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 Industrial Management & Data Systems
Factors influencing the use of social media by SMEs and its performance outcomes
Sulaiman Ainin Farzana Parveen Sedigheh Moghavvemi Noor Ismawati Jaafar Nor Liyana Mohd
Shuib
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Sulaiman Ainin Farzana Parveen Sedigheh Moghavvemi Noor Ismawati Jaafar Nor Liyana Mohd
Shuib , (2015),"Factors influencing the use of social media by SMEs and its performance outcomes",
Industrial Management & Data Systems, Vol. 115 Iss 3 pp. 570 - 588
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Mark Durkin, Pauric McGowan, Niall McKeown, (2013),"Exploring social media adoption in small to
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Margaret McCann, Alexis Barlow, (2015),"Use and measurement of social media for SMEs", Journal
of Small Business and Enterprise Development, Vol. 22 Iss 2 pp. -
Georgios Tsimonis, Sergios Dimitriadis, (2014),"Brand strategies in social media", Marketing
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IMDS
115,3
Factors influencing the use of
social media by SMEs and its
performance outcomes
570 Sulaiman Ainin, Farzana Parveen, Sedigheh Moghavvemi and
Received 11 July 2014 Noor Ismawati Jaafar
Revised 5 September 2014 Department of Operations and MIS, Faculty of Business and Accountancy,
5 January 2015
Accepted 1 February 2015 University of Malaya, Kuala Lumpur, Malaysia, and
Nor Liyana Mohd Shuib
Faculty of Computer Science & Information Technology, University of Malaya,
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Kuala Lumpur, Malaysia

Abstract
Purpose – The purpose of this paper is to investigate the factors that influence Facebook usage
among small and medium enterprises (SMEs). In addition, it examines the impact of Facebook usage on
financial and non-financial performance of the SMEs.
Design/methodology/approach – Using integrated model, this study examined the influence of
compatibility, cost effectiveness, interactivity and trust on Facebook usage and its subsequent
impact on organizations performance. Statistical analyses were based on the data collected, through
survey questionnaire from 259 SMEs in Malaysia. Partial Least Square (PLS) method was used to test
the hypotheses.
Findings – The study revealed that Facebook usage has a strong positive impact on financial
performance of SMEs; similarly it was also found that Facebook usage positively impacts the non-
financial performance of SMEs in terms of cost reduction on marketing and customer service,
improved customer relations and improved information accessibility. Additionally, factors such as
compatibility, cost effectiveness and interactivity was identified as factors that influence Facebook
usage among SMEs.
Research limitations/implications – This study is limited in selection of samples. The sample only
covered one community of SME in Malaysia which limits generalizability of the findings. This study
provided a clearer idea on the real importance of Facebook and its benefits. The results would motivate
and guide organizations in the adoption of Facebook for business activities. The study also has various
theoretical and practical contributions.
Originality/value – Very few empirical studies investigated the actual impact of Facebook usage
among organizations. This study investigated the effect of Facebook usage on the financial
performance of the organizations which is really important to study as it reveals the exact value of
using Facebook for business activities.
Keywords Facebook, SME, Social media
Paper type Research paper

