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JOURNAL OF INFORMATION SYSTEMSAmerican Accounting Association Vol. 28, No. 1 DOI: 10.2308/isys-50674 Spring 2014 pp. 187–207 The Value of Social Media for Small Businesses Ludwig Christian Schaupp West Virginia University France Be´ langer Virginia Polytechnic Institute and State University ABSTRACT:Companies are implementing social media for marketing, advertising, employee recruitment, and overall communications with employees, clients, and partners. Small businesses are able to gain substantial value from social media but there are also many challenges. In this research, the Technology-Organization- Environment framework, the Resource-Based View theory, and interview data are combined to develop a model of social media usage and value for small businesses.

Survey data from small businesses from a variety of industries and geographical locations are collected to validate the model. Results indicate that technology competence, pressure from clients, and characteristics of the mobile environment are significant antecedents of social media usage. The dimensions of social media value— perceived impact on internal operations, marketing, customer service, and sales—are also significant. Implications and avenues for future research are discussed.

Keywords:social media; small business; organizational perspective; value; resource- based view; technology-organization-environment. I. INTRODUCTION R esearch has shown that by developing social media strategies small businesses are creating new opportunities to communicate with their customers (Jantsch 2010). A recent survey found that the greatest advantages of social media marketing are generating more business exposure, increasing traf c, and improving search engine rankings (Stelzner 2011). All of these bene ts are especially important for small businesses with limited means, since the owners often wear many hats in the organization and, as a result, have many demands on their time (Mershon 2011). While marketing is often essential to their success, small business owners must also make sure that operations are run ef ciently, nances are well taken care of, and employees are both productive and satis ed with their employment. Exacerbating the time demands are small business owners’ limited nancial means, which lead to the need to nd creative ways to perform many tasks at limited costs. This is where social media can play an important role. Indeed, 66 percent of small Editor’s Note: Accepted by William N. Dilla. Published Online: December 2013 187 business owners with two or more employees strongly agree that social media is important for their businesses (Stelzner 2011).

Engaging in social media efforts can help generate exposure and increase traf c for the small business at a fraction of the cost of traditional marketing approaches. The main nancial cost of social media marketing is the time it takes to realize the bene ts of the effort put forth. However, overall marketing costs can potentially be reduced or eliminated by using social media. Further, small businesses can bene t from‘‘earned media’’or the favorable publicity gained through promotion other than advertising. Social media generates this publicity through grassroots actions.

As such, earned media cannot be bought, only gained. This is the value of social media marketing:

it provides a platform that has the potential to expose small businesses to numerous potential customers and to nurture their existing customer base in an inexpensive and effective manner.

It is essential for small businesses to understand and be able to identify the value that results from their social media efforts. While there are a number of recent studies exploring social media use by individuals (e.g.,Heinrichs, J. Lim, and K. Lim 2011;Scott and Orlikowski 2012), few studies empirically explore usage and value of social media from the organizational perspective. To our knowledge, no one has yet empirically studied social media use by small businesses and the value they may derive from such use. To address this gap in existing research, the study develops a model of the antecedents and value of social media for small businesses. The Technology-Orga- nization-Environment (TOE ) framework (Tornatzky and Fleischer 1990) is used to identify a number of potential antecedents of small business social media usage. The Resource-Based View (RBV ) theory (Wade and Hulland 2004;Zhu and Kraemer 2005) is used as a starting point to identify determinants of social media value for small businesses.

Therefore, grounded in the TOE and RBV frameworks, the research seeks to answer the questions: (1) What are the antecedents of social media usage by small businesses? (2) What is the value of social media usage for small businesses? Results from exploratory interviews (Study 1) help identify value drivers beyond those already described in the existing literature. A model of antecedents for, and value of, small business social media use is then developed using these ndings. Small businesses, in a variety of industries and geographical locations that implemented social media initiatives, were surveyed (Study 2) to test the model.

Social media usage for small businesses is de ned in this study as the use of a technology platform to develop a community of stakeholders to collectively create, know, like, and trust relevant matters of the business entity. As done in prior research (DeLone 1988;Thong 1999), all of the businesses that were investigated in this study meet the Small Business Administration (see, http://www.sba.gov) requirement of having less than 100 employees. The results indicate that three of the four proposed antecedents of social media usage are signi cant: technology competence, customer pressure, and the mobile environment. One antecedent, competitive pressure, was not found to be signi cant. The results also support the proposed dimensions of social media value, with perceived impact on internal operations, marketing, customer service, and sales all signi cant.

For researchers, this study validates a theoretically based model of social media organizational usage and value for small businesses. Most prior social media research has focused either solely on the individual perspective or on large organizations. The study also provides a more in-depth look at the concepts of interest by using a research approach that combines qualitative and quantitative methods. In addition, it examines actual usage by real-world organizations, as opposed to intentions to use social media, as most prior research has done. Importantly, the research provides a more in-depth understanding of the dimensions of value in the context of social media. The ndings therefore contribute to the research literatures on social media and small business.

For practitioners, the model of social media value and usage gives small business owners and managers a roadmap to identify additional ways to use social media to their advantage. For example, while a small business owner might have heard how social media allows mass marketing 188Schaupp and Be´ langer Journal of Information Systems Spring 2014 to reach a large population of potential customers, they may not have considered how to use social media for internal operations. Indeed, the internal operations dimension accounts for the most-explained variance in the model. In addition, managers and owners can consider the model’s determinants of social media usage as a guide for where to invest to improve their use of social media tools. For example, since technology competence is an important determinant, the small business owner can invest in training and education to provide employees with a better understanding of mobile technologies.

