How Small and Medium Enterprises Are Using Social Networks? Evidence from the Algarve Region

Abstract

The evolution of internet created new opportunities for small and medium enterprises (SME), among which are social networks. This work aims at analyzing the potential of these networks for the SME in Algarve, creating a questionnaire for the purpose. The empirical study revealed that some firms have already an integrated business strategy with social networks, as well as a group in the firm responsible for it. Most of their managers consider that social networks enhance performance, but few really measure these results. A categorical principal component analysis identified two dimensions of social networks’ use: social networks for product-client interaction and knowledge; and social networks with potential for marketing. A supplementary analysis (hierarchical clustering) identified three patterns of SME’s involvement in social networks: cluster Social Net Level 1, cluster Social Net Level 2 and cluster Social Net Level 3. These groups validated the results described above, indicating a sustainable methodological approach.Keywordssocial networksSMEpatternsperformancealignment