1. Introduction
Using social media or Facebook as a platform for business has become a must
nowadays. With 13,589,520 Facebook users in Malaysia (Internet World Stats, 2012),
Facebook is increasingly becoming a popular choice of promoting business as it allows
Industrial Management & Data
communications to go beyond a private one-to-one conversation and now becomes
Systems a conversation of many-to-many (Derham et al., 2011). Business owners can fully utilize
Vol. 115 No. 3, 2015
pp. 570-588
© Emerald Group Publishing Limited
0263-5577
University of Malaya has provided funding in the form of research grant RP004C-13ICT, which
DOI 10.1108/IMDS-07-2014-0205 enabled us to sharpen the research methodology skills via a workshop the authors attended.
 Facebook functions for selling, advertising and marketing at a cheaper cost. They can Factors
use Facebook functions to promote their products, services and brands such as sharing, influencing
tagging, messaging, commenting and notifying. Bonsón and Ratkai (2013), Sarosa
(2012) and Wong (2012) in their studies analysed the use of Facebook in businesses
the use of
and they all stated that it is good for business to embrace it. Facebook can be social media
implemented in any businesses without any additional resources if they are
already connected. Thus, even small medium enterprises (SMEs) can use it for their 571
daily transactions as the cost is minimal and requires low level of IT skills (Derham
et al., 2011).
In the past, studies on the social media particularly Facebook either focus on factors
influencing usage (Akar and Topcu, 2011; Sin et al., 2012), types of usage (Bonsón
and Ratkai, 2013; Sarosa, 2012; Wong, 2012) or impact of usage (Chu et al., 2012;
Karpinski et al., 2013). This study combines all three elements; hence the study aims to
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investigate the various factors that influence the usage of Facebook and its impact on
organizational financial and non-financial performances among SMEs in Malaysia.
This study concentrated on Facebook usage as it is the most widely used social media
among Malaysian companies (Parveen et al., 2013). On the other hand, SME’s
are chosen as the population of study as they contribute 32 percent of gross domestic
product, 59 percent of employment and 19 percent of exports (SME Corporation, 2013).
Thus, it becomes imperative that this study be conducted.
The study is based on the Diffusion Of Innovation (DOI) theory. The DOI theory
plays an important role in increasing adoption intention and actual adoption of a
technology. Innovation by definition includes change, either in the media we use or
the means by which we engage a traditional process. Based on the DOI theory, the
innovation attribute compatibility was examined in this study. Variables such as
interactivity, cost effectiveness and trust on social media were also included.
The following section presents the Literature review and the hypothesis
development. Subsequently, the Methods used to conduct the study are explained
which is then followed by the description of the Data analysis, Results, and Conclusion
and discussion.

2. Literature review and hypothesis development

2.1 Social media adoption
The use of internet technology has become a common practice in the workplace
(Chen et al., 2008). The internet enabled communication media, helps organizations to
conduct business anytime from anywhere (Chen et al., 2008). A number of studies
investigated the use of Facebook among SMEs and found SMEs used Facebook
for various organizational objectives such as marketing, communication, sales,
advertising, innovation, problem resolution, customer service, human resources,
information technology, driving cultural change (Bhanot, 2012), advertising on the
social network (Beloff and Pandya, 2010; Handayani and Lisdianingrum, 2012) and
internet marketing (Congxi et al., 2010). Meske and Stieglitz (2013) indicated that SME
uses social media technologies like Facebook as a way to communicate with their
customers and support internal communication and collaboration.