The remainder of the paper is organized as follows. Section II presents the background of the study. Section III and Section IV present the theoretical background, methodologies, and results for Studies 1 and 2, respectively. Section V and Section VI present a discussion of the ndings and the study’s overall conclusion.

II. BACKGROUND Businesses can use social media for a variety of organizational tasks such as recruitment, marketing, customer relationship management, and employee communications. Large global organizations’ recruiting operations use social media to advertise positions (Doherty 2010) and screen applicants (Slovensky and Ross 2012). Marketing and advertising are the most widely recognized uses of social media for all organizations, both large and small (Askool and Nakata 2011;Looney and Ryerson 2011). Researchers recently identi ed the term‘‘social CRM’’(SCRM) to refer to the fact that organizations are no longer managing relationships with clients, but instead ‘‘facilitate collaborative experiences and dialogue that customers value’’(Baird and Parasnis 2011).

SCRM not only includes social networking sites, but also Wikis and blogs (Askool and Nakata 2011) where customers, partners, and employees are all engaged into conversations.Woodcock, Green, and Starkey (2011) suggest that SCRM is fundamental to business performance, with nancial bene ts accruing throughout the customer life cycle.

Companies using social media continue to report they are receiving measurable business bene ts, with 90 percent reporting at least one such bene t (Bughin and Chui 2010). A sample of the reported bene ts include: increased sales and market size, improved customer satisfaction and relationships, improved employee relationships, better technical support, reduced marketing expenses, and improved search engine rankings (e.g.,Angel and Sexsmith 2011;Askool and Nakata 2011;Stelzner 2011). However, there are also potential constraining implications of organizational use of social media. For example, social media has led to a shift in accountability of organizations toward consumers (Baird and Parasnis 2011;Scott and Orlikowski 2012) and has created new threats to the reputation of organizations (Aula 2010;Jones, Temperley, and Lima 2009). Organizations are also warned that implementation of social media requires proper development of social media policies regarding uses for both employees and customers (Cull 2011; Harris 2011), support from executives (Cull 2011), security to protect bandwidth and information (Cunningham 2011), and importantly, tools to measure social media returns (Cull 2011).

Most of the research on social media has focused on large organizations. Indeed, a study of 132 websites of global nancial institutions in Europe, the Asia-Paci c region, and the Americas found that the size of the organization and the region in which it operates were signi cant factors determining whether organizations made full usage of Web 2.0 and social media (Bonso´ n and Flores 2011). Further, only half of small businesses use social media and, of those, most deploy only Facebook and email for customer contact (Looney and Ryerson 2011). While small businesses often‘‘feel compelled to follow mainstream corporate entities and develop social media for promotion and customer interactions’’(Bonso´ n and Flores 2011, 157 ), their resources are limited, with the owner often handling many functions such as marketing, nance, and technology management. Therefore, while small businesses have the potential to use social media at a strategic The Value of Social Media for Small Businesses189 Journal of Information Systems Spring 2014 level for marketing efforts (Jantsch 2010), they often do not have the resources or the competencies necessary to implement social media efforts. A recent survey of small businesses shows that only 37 percent of respondents felt they were competent enough to deal with social media, with others stating they needed more training (32 percent), had just enough skills (20 percent), or felt totally lost (11 percent) (Looney and Ryerson 2011). Consequently, it may be dif cult for small rms to have a good perspective on the value proposition of social media.

For many information technology-based initiatives, measuring the value of IT has been a challenge, even for large organizations. In an analysis aimed at developing a return on investment measure for social media for a public library,Romero (2011) notes that while the costs are fairly easy to identify, it is not necessarily true for pro ts. Therefore, other measures of social media bene ts might include changes in number of users of the site, changes in brand perception after implementation of social media, and changes in the behavior of users who follow the organization on social media. There are also important cost savings to consider, such as the reduced cost of resolving customer complaints, advertising, and surveying clients. Other less tangible bene ts to consider include improvements in products and overall user experience via social media feedback (Angel and Sexsmith 2011). However, how do these bene ts actually turn into value? More important, are small businesses deriving value from their social media efforts?

Theories of Social Media Usage Previous studies of social media, even at the organizational level, are primarily grounded on theories that analyze adoption at the individual level (Gangadharbatla 2008), such as the Theory of Planned Behavior (TPB) (e.g.,Harrison, Mykytyn, and Riemenschneider 1997) or extended versions of the Technology Acceptance Model (Riemenschneider, Harrison, and Mykytyn 2003).

However, when studying IT adoption at the organizational level, some researchers argue that such theories are not appropriate (Picoto, Be´ langer, and Palma-dos-Reis 2012). Two theories widely used at the organizational level of analysis are the Technology-Organization-Environment (TOE ) framework (e.g.,Kuang-Wei and Yan 2010; Picoto et al. 2012;Srivastava and Teo 2009) and the Resource-Based View (RBV ) theory (Wade and Hulland 2004;Zhu and Kraemer 2005). The TOE framework serves as a foundation to identify potential antecedents of social media usage, while the RBV provides a foundation for the link between social media usage and value.

