How do small firms learn to develop a social media competence?

Abstract

Social media can be leveraged to improve the firm's business activities to create value. Because small firms have a lower portfolio of financial resources to compete more effectively in the market, social media capabilities can become more important for small than large firms. However, prior research has failed in explaining the variables through which small firms can learn to adopt social media. Our study is a first effort to address this research gap. We propose a conceptual model in which social competitor pressure, IT infrastructure capability, two organizational capabilities (marketing management and innovation management) and firm size enable small firms to learn to develop a social media competence. The model is tested using the partial least squares-based structural equation modeling technique employing a unique secondary dataset on a sample composed of the 100 small U.S. firms included in the 2013 Forbes America's Best Small Companies ranking. The empirical analysis suggests that IT infrastructure capability, social competitor pressure, marketing management and innovation management are key mechanisms through which small firms learn to develop a social media competence. The empirical analysis also suggests that social media competence is more important for the smallest manufacturing firms even among a sample of small firms.