2.2 Factors influencing adoption

A study among the SME mangers in the USA, the UK, Australia and India indicated
that firm innovativeness, age and geographic location have a significant impact on
 IMDS Twitter adoption by SMEs (Wamba and Carter, 2013). On the other hand, Zeiller and
115,3 Schauer (2011) indicated that SMEs will use social media if these applications provide a
significant amount of relevant and high-quality up-to-date content. A number of
studies indicated that factors such as compatibility (Wang et al., 2010), cost
effectiveness (Chong and Chan, 2012), trust (Chai et al., 2011) and interactivity (Lee and
Kozar, 2012) influence social media adoption. The following paragraphs describe the
572 relationships.
2.2.1 Compatibility. Based on the DOI theory, compatibility refers to the degree to
which innovation fits with the potential adopter’s existing values, previous practices
and current needs (Rogers, 1983). Compatibility has been considered as an essential
factor for innovation adoption (Cooper and Zmud, 1990; Wang et al., 2010). When
technology is recognized as compatible with work application systems, firms are likely
to consider the adoption of new technology. Many researchers have investigated
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the influence of compatibility on technology adoption, and found both positive and
negative results. For instance, Brown and Russell (2007) highlighted the effect of
compatibility on the adoption of radio frequency identification technology in the
South African retail sector and argued that for the RFID adoption and
implementation to be successful, it is necessary that organization develop a flexible
IT infrastructure that will be able to accommodate RFID systems. Hsu, Lu and Hsu
(2007) found the significant effect of compatibility in MMS adoption in the groups
of potential MMS user and indicated that they will adopt MMS if they feel that
using MMS in compatible with their values and beliefs. Wang et al. (2010), studied
the influence of compatibility and found that it is a significant factor. Whereas
Ramdani et al. (2009) in their study, found that compatibility is an insignificant
factor in the adoption of enterprise systems. Similarly, another study that investigated
the adoption of cloud computing (Low et al., 2011) found that compatibility was
found to have insignificant impact. Embedding social media in businesses
would be a best-fit concept because it helps to niche the target customers
effectively and businesses would be able to share the content of their products
and services almost instantly (Derham et al., 2011). Since the findings show
inconclusive results, it is interesting to study the influence of compatibility on
Facebook usage. Hence, in order to test the relationship the following hypothesis
is proposed:
H1. Compatibility positively influences Facebook usage.
2.2.2 Cost effectiveness. Previous research highlighted the importance of cost in the
adoption and utilization of the technology (Ernst and Young, 2001) and found direct
and significant relationship between cost and adoption of technology (Alam and Noor,
2009). Studies have found cost effectiveness to be an important variable in the adoption
of new technologies (Chong and Chan, 2012; Premkumar and Roberts, 1999). Social
media is suitable for SMEs because of low cost, low barriers to participation and low
level of IT skills required to use it (Derham et al., 2011). Dixon et al. (2002) argued that
the SMEs will less likely adopt ICT if its initial set-up cost is high. In the context of
Malaysia, Alam (2009) found the cost of adoption have a significant effect on internet
adoption among SMEs. In contrast, Tan et al. (2009) found that cost had no significant
effect with the ICT adoption. In a similar study by Alam and Noor (2009) perceived
cost was found to have no direct impact on ICT adoption. However, as social media is
a cost effective technology and organizations can have direct communication with
 customers at relatively low costs (Kaplan and Haenlein, 2010), it is most likely for an Factors
organization to use it. Hence, the following hypothesis is postulated: influencing
H2. Cost effectiveness of Facebook positively influences social media usage. the use of
2.2.3 Trust. Trust is a multidimensional construct. The authors have investigated social media
different types of trust in their studies. The more suitable one for this research
would be the institution-based trust. Mcknight et al. (1998) described two types of 573
institution-based trust – situational normality and structural assurance. Situational
normality refers to the belief that success is anticipated because the situation is normal.
Whereas the structural assurances refer to the belief that favorable outcomes are likely
because of contextual structures, such as contracts, regulations and guarantees.
Choudhury and Karahanna (2008) further extended McKnight et al.’s (2002)
framework and suggested the existence of another form of trust, i.e. informational trust.
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Informational trust is defined as a users’ belief about the reliability, credibility and
accuracy of information obtained from Facebook and is an important factor that
influence usage (Chai et al., 2011). The essential success factor for the small business is
a good customer relationship that is accommodated by social media. Expertise within
the organization could share their ideas, opinions and knowledge based on the queries
of their customers via the social media (Schaffer, 2013). In SMEs context, organizations
post lot of information about their organization, products, services and other
promotional activities and also obtain information from Facebook and gain knowledge
from it. Hence there might be a need for structural assurance and informational trust
in order to use Facebook for work-related purposes. Therefore, the following
hypothesis is proposed:
H3. Trust on Facebook positively influences social media usage.
2.2.4 Interactivity. Previous studies have found that the design and implementation
of the information systems considers the successful interaction between human and
technology as a key factor (Lee and Kozar, 2012). Among the various design
characteristics, interactivity stands out as a key and distinguished factor that impacts
users’ response to new technologies including web sites (Agarwal and Venkatesh,
2002; Jiang and Benbasat, 2007). Social media like Facebook is considered as an
interactive media. It enables two-way communication rather than one-directional
transmissions or distributions of information to an audience (Mayfield, 2008).
Handayani and Lisdianingrum (2011) investigated adoption and use of Facebook in
two Indonesian SMEs, and argued that Facebook can be used as effective
free online marketing tool if can be well managed. Therefore, considering
the interactive nature of Facebook, the interactivity construct might have
a strong influence on Facebook usage thus the formulation of the following
hypothesis:
H4. Interactivity of Facebook positively influences Facebook usage.
2.3 Impact of social media on organizational performance
Despite many advantages of using Facebook, organizational-level research on
Facebook and its impact on organizational performance has not grown as rapidly
(Lovejoy and Saxton, 2012; Shahizan et al., 2012). Therefore this study investigates the
various factors that influence Facebook usage among organizations and its impact on
organizational performances.
 IMDS Facebook usage in this study is measured using the system-centered fashion where
115,3 the measures of system usage are based on the various tasks for which the system is
used (Burton-Jones and Gallivan, 2007). In order to investigate the usage of Facebook
among organizations, the informed effective use of Facebook was considered, as
this was an important indication of technology success, which in turn has an
impact on organizations (DeLone and McLean, 2003). Based on the DeLone and
574 McLean IS success model, organizational performance refers to the actual benefits
organizations received from using Facebook in terms of both financial and non-
financial performances.
Previous studies have investigated organizational usage of Facebook, however only
few studies have examined the impact of Facebook on organizational performance. For
instance, Rodriguez et al. (2014), provided evidence that social media technologies like
Facebook positively impacts the customer-orientated processes which in turn impacts
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the sales performance of an organization. Ferrer et al. (2013) demonstrated that the use
of social media technologies positively impacts the social capital of an organization and
therefore its performance. In addition, Wong (2012) found out that Facebook usage has
a positive impact on SME business (Wong, 2012). This is supported by finding from
Kwok and Yu (2013) who found that sales can be increased with Facebook usage. When
organizations use Facebook, it is likely to have a positive impact in terms of both
financial and non-financial performances. This can be empirically tested by setting the
following hypothesis:
H5. Facebook usage will have positive impact on non-financial performance.
H6. Facebook usage will have positive impact on financial performance.
Figure 1 outlines the theoretical model that guides this research.