Potential antecedents of social media usage are well described by the TOE framework, whereas the value drivers for small business are incompletely described. Therefore, the present research uses a mixed-method approach, as in prior research on organizational IT adoption (Riemenschneider et al. 2003), to address this gap. This approach consists of an exploratory qualitative phase and a con rmatory quantitative phase. First, interviews were conducted with a small sample to more fully identify the value drivers (Study 1). Then, the complete model of antecedents and value drivers was tested with a larger sample of survey respondents (Study 2).

III. STUDY 1: VALUE DIMENSIONS Research Method Fifteen small businesses from various industries in the United States that had recently implemented the use of social media were contacted. These businesses were identi ed through personal contacts of the authors. Eight individuals responsible for their small business’ social media implementation agreed to participate in semi-structured interviews (Myers 1997). Data collection took place in person at the convenience of the respondents.

190Schaupp and Be´ langer Journal of Information Systems Spring 2014 Protocol Development and Coding Procedures The semi-structured interview protocol was developed to offer structure yet exibility when conducting the interviews. The focus was on identifying dimensions of social media value for small businesses and potential metrics to measure this value, and on identifying factors leading to social media use by small businesses. The nal protocol contained 33 open-ended questions, summarized in Appendix A.

The interviewer took notes during the interviews, which lasted on average 50 minutes. An initial list of coding categories was developed based on the constructs identi ed from the literature.

The list was then re ned after the interviews to re ect additional knowledge gained from the interviews (Miles and Huberman 1994). Once the original coding categories were identi ed, the two authors coded each interview le and compared their ndings, discussing any discrepancies.

The Cohen’s Kappa statistic was above 0.80, suggesting almost perfect agreement (Landis and Koch 1977). The initial coding categories for antecedents of use included all of the factors identi ed in the literature review (technical competence, customer pressure, competitive pressure, and characteristics of the mobile environment). The following categories of bene ts or value emerged: brand recognition, increased sales, increased traf c, and improved marketing. Based on the interview results, bene ts to internal operations such as improved communication among employees and customer service were added. During the coding process, it became apparent that the coded quotes for the categories marketing and brand recognition were similar. The same was true with the categories increased sales and traf c. Therefore, the categories with signi cant overlap were better coded as one. Marketing and brand recognition were merged, as were increased sales and traf c. The resulting metrics and categories are presented in Table 1.

Study 1 Results The interviewees were asked about the‘‘value’’of social media usage for their business and why they used social media. The value elements were then grouped into the four dimensions in Table 1, i.e., perceived impact on (1) internal operations, (2) sales, (3) marketing, and (4 ) customer service. Internal operations represent operational bene ts of social media usage, such as improved communications among employees and increased staff motivation and effectiveness. Indeed, in their discussion of the usefulness of the RBV model,Wade and Hulland (2004) state that managing internal relationships and providing cost-effective operations are important uses of IS resources.

The interview data differentiate impacts on sales and on marketing. Marketing focuses on the bene ts of pre-selling activities, including improved advertising and marketing efforts and reduced marketing costs, whereas sales refer to the actual bene ts related to the sale of a product or service, including increased market share, revenues, and product improvements. Finally, the customer service dimensions include bene ts related to service interactions with customers, such as greater satisfaction, increased convenience, and improved communications. The marketing, sales, and customer service dimensions are consistent withWade and Hulland’s (2004) assertion that managing external relationships and market responsiveness are important uses of IS resources.

These value constructs are summarized in the research model in Figure 1.

IV. STUDY 2: SOCIAL MEDIA VALUE Antecedents of Social Media Usage The Technology-Organization-Environment (TOE ) framework (Tornatzky and Fleischer 1990) is useful to explore the factors that may in uence the use of social media by small businesses, since previous research shows that it is empirically supported in a variety of contexts (e.g., e- The Value of Social Media for Small Businesses191 Journal of Information Systems Spring 2014 TABLE 1 Value Dimensions from Interview Data and Literature Construct Metrics from InterviewsMetrics from Literature References Perceived impacts on internal operations Better information quality Compression of business processes/faster business processes Facilitate communication among employees Improved decision making Improved employee effectiveness Improved employee learning Increased staff motivation and satisfaction Internal marketing initiatives became more ef cient Reduce administrative duties by elimination of manual routine Reduction of number of employees required Staff productivity increased Better information quality Increased staff motivation and satisfaction(Picoto et al. 2012) Perceived impacts on sales Improved product and service innovation Sales area widened Sales increased as a result of social media use Sales area widened Sales increased as a result of social media use(Picoto et al. 2012) Perceived impacts on marketing Ability to access and update in real time from any location Improved marketing exibility Increased control of direct marketing objectives Reduced marketing costs Reduced marketing costs Interviews and (Picoto et al. 2012) Perceived impacts on customer service Customer satisfaction increased Customer service improved Facilitate communication with customers Increased convenience/service level to customers Customer service improved Facilitate communication with customersInterviews 192Schaupp and Be´ langer Journal of Information Systems Spring 2014 business, mobile business, and enterprise resource planning) (Pan and Jang 2008; Picoto et al.

2012;Zhu and Kraemer 2005). The TOE framework includes three elements: (1) technological, (2) organizational, and (3) environmental contexts.

Technological Context The technological context focuses on the characteristics of technologies being considered (Basole 2005), in this case, social media tools. Social media adoption by small businesses is heavily dependent upon the degree to which they can utilize social media sites and their offerings.Jantsch (2010) argues that when technology is leveraged to facilitate and enhance social interaction, a great deal of value can be created. Yet,Looney and Ryerson (2011) nd that 65 percent of small business owners attempt to manage social media without the necessary competence. According to the Information Systems (IS) literature, technology competence consists of technology infrastructure and Information Technology (IT) human resources in terms of knowledge and skills required to implement a speci c technology (Soares-Aguiar and Palma-dos-Reis 2008;Zhu and Kraemer 2005). Similarly,Askool and Nakata (2011) specify that the factors needed for social media adoption include technology infrastructure, applications, and system integration, as well as FIGURE 1 Model of Social Media Value for Small Businesses The Value of Social Media for Small Businesses193 Journal of Information Systems Spring 2014 employee training. Thus, technology competence represents both the technology infrastructure and the employees’ knowledge and skills needed to enable social media usage.

H1:Technology competence is positively associated with social media usage by small businesses.

Organizational Context The organizational context is typically de ned in terms of descriptive features like rm size, centralization or formalization, communication processes (with clients or employees), and management structure (Tornatzky and Fleischer 1990). While organization size is an important organizational factor for technology adoption in general (Tornatzky and Fleischer 1990), and more speci cally for social media (Bonso´n and Flores 2011), it is not included in this study becauseall rmsinthesamplearesmall.Similarly,management structure and centralization are unlikely to vary across small organizations. The study, therefore, focuses on communication processes with customers, more speci cally on the requests customers make for the rm to provide social media, which is labeled customer pressure. 1Depending on the level of bargaining power customers have, they may be able to pressure the organization to implement an innovation (Teo, Wei, and Benbasat 2003). With respect to social media,Askool and Nakata (2011, 212) suggestthatitis‘‘easier for the management to make a decision if someone they know has it or is getting it.’’Therefore, if customers exert enough power to request that a small business implement social media, it is more likely that the small business will indeed make greater usage of social media tools.

H2:Customer pressure is positively associated with social media usage by small businesses.

Environmental Context The environmental context is‘‘the arena in which a rm conducts its business—its industry, competitors, access to resources supplied by others, and dealings with the government’’(Tornatzky and Fleischer 1990, 154 ). In this study, the environment includes competition, government (regulations), and the mobile environment (resources) in which the small business exists. Since there are no regulations regarding social media usage in the participants’ geographic area, only competitive pressure and mobile environment are included in the model.

Competitive pressure, or the degree to which an organization is affected by competition in the market, has been recognized as an important factor in prior e-business usage research (Zhu and Kraemer 2005).Askool and Nakata (2011) also recognize this importance in the context of social media, especially in competitive environments.Porter and Millar (1985) suggest that by using innovations, businesses may change the rules of competition and leverage new ways to surpass competitors, changing the competitive landscape. Thus, businesses in a more competitive market are more motivated to use advanced technologies, such as social media and Web 2.0 technologies.

In view of these ndings, it is likely that many small business owners in industries that are facing increasing growth of social media usage feel the pressure to also do so.

H3:Competitive pressure is positively associated with social media usage by small businesses. 1Teo et al. (2003) refer to this dimension as partner pressure. The term customer pressure is adopted to capture the retail nature of the model.

194Schaupp and Be´ langer Journal of Information Systems Spring 2014 The mobile environment in which a small business operates in uences the adoption and usage of mobile Web 2.0 technologies, including social media. Factors such as the availability of client devices and the price of mobile technologies likely can in uence mobile use (Tarasewich, Nickerson, and Warkentin 2002). For example, more than 250 million active users are currently accessing Facebook through their mobile devices, and they are considered twice as active as non- mobile users (Facebook 2012). Businesses operating in advanced mobile environments, therefore, are likely to make more use of social media.

H4:The mobile environment of the small business (technology and security availability) is positively associated with social media usage by small businesses.

Social Media Usage and Value The Resource-Based View theory suggests that to be valuable, IS resources must be (1) economically valuable, (2) relatively scarce, (3) dif cult to imitate, and (4 ) immobile across companies (Peteraf 1993). In this study, RBV provides support for the link between usage of social media and its value for small businesses on various dimensions of value creation. Therefore, the model posits that managers will identify social media use, as determined by the antecedents previously discussed, as an opportunity to create value for the organization. More speci cally:

H5a:Small business social media usage is positively associated with its perceived value on the internal operations dimension.

H5b:Small business social media usage is positively associated with its perceived value on the marketing dimension.

H5c:Small business social media usage is positively associated with its perceived value on the customer service dimension.

H5d:Small business social media usage is positively associated with its perceived value on the sales dimension.

Research Method Ninety-nine small businesses that had recently begun utilizing social media were solicited to participate in the survey. Businesses were identi ed through personal contacts of the authors, as well as via Facebook. The survey was accessible via a link provided by email if completed online or printed on paper if solicited in person. Of the 99 small businesses contacted, 57 completed the survey, for a response rate of 58 percent. Upon survey completion, respondents had the opportunity to enter a drawing for an iPad. Respondents included owners, general managers, marketing managers, or the primary person in charge of social media efforts at the business. They were from a variety of industries and geographic locations. All surveys were con dential (except contact information for the drawing, which was kept separately from survey data). Demographics are summarized in Table 2.

