79 4150 469 34 Q60tal Wi 661 173 thi 6001443 To 63 796 34 Q61tal Wi 286 thi 700 To 92 4160 2082 34 Q62tal Wi 857 195 thi 142 To 60 4140 000 34 Q63tal Wi 10 thi 010 4170 To 46 Q64tal Wi 864 thi 342 To 71 4145 020 34 Q65tal Wi 759 thi 242 To 62 4141 2939 34 Q66tal Wi 110 184 thi 210 4171 To 53 Q67tal Wi 74 thi 168 To 77 4151 755 34 Q68tal Wi 089 176 thi 179 To 91 4162 469 34 Q69tal W 85 474 To 88 4159 653 Q7 tal Be 34 Wi tw 82 thi 153 To 90 4157 612 34 Q71tal Wi 362 thi 2791443 To 68 082 34 Q72tal Wi 388 143 thi 442 To 89 4161 755 10 34 Q73tal Wi 608 57 thi 474 To 68 4140 082 34 Q74tal 184 Wi 90 thi 653 To 93 4163 184 34 Q75tal Wi 263 thi 0531444 To 67 224 34 Q76tal Wi 277 thi 100 To 86 4153 3082 34 Q77tal Wi 047 thi 768 To 50 4133 939 34 Q78tal Wi 065 thi 200 To 72 4145 000 34 Q79tal Wi 786 181 thi 5741460 To 89 020 34 Q80tal Wi 010 153 thi 510 4173 To 26 Q81tal Wi 410 199 thi 110 4170 To 44 Q82tal Wi 672 thi 779 To 77 4150 Q83 Wi thi To Q84tal Wi thi To Q85tal Wi thi To Q86tal Wi thi To Q87tal Wi thi To Q88tal Wi thi To Q89tal Wi thi To Q90tal Wi thi To Q91tal Wi thi To Q92tal Wi thi To tal 23 066 179 568 68 4146 2939 34 513 183 814 4197 13 92 611 96 4164 367 34 718 196 14 18 87 810 811 4175 36 980 211 84 4156 000 133 4 2581 19 16 017 41 46 414 11 14 15 02 276 171 216 78 4153 367 143 4 576 16 91 517 41 Means Comparision between Type of Company group Type of Company Privat Int er Limite Li Int abi er Joint sto Int Q 43 Q 53 Q 35 Q 35 Q 53 3 3 Others Int er Total Int er Type of Company3 Privat Int er Limite Li Int abi er Jointsto Int ck er Others Int er Total Int er Type of Company3 Privat Int er Limite Li Int abi er Jointsto Int ck er Others Int er Total Int er Type of Company Privat Int er Limite Li Int abi er Jointsto Int ck er Others Int er Total Int er 2 3 Q 4.5 Q Q Q Q 54 36 63 46 4 4 4 Q 74 Q 74 Q 73 Q 74 Q 74 3 3 3 Q 84 06 Q 83 Q 83 06 Q 92 73 20 2 50 60 3 3 60 3 60 60 3 95 00 95 Statutory Declaration: I declare that I have developed and written the enclosed Master Thesis completely by myself, and have not used sources or means without declaration in the text Any thoughts from others or literal quotations are clearly marked The Master Thesis was not used in the same or in a similar version to achieve an academic grading or is being published elsewhere Jena, 15.10.2018 Bui, Thi Phuong Hong ... 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. .. 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. .. 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