3. Research methodology
The participants for this study are SME owners in Malaysia who uses Facebook for
their business. SME can be defined by sales turnover or number of employees.
Micro business are businesses with sales turnover less than RM300,000 or full-time
employees less than five. Small business are those with sales turnover from RM300,000

Compatibility H1

Non-Financial
H5 Performance
H2
Cost Effectiveness

Facebook Use
H3 H6

Trust
Financial
H4
Performance

Figure 1.
Interactivity
The research model
 to less than RM3 million or full-time employees from five to less than 30 while medium Factors
business are those with sales turnover from RM3 million to not exceeding RM20 influencing
million or full-time employees from 30 to not exceeding 75 (SME Corp. Malaysia, 2013).
The targeted respondents were the owners of the businesses taken from one
the use of
online SME community consisting of 937 members. The questionnaire was posted social media
via the community’s portal and they were invited to participate in the survey using
Survey Monkey. 575
Before conducting the survey, interviews were conducted with the head of
marketing or head of social media of six Malaysian organizations that have been using
Facebook. They were identified from their web sites. Initial contacts were made to
invite them to participate in the interviews. The objectives of the interviews were two
prong: first, purpose of using Facebook; and second, perceived impact of Facebook
usage on organizational performance. Based on the interviews, Facebook usage was
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categorized as information search, visibility and building customer relations whereas

non-financial performance was divided into three: cost reduction, improved customer
relations and improved information accessibility.
The questionnaire (see Table AI) consists of two parts. Part 1 contains questions
on the constructs of interest to this study namely trust, interactivity, compatibility,
cost-effectiveness, social Media usage and organization performance. All the
statements were measured using multiple items, on five-point Likert scale items
anchored with, “1 ¼ Strongly Disagree” and “5 ¼ Strongly Agree.”
The items of compatibility were adapted from Rogers (1995), Teo et al. (1997-98) and
Teo and Pian (2003). The items of cost factor were adapted from Chong and Chan
(2012), and modified to the context of Facebook. The conceptualization of trust was
measured using items adapted from Chai et al. (2011), interactivity from Lee and Kozar
(2012), usage from Papastathopoulou and Avlonitis (2009), Elliot and Boshoff (2005),
Moen et al. (2008) and Teo and Choo (2001), social media impact (non-financial
performance) from Apigian et al. (2005), Teo and Choo (2001), Mirani and Lederer
(1998), Elliot and Boshoff (2005) and Molla and Heeks (2007) and financial performance
from Ainin et al. (2012). The second part of the questionnaire focussed on respondents’
demographics information. Pilot test was conducted with 33 responses, in order to
ensure the validity of the questions and structures. Some minor revision were made and
subsequently, the survey was conducted online using Survey Monkey. It was
conducted for two months from July 2013 to August 2013. The link for the
questionnaire was posted on the community forum. Follow-up reminder was sent to the
respondent as individual private message on Facebook. For data analysis, PLS
technique was used to test the hypotheses of the study.