Survey Instrument The online survey has two sections. The rst captures measures of the latent variables, while the second section captures respondents’ demographics. The instrument uses measures adapted from prior research whenever possible, with the wording modi ed to t social media contexts. The following latent variables are measured as re ective based on the literature they were drawn from:

technology competence, customer pressure, competitive pressure, mobile environment, and usage The Value of Social Media for Small Businesses195 Journal of Information Systems Spring 2014 of social media (Hsu, Kraemer, and Dunkle 2006; Picoto et al. 2012;Tarasewich et al. 2002;Zhu and Kraemer 2005;Zhu, Kraemer, and Xu 2006). Similarly, three of the dimensions of value are modeled as formative, as was done in prior research: impact on internal operations, marketing, and sales (Picoto et al. 2012). Finally, the impact on customer service dimension is modeled as re ective, since the items that are identi ed during the interviews are interchangeable measures of customer service. Each question is measured on a ve-point Likert-type scale, ranging from 1 (strongly disagree) to 5 (strongly agree). Fifteen academics and practitioners pre-tested the instrument. The revised nal survey includes 26 items representing nine constructs, in addition to demographic and self-reported usage items. Constructs and sources are presented in Table 3.

Data Analysis The model is tested using SmartPLS 2.0 (Ringle, Wende, and Will 2005) since it allows for the testing of re ective and formative constructs, and is robust to small sample sizes (Chin and Todd 1995). In this study, the sample size of 57 exceeds the minimum threshold (Chin and Newsted 1999;Hair, Ringle, and Sarstedt 2011). 2Because SmartPLS 2.0 has no established global goodness-of- t criterion, a two-step process is used to assess rst the measurement model, and then the structural model (Urbach and Ahlemann 2010).

Convergent validity.For re ective constructs, convergent validity is assessed using threead hoctests recommended byAnderson and Gerbing (1988): the standardized loadings, construct composite reliabilities, and variance-extracted estimates (Tables 5 and 6 ). All tests support the convergent validity of the scales with expected loadings above 0.50 (Fornell and Bookstein 1982) except for TC3, composite reliabilities between 0.77 and 0.90, and average variance-extracted estimates between 0.55 to 0.82 (Netemeyer, Johnston, and Burton 1990). Cronbach’s alphas for all re ective constructs are almost at or above 0.70 (Nunnally 1978). While TC3 has a lower loading at 0.393, the item loads much higher on technology competence than any other construct (Table 4 ). In the interest of completeness, and given an acceptable composite reliability, all three technology- competence items are retained for analyses.

TABLE 2 Demographics Category Values Frequency Percentage Age 21–24 37 37.4% 25–30 22 22.2% 31–35 18 18.2% 36–40 4 4.0% 41–50 6 6.1% 50þ12 12.1% Totals 99 100.0% Gender Male 55 55.6 % Female 44 44.4% Totals 99 100.0% 2Hair et al. (2011) suggest that the minimum sample size should beequal to the larger of (1) ten times the largest number of formative indicators used to measure one construct, or (2) ten times the largest number of structural paths directed at a particular latent construct in the structural model.

196Schaupp and Be´ langer Journal of Information Systems Spring 2014 TABLE 3 Re ective Measurement Constructs and Validity Analysis Construct Items—TYPE (Sources)Standardized LoadingComposite Reliability AVECronbach’s Alpha Technology Competence—REFLECTIVE (Picoto et al. 2012;Zhu and Kraemer 2005) 0.771 0.552 0.690 1. The amount of technology necessary available to facilitate social media usage 0.895 2. The number of IT knowledgeable employees available to facilitate social media usage 0.837 3. The extent of social media applications that are integrated with internal databases and information to facilitate social media initiatives0.393 Customer Pressure—REFLECTIVE (Hsu et al. 2006; Picoto et al. 2012) 0.872 0.750 0.830 1. Customers demand it0.930 2. To improve communication channels to your customers 0.773 3. Top management requires it0.887 Competitive Pressure—REFLECTIVE (Picoto et al. 2012;Zhu and Kraemer 2005) 0.902 0.822 0.789 1. Degree to which social media in uences the competition in your industry 0.937 2. Degree to which your competitors in uence your business in the local market 0.876 Mobile Environment—REFLECTIVE (Picoto et al. 2012;Tarasewich et al. 2002) 0.872 0.775 0.750 1. Availability of attractive smart phones 0.784 2. Mobile technology price0.967 Social Media Use—REFLECTIVE (Zhu and Kraemer 2005;Zhu et al. 2006) 0.837 0.633 0.708 1. The extent of marketing objectives conducted via social media 0.731 2. The extent of customer services conducted via social media 0.767 3. The extent of supporting employees to work independently from top management 0.882 Perceived Impact on Customer Service—REFLECTIVE (Interviews) 0.900 0.693 0.853 1. Customer service improved0.767 2. Customer satisfaction increased 0.826 3. Increased convenience/service level to customers 0.920 4. Facilitate communication with customers 0.811 The Value of Social Media for Small Businesses197 Journal of Information Systems Spring 2014 Formative construct validity.Formative construct validities are evaluated based on their weights and Variance In ation Factors (VIFs) (Table 5). The weights for Sales area widened; Improved marketing exibility; Internal marketing initiative more ef cient; and Staff productivity increased are statistically signi cant, which is an indication of their validity (Chin 2010). The weights for Sales increased; Increased control; Reduced marketing costs; Increased staff motivation TABLE 5 Formative Constructs Measurement and Validity Analysis Construct Items—TYPE (Sources)Standardized Loading Signi cance VIF Perceived Impact on Sales—FORMATIVE (Picoto et al. 2012) 1. Sales increased as a result of social media use 0.216 ns 1.738 2. Sales area widened 0.846 0.001 1.738 Perceived Impact on Marketing—FORMATIVE (interviews; Picoto et al. 2012) 1. Improved marketing exibility 0.796 0.001 1.594 2. Increased control of direct marketing objectives 0.169 ns 2.398 3. Reduced marketing costs 0.172 ns 1.765 Perceived Impact on Internal Operations—FORMATIVE (Picoto et al. 2012) 1. Internal marketing initiatives more ef cient 0. 594 0.001 1.334 2. Staff productivity increased 0.397 0.05 2.568 3. Increased staff motivation and satisfaction 0.109 ns 2.887 4. Improved employee effectiveness 0.129 ns 2.105 TABLE 4 Item Loadings and Cross Loadings for Re ective Indicators Technology CompetenceCustomer Pressure (PP)Competitive PressureMobile Environment USEImpact Customer Service TC1 0.895 0.369 0.123 0.024 0.274 0.269 TC2 0.837 0.180 0.129 0.070 0.229 0.211 TC3 0.393 0.025 0.002 0.333 0.020 0.063 PP1 0.291 0.930 0.350 0.419 0.430 0.495 PP2 0.238 0.774 0.175 0.080 0.371 0.712 PP3 0.324 0.887 0.319 0.528 0.433 0.469 CP1 0.067 0.292 0.937 0.532 0.140 0.234 CP2 0.229 0.313 0.875 0.371 0.101 0.294 ME4 0.135 0.382 0.485 0.784 0.156 0.371 ME5 0.103 0.371 0.458 0.967 0.380 0.230 USE1 0.194 0.361 0.146 0.339 0.731 0.261 USE2 0.180 0.413 0.060 0.166 0.766 0.421 USE3 0.321 0.366 0.120 0.318 0.882 0.453 CS1 0.323 0.532 0.281 0.295 0.289 0.766 CS2 0.124 0.641 0.426 0.420 0.427 0.826 CS3 0.296 0.611 0.230 0.231 0.475 0.920 CS4 0.242 0.320 0.008 0.044 0.381 0.811 198Schaupp and Be´ langer Journal of Information Systems Spring 2014 and satisfaction; and Improved employee effectiveness are not signi cant. However, they are not removed from the model, as they represent different dimensions of the construct of interest (Chin 2010). This is consistent with prior research where such items are retained to preserve content validity (Arnold, Benford, Canada, and Sutton 2011;Bollen and Lennox 1991;Petter, Straub, and Rai 2007). Multicollinearity is checked using the VIFs and all of the VIFs are below the cutoff value of 3.3 (Diamantopoulos and Siguaw 2006), indicating that multicollinearity is not an issue.

Discriminant validity.Discriminant validity is assessed with the test recommended by Anderson and Gerbing (1988). A construct is considered to be distinct from other constructs if the square root of the AVE for it is greater than its correlations with other latent constructs (Barclay, Higgins, and Thompson 1995). As shown in Table 6, all constructs in the model pass this test.

Common method bias.To verify whether common method bias is a problem with the data set, the Harmon one-factor test (Podsakoff and Organ 1986) is conducted where all 26 items are entered into a factor analysis. The results show that at least eight factors are present, and that the most variance explained by any one factor does not account for the majority of the variance (i.e., 50 percent), indicating that common method bias is not a likely issue in this study (Podsakoff and Organ 1986).

Results.Results of the structural model analysis are presented in Figure 2.The PLS testing of the structural model results in moderate levels of variances explained (R 2) in the endogenous variables. 330.4 percent of the variance for the usage of social media construct is explained. For the dimensions of social media value, the percentages of variance explained are 45.6 for perceived TABLE 6 Discriminate Validity Test Construct Mean (S.D.) TC CP PP ME USE SI CSI IOI MI Technology Competence (TC ) 3.750.743 (0.96 ) Competitive Pressure (CP) 3.70 0.1480.888 (1.05) Customer Pressure (PP) 3.54 0.330 0.3300.911 (1.04 ) Mobile Environment (ME ) 4.04 0.037 0.509 0.4090.866 (0.86 ) Social Media Use (USE ) 3.48 0.298 0.135 0.474 0.3440.841 (1.04 ) Perceived Impact on Sales (SI) 4.04 0.354 0.307 0.622 0.317 0.607 NA (0.84 ) Perceived Impact on Customer Service (CSI)4.24 0.287 0.284 0.636 0.296 0.482 0.7060.924 (0.72) Perceived Impact on Internal Operations (IOI)3.40 0.194 0.435 0.701 0.522 0.675 0.682 0.655 NA (1.00) Perceived Impact on Marketing (MI)4.16 0.275 0.221 0.603 0.246 0.554 0.532 0.673 0.643 NA (0.81) Diagonal values shown in bold are the square root of the average variance extracted for each construct.

Off-diagonal elements represent the correlations among constructs.

3Chin (1998) considers values above 0.67 substantial, above 0.33 moderate, and values of 0.19 and lower weak.

The Value of Social Media for Small Businesses199 Journal of Information Systems Spring 2014 impact on internal operations, 30.7 for perceived impact on marketing, 23.2 for perceived impact on customer service, and 36.8 for perceived impact on sales.

Three of the four proposed hypotheses regarding antecedents of social media usage by small businesses are supported. Social media use is positively impacted by greater technology competence (H1), greater customer pressure (H2), and a more developed mobile environment (H4 ) with coef cients of 0.223, 0.330, and 0.298, respectively. All of these paths are signi cant ( p ,0.05) in the model, supporting H1, H2, and H4. Competitor pressure (H3) was not found to be a signi cant antecedent of social media use by small businesses in this study. The strongest paths in the model are between social media usage and dimensions of value, with coef cients of 0.675 for impact on internal operations, 0.607 for impacts on sales, 0.554 for impacts on marketing, and 0.482 for impacts on customer service. All of these paths are highly signi cant ( p,0.0001) in the model, supporting H5a, H5b, H5c, and H5d. Together with the moderate levels of explained variance, these ndings suggest that the RBV is indeed an appropriate framework for studying the value of IT at the organizational level. FIGURE 2 Results for the Social Media Value for Small Businesses Model *, ** Indicates p,0.05, and p,0.0001, respectively.

200Schaupp and Be´ langer Journal of Information Systems Spring 2014 V. DISCUSSION Social media creates new and unprecedented opportunities for small businesses to expand their existing marketing strategies to improve customer relationships, increase their sales, and improve their reputation. Social media is especially important for small businesses with limited means and skills. Yet, the value of social media for small businesses has yet to be researched. Therefore, this study explores the usage and value of social media for small businesses. Elicited from interviews of small businesses utilizing social media, the TOE framework, the RBV theory, and prior literature, antecedents of usage of social media by small businesses are identi ed and three of them are validated. The four proposed dimensions of social media value for small businesses are also con rmed.

Summary of Results The research comprised two studies. First, interviews were conducted with a small sample to more fully identify social media value drivers (Study 1). Then, a complete model of antecedents and value drivers was tested with a larger sample of survey respondents (Study 2). PLS testing for the proposed model of social media usage and value con rms that technology competence (H1), customer pressure (H2), and the characteristics of the mobile environment (H4 ) positively impact social media use by small businesses. Competitive pressure (H3) does not impact social media use by small businesses in this study. This nding might be explained by the fact that in a small business context the focus tends to be mostly on the customer, especially repeat customers, and that oftentimes the small business does not have a direct competitor in close proximity. In fact, in interviews, respondents mentioned that they typically did not have many, if any, competitors in the local market. This presents an interesting avenue for future research. Statistical tests also con rm that the four proposed dimensions of social media value (impact on internal operations, on sales, on marketing, and on customer service) are all signi cant, supporting H5a–H5d.

The model developed and tested in this paper provides a foundation for future research on social media. Most prior social media research has focused either solely on the individual perspective or on large organizations. By focusing on the organizational perspective with an organizational-level framework, antecedents such as customer pressure and characteristics of the mobile environment were identi ed and found to be signi cant. This is important for researchers interested in organizational-level studies, since the research validates the use of the TOE framework for technology usage in such contexts.

The impact of technology competence on usage suggests that researchers have to consider both the amount of technology available and the skills available when measuring technology competence. The small businesses surveyed had minimal amounts of technology at their disposal, but were still able to make good use of social media. Measuring only technologies available is not suf cient; researchers must also measure the IT knowledge of employees who utilize the available technology. For practitioners, this result suggests that small business owners and managers will likely need to acquire the skills to support social media even more in the future. Since customer pressure is rarely studied as a determinant of usage, but was found to be signi cant in this study, researchers should consider adding customer pressure to IT usage models at the organizational level of analysis. For small business owners, this result highlights the importance of maintaining a line of communication between themselves and their customers. Finally, the importance of the mobile environment as a signi cant predictor of social media usage provides researchers with initial evidence regarding this relationship. Researchers interested in social media should include the characteristics of the mobile environment in future research. For practitioners, the results suggest that small businesses must develop effective strategies for increasing their mobile technology adoption. The Value of Social Media for Small Businesses201 Journal of Information Systems Spring 2014 Overall, the ndings regarding the antecedents of social media usage by small businesses provide an extension to prior research using the Technology-Organization-Environment framework by validating the framework in the context of small businesses. In addition, the study adds to social media research by examining actual usage by real-world organizations as opposed to intentions to use social media. Finally, managers and owners can consider the determinants of social media usage as a guide for where to invest to improve their use of social media tools.

The research also examines the dimensions of value in the contexts of social media and small businesses. Interestingly, the strongest explained variance was for the impact on internal operations.

This is an important nding, since most researchers may think of social media as outward looking.

The model provides small business owners and managers a roadmap to identify potential additional ways to use social media to their advantage. For example, while a small business owner might have heard how social media allows mass marketing to a large population of potential customers, they may not have considered how to use social media for internal operations. Other small businesses might start using social media for sales purposes, but the results suggest they should also consider expanding their use for marketing, customer service, and internal operations. For small businesses, social media involves substantial investment, so a better understanding of its possible value is crucial. A critical success factor for small businesses is their ability to market themselves ef ciently and cost effectively by reducing or eliminating marketing and sales costs, and social media provides an opportunity to do this.

Limitations There are limitations to the study. First, the sample size was relatively small; however, the rules of thumb of PLS analysis (Chin and Todd 1995) suggest that the sample was suf cient for the analyses performed (40 data points required). Since this research focused on the organizational perspective, it was necessary to obtain answers from organizations; there could not be several responses per organization, which would have increased the sample size. Also, surveying a single individual may or may not adequately re ect the organization’s views.

Opportunities for Future Research Several possible avenues for future research derive from the ndings of this study. One of the most interesting ndings is the non-signi cant result for H3. Competitive pressure does not signi cantly in uence social media usage in this study, which suggests that competition is not the driving force behind the decision to adopt social media, but that instead, customers are. Future research should investigate the conditions under which competitive pressure might or might not be a factor in social media use.

The TOE framework could be used to identify other possible antecedents of social media usage by organizations. For example, future studies might separate technology availability and skills into different constructs. Finally, it would also be interesting to compare where on the continuum of small business (micro-business with 1 to 5 employees, very small with 5 to 25 employees, or small with 25–100 employees) the organizations are. Since in the context of very small businesses the owner may also be the main user/developer, it is possible that individual-level theories, such as the Technology Acceptance Model (Davis 1989) and its subsequent versions, might be appropriate to study such micro-businesses.

VI. CONCLUSION This study extends prior research on social media to examine organizational use by small businesses. It uses a mixed method approach that combines interviews and survey data. Unlike prior 202Schaupp and Be´ langer Journal of Information Systems Spring 2014 research at the individual level, this study examines social media usage at the organizational level.

Three of the four proposed antecedents of social media usage are signi cant: technology competence, customer pressure, and the characteristics of the mobile environment. At the same time, all four proposed dimensions of social media value for small businesses are signi cant: impact on internal operations, sales, marketing, and customer service. The study therefore provides empirical evidence of the links between antecedents, social media usage, and its value for small businesses.

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2. How many‘‘friends’’do you have?

3. Are Social Media tools being utilized?

4. What is the purpose of your Social Media presence?

5. What are your most important goals that your Social Media helps accomplish?

6. How have these goals affected the actual design or functionality of your Social Media?

7. How do you judge whether your Social Media is successful in meeting those goals?

8. What outcome(s) do you hope to see as a result of Social Media?

9. What does Social Media add to the business?

10. Who are the users of your Social Media?

a. Speci cally, how well do you‘‘know’’your Social Media friends?

11. What is the primary purpose that a potential Social Media‘‘friend’’would become a part of the Social Network?

a. What bene t(s) do users enjoy by participating?

12. Does Social Media improve the organization’s visibility/image?

13. Is communication bi-directional (two-way)?

a. In other words, B2C and C2B.

14. Does the business have a website in addition to Social Media?

a. Are metrics tracked?

b. How many visits do you get per day/week?

15. Is the website able to make transactions of some sort with users?

a. If yes, how many are executed per day/week?

16. What are the main concerns of your senior management regarding Social Media?

17. Who has ultimate responsibility in running your Social Media initiative?

a. Is it autonomous control or shared between several individuals?

18. How often is Social Media updated?

a. How many and how often are message blasts sent out? Daily? Hourly?

b. Do you utilize location service functionality, i.e., mobile advertising?

19. Do you have a Social Media and/or website development/maintenance budget, or is this activity fundedad-hoc?

20. Who (if anyone in particular) is responsible for the design/content of your site?

21. How do you keep your Social Media current/up to date?

a. Are in-store specials the same as those offered via Social Media? 206Schaupp and Be´ langer Journal of Information Systems Spring 2014 22. What (if anything) are you measuring?

23. What do you wish you could measure?

24. Do you have any process for gathering feedback from visitors/customers and incorporating this into your Social Media?

25. Who are the audiences that you target?

26. How do you design your Social Media in order to target multiple audiences?

27. What have you done to learn about the motivations and goals of your customers?

28. Do you know if your customers are referring other people to your Social Media?

29. What is your social networking growth rate?

a. How many new friends do you add in a month?

30. In your own words, how would you evaluate the success of your Social networking efforts?

31. Please rate the importance of the following criteria in evaluating the success of your Social Media efforts (5¼most important, 1¼least important):

a. Increased favorable impression of your organization b. Increased frequency of return visits to the Social Media page c. Customers refer the Social Media page to others d. Customer satisfaction increased e. Reduction in advertising costs versus other avenues (in-person, phone, mail) 32. What are the major weaknesses of your Social Media efforts?

33. Do you plan on expanding your Social Media efforts? How? When?

a. Willing to commit resources ($$) to the cause? The Value of Social Media for Small Businesses207 Journal of Information Systems Spring 2014 Copyright ofJournal ofInformation Systemsisthe property ofAmerican Accounting Association anditscontent maynotbecopied oremailed tomultiple sitesorposted toa listserv without thecopyright holder'sexpresswrittenpermission. However,usersmayprint, download, oremail articles forindividual use.