4. Results
Among the 937 questionnaire distributed, 259 usable responses were received showing
a response rate of 28 percent. About 85 percent of the organizations employed less than
five employees, 11.6 percent employing five to ten employees and 1.5 percent
employing more than 20 employees. This shows that almost all the organizations that
responded to the survey are small, with less than 20 employees. In terms of business,
about 26 percent of organizations sell clothing, 25 percent selling beauty and
health-related products, 13 percent of organizations sell food products, 11 percent of
organizations sell accessories and 2 percent organizations are involved in
communication, design, digital, tourism and finance-related businesses.
 IMDS 4.1 Facebook usage
115,3 About 29 percent of the organizations have been using Facebook for about one to two
years, 28.6 percent for less than six months, 21.6 percent for a period of six months to
one year, 12.7 percent for two to three years and 4.2 percent for three to four years.
This illustrates that most of the SMEs surveyed have been using Facebook for a
reasonable period of time thus they were able to provide the answers related to the
576 organizational impact.
More than half (63.3 percent) of the organizations reported that they post
information on their organizations’ Facebook page twice a day, 17.8 percent post once a
day and 10.4 percent post information at least twice a week. In addition, more than half
(53.3 percent) of the organizations replied that they respond to any enquiries within an
hour, and 35.1 percent responded within a day. The results indicate that the SMEs are
serious to enhance their customers’ relationship via Facebook.
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The results also showed that 61.4 percent of SMEs do not use any other social media
tool other than Facebook, while 38.6 percent of SMEs reported that they do use other
social media tools such as Twitter, Instagram and Blogs, etc. Hence, the focus of this
study is substantiated.

4.2 Assessment of measurement model

This study uses the Partial Least Square (PLS) technique to analyse data by using
SmartPLS 2.0 software for validating measurements and testing the hypothesis. The
two-stage approach was used to assess the second-order constructs. This method
provides the advantage of estimating a more parsimonious model on the higher level
analysis without the Lower Order Constructs (LOCs) (Becker et al., 2012). The
evaluation of the measurement model is based on the assessment of internal
consistency (composite reliability), indicator reliability (outer loadings), convergent
validity (average variance extracted (AVE)) and discriminant validity.
In order to retain an item in the measurement model, it must have significant outer
loadings. The indicator outer loadings should be higher than 0.708. Figure 2 illustrates
the measurement models of the study and the factor loadings (outer loadings) of the
constructs. As mentioned, the study uses the two-stage approach. In the first stage,
Figure 2 shows first-order constructs such as FBUsage1, FBUsage2, FBUsage3 of
Facebook usage construct; cost reduction (CR), improved customer relations (Cust.
Rela), enhanced information accessibility (Info. Acess) of non-financial performance
constructs are directly connected with other constructs of the study.
As illustrated in Figure 2, all of the indicators’ outer loadings are above the
threshold value of 0.708. The values of composite reliability and AVE to test the
reliability and validity of the constructs are reported in Table I. Results of the study
revealed that the values of the composite reliability are W 0.6 and AVE is greater than
0.5 for all the constructs, thus construct reliability and convergent validity is achieved.
The next evaluation criterion for reflective models is to check for discriminant validity.
The results of Fornell-Larcker criterion showed that the square root of AVE for the
constructs is greater than other inter-constructs’ correlation value (refer Table AII).
Therefore, discriminant validity is achieved.

4.3 Evaluation of second-order constructs

This study modeled two second-order constructs namely Facebook usage and
non-financial performance. The composite reliability, AVE, and outer loadings were
 Comp1 Factors
(0.890) Imp1_CR
(0.921)
influencing
Comp2
0.000
Usage2
(0.893)
the use of
(0.899) Imp2_CR
0.225
(0.930) 0.292 social media
Comp3 Usage3
(0.898) Compatibility (0.894) CB
FBUsage1 Imp3_CR
(0.905) 577
CE1 Imp13_Info
(0.882) Usage1 (0.862)
(0.814)
CE2 Imp4_CS
0.000
(0.935) Usage10 (0.836)
(0.845)
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CE3 Imp5_CS
Cost Effectiveness
(0.894) Usage4 (0.833)
(0.822) 0.484
Imp6_CS
Trust1 Usage5 (0.908)
(0.786) (0.800) Cust Rela
Imp7_BnC
0.477
Trust2 Usage6 (0.846)
(0.820) (0.902)
FBUsage2 Imp10_Info
Trust3 0.000 Usage7 (0.895)
(0.789) (0.832)
Imp11_Info
Trust
Trust4 Usage8 (0.779)
(0.861) (0.883)
Imp12_Info
Trust5 Usage9 (0.898)
(0.789) (0.820)
Imp8_BnC
(0.898) 0.493
Int1 Usage12
(0.863) (0.882) Imp9_BnC Info Access
(0.866)
Int2 0.193
0.000
(0.859) Perf1
Usage13
FBUsage3 0.923
(0.923)
Interactivity
Int3
(0.862) Perf2
(0.943)

Perf3
(0.920)
Figure 2.
Perf4 0.224 Measurement model
(0.984) with factor loadings
FP

evaluated for the second-order reflective constructs during second stage of

analysis. The Tables II and III summarizes the evaluation results of the second-order
constructs.
The AVE of non-financial performance was 0.8065, and Facebook usage was 0.7099
which shows that the values of both the second-order constructs were well above the
cut-off value 0.5. The composite reliability of non-financial performance was 0.9258,
and Facebook usage was 0.8797 which were above the threshold of 0.70 thus
 IMDS Constructs AVE Composite reliability
115,3
CR 0.8446 0.9422
Compatibility 0.8023 0.9241
Cost Effectiveness 0.8169 0.9304
Cust. Rela 0.7349 0.9326
FB Usage1 0.7981 0.8877
578 FB Usage2 0.7276 0.9552
FB Usage3 0.8145 0.8977
Table I. FP 0.8651 0.9625
Construct reliability Info. Access 0.7428 0.9351
and convergent SM Interactivity 0.7424 0.8963
validity Trust 0.6552 0.9047
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Table II. Constructs AVE Composite reliability R2 Cronbach’s α

Evaluation of
second-order FB Usage 0.7099 0.8797 0.4268 0.7985
constructs Non-financial performance 0.8065 0.9258 0.4434 0.8797

Second-order sub-constructs Outer loadings t-value Significance level

FB usage
FB Usage1 0.8248 20.516 ***
FB Usage2 0.9137 87.022 ***
FB Usage3 0.7839 16.243 ***

Table III. Non-financial performance

Evaluation of CR 0.8294 18.796 ***
second-order Cust. Rela 0.9285 59.295 ***
constructs Info. Access 0.9325 74.943 ***
(significance test) Note: ***p o0.01 ( W2.58)

supporting internal consistency reliability. During the second stage of the analysis, the
latent variable scores (LVS) of the first-order constructs were used as indicators for
second-order constructs. Table III shows that the outer loadings of the sub-constructs
of usage and non-financial performance were well above the critical value of 0.708.
Similarly the significance level showed that all the sub-constructs of usage and
non-financial performance were significant at 1 percent, as the t-values are clearly above
2.58. Therefore the analysis of the indicators of second constructs showed significant
results and therefore appropriate to be included in the study for further analysis.

4.4 Assessment of structural model

The important criterion to assess the structural model was the estimates of path
coefficients and R2. The estimated values for path relationships in the structural model
should be evaluated in terms of sign and magnitude. The significance of the
hypothesized relationship was estimated through bootstrapping. Figure 3 shows the
structural model with path coefficients, t-values and R2 value.
 Compatibility Non-Financial Factors
0.1488**
Peformance influencing
T =2.0151 the use of
0.6659***
T =9.4241
social media

Cost Effectiveness 0.2156*** Facebook Use

579
T =3.3027

0.0694 0.431***
T =1.3841 T =8.0414
Trust
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0.3568***
T =5.6564 Financial
Performance

Interactivity Figure 3.
Assessment of
Notes: ***p<0.01 (>2.58); **p<0.05 (>1.96); p<0.01 (>1.645) structural model

The main criterions to assess the structural models are the R2 of endogenous latent
values. R2 values of 0.67, 0.33 or 0.19 for endogenous latent variables in the inner path
model were described as substantial, moderate or weak by Chin (1998). This study
shows the R2 value for the endogenous latent variables Facebook usage was 0.43 and
non-financial performance was 0.44, which is considered as moderate. The R2 for
Financial performance is 0.19 which is considered weak. Another important criterion to
assess structural model is the estimates of path coefficients. The estimated values for
path relationships in the structural model should be evaluated in terms of sign and
magnitude. The study results showed that except for the relationship between Trust
and Facebook usage (0.068) which is weak, other relationships are strong. Therefore, in
order to test the significance of the hypothesized relationship, bootstrapping was
applied which provides the t-value that indicates whether the corresponding path
coefficient is significantly different from zero (Hair et al., 2006).
The result of the path coefficients and t-values (Table IV) showed that compatibility
with t-value W1.96 at 5 percent significance level, cost effectiveness and interactivity with
t-value W2.67 at 1 percent significance level significantly influences Facebook usage
among organizations. Similarly, Facebook usage with t-value W2.67 at 1 percent
significance level have an impact on both financial and non-financial performance of
the organization. Therefore H1, H2, H4, H5 and H6 are supported in the study.
Table IV. Summarizes the results of hypotheses testing.

5. Discussion and conclusion

Findings of the study suggested that interactivity, compatibility and cost effectiveness
are significantly related to Facebook usage. On the contrary, trust was found not to be
significantly related to Facebook usage. The results also showed that Facebook usage
had a positive impact on Malaysian SME’s in terms financial performance and non-
 IMDS Hypothesis β t-Value Result
115,3
H1. Compatibility positively influences Facebook usage 0.1488** 2.0151 Supported
H2. Cost effectiveness positively influences Facebook 0.2156*** 3.3027 Supported
usage
H3. Trust positively influences Facebook usage 0.0694 1.3841 Not Supported
H4. Interactivity positively influences Facebook usage 0.3568*** 5.6564 Supported
580 H5. Facebook usage will have positive impact on non- 0.6659*** 9.4241 Supported
financial performance
Table IV. H6. Facebook usage will have positive impact on 0.431*** 8.0414 Supported
Summary of financial performance
hypotheses testing Notes: ***p o0.01 (W2.58); **po 0.05 (W 1.96)
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financial performances such as cost reduction, enhancement in customer relations and

information accessibility.
The factors such as compatibility ( p o 0.005) and cost effectiveness ( p o 0.001)
of Facebook were found to be the significant factors that influenced Facebook
usage in organizations. Anyone with internet connection can use Facebook. It is very
compatible with existing infrastructure as the technology is very simple and easily
adoptable by any organization. The study result on compatibility was consistent
with the previous studies which found that compatibility is a significant factor in the
adoption of technology (Wang et al., 2010; El-Gohary, 2012). Similarly, cost
effectiveness found to have significant relationship with Facebook usage. Since
SME’s have limited financial resources, they can reach large number of audiences
through advertisements, promotions and campaigns on Facebook without huge
investment. The result is consistent with previous studies (Chong and Chan, 2012;
Alam, 2009).
The results also revealed that interactivity of Facebook is an important factor that
determined Facebook use in organizations ( p o 0.001). The result could be interpreted
as that the interactive nature of Facebook that enabled two-way communications with
the public had greatly influenced the organizations to use it. Previous studies also
provided consistent results that interactivity of the technology has a strong effect on
technology adoption (Lee and Kozar, 2012; Pituch and Lee, 2006).
Trust was found to have insignificant relationship with Facebook usage. The result
was consistent with Wu and Liu (2007) study. The possible interpretation for this
result would be that since social media service providers like Facebook are well known
all over the world and the features of these sites are quite consistent and common to all
users, trust may not be an issue. Also the cost associated with the adoption of Facebook
is very little, so the organization might adopt Facebook without considering the trust
factor. Therefore the study result suggests that trust is not a significant factor that
influenced Facebook usage in organizations.
The results also revealed that Facebook usage has a very strong positive impact on
organizations’ performance ( p o 0.001) both financial and non-financial. The study
found that Facebook usage has a strong positive impact on performance of the
organizations in terms of increase in sales transactions, sales volume, sales enquires
and number of customers. Facebook usage also has a positive impact on non-financial
performance of the organization. The result is consistent with previous findings that
found positive relationships between technology usage and organizations’ performance
(Shuai and Wu, 2011; Stone et al., 2007; Apigian et al., 2005).
 In today’s era the digital advertisements especially in Facebook had reduced the Factors
cost of advertising to a great extent which is an important impact factor for SME’s influencing
considering their financial constraints. Customer relations are improved by allowing
customers direct access to information for which they would previously have had to
the use of
telephone, or e-mail. Moreover, organizations can get the information about their social media
potential customers, their tastes, their wants easily from the conversations in the
Facebook pages. By becoming a fan of other organizations’ Facebook pages, they can 581
also get information about their competitors, their activities, their tactics and their
brand sentiments.

5.1 Implications of the study

During the past few years, studies have been conducted to investigate the antecedents
and consequences of various IT systems (Lee et al., 2010; Salwani et al., 2009;
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Stone et al., 2007; Zhu and Kraemar, 2005). But in the context of Facebook, there is a
lack of studies that investigated the organizational usage of Facebook in an integrated
model (Akar and Topcu, 2011; Lovejoy and Saxton, 2012) especially not many studies
had studied the impact of Facebook usage on both financial and non-financial
performance of the organization. Therefore from a theoretical perspective, the results
provide a better understanding of the innovative information systems usage theory in
the context of social media. To the researchers’ knowledge, this study is among the first
that use an integrative model to examine the determinants of Facebook use, the extent
of Facebook use, and its impact on organizational performances.
From a professional perspective, results provide a snapshot of how organizations
are organizing their Facebook pages for communication and providing information to
their customers. Social media platforms, more specifically in the context of the study,
Facebook, provide numerous ways for consumers to interact, express, share and create
content about organizations’ products and services (Camarero and San Jose,́ 2011).
Thus, corporate brand profiles on Facebook should be managed to enhance the interest
of customers while encouraging them to create content and share information with others
(Muntinga et al., 2011). Brand managers should incorporate Facebook as part of their
marketing communication agenda (Laroche et al., 2012). Marketing and brand managers
must recognize that social media are an essential aspect of the internet, and many
consumers use them in their daily routines. Social media offer organizations the
opportunity to engage with consumers and even to influence their conversations, which
result in enhanced customer relation (Amichai-Hamburger, 2008). Organizations use the
sharing of tasks strategy the least frequently in their Facebook communication,
reinforcing the findings of Williams and Brunner (2010). They are most frequently using
relationship cultivation strategies which focus on openness and disclosure and access to
information that exemplify one-way communication (O’Neil and Schieffer, 2014).
This study investigated various factors to study its influence on Facebook usage.
Future researchers can investigate the impact of Facebook usage based on the
categorization of the impact factors identified in this study and prove the results in
different contexts. Due to the existing debate on the positives and negatives of
Facebook, most of the organizations are in a confused state regarding the adoption
of Facebook. Therefore this study will provide a clearer idea on the real importance of
Facebook and its benefits. The results would motivate and guide organizations especially
SMEs in the adoption of Facebook for business activities. The identified influential
factors for Facebook usage provides a clearer understanding for the decision makers to
concentrate on the important factors that influence the Facebook usage in organization.
 IMDS This study is limited in selection of samples. The sample only covered one
115,3 community of SME in Malaysia. Future research should include respondents from
various communities and different size of organizations to enhance the findings on the
impact of Facebook usage and to improve the possibility of generalization. This study
used a cross-sectional sample to collect data. Future researchers can conduct a
longitudinal study to investigate the relationship between the various adoption factors
582 and usage. Similarly, the relationship between Facebook usage and impact on
performance in different times can be investigated to examine whether there are any
changes in results between time periods.

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Corresponding author
Dr Sulaiman Ainin can be contacted at: [email protected]
 Appendix Factors
influencing
the use of
My organization use Facebook to […]
Usage1 Advertise and promote product and services social media
Usage2 Create brand visibility
Usage3 Conduct marketing research
Usage4 Get referrals (word of mouth via likes, shares and followers in Facebook) 587
Usage5 Develop customer relations
Usage6 Communicate with customers
Usage7 Conduct customer service activities
Usage8 Receive customer feedback on existing product/services
Usage9 Receive customer feedback on new/future product/services
Usage10 Reach new customers
Usage11 Search for general information
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Usage12 Search for competitor information

Usage13 Search for customer information
Facebook provides […]
Trust1 Adequate measures to safeguard information posted
Trust2 A robust and safe environment to transact information
Trust3 Adequate legal and technological measures to overcome usage problems
Trust4 Reliable information
Trust5 Dependable knowledge
Int1 Features for interactive communication with customers
Int2 Appropriate amount of interactive features (e.g. graphics, pop-up windows, animation,
music, voices)
Int3 Features for vivid responses
Facebook usage in the organization had […]
Imp1_CR Reduced the cost of communication with customers
Imp2_CR Reduced the cost of advertising and promotion
Imp3_CR Reduced the cost of customer service and support
Imp4_CS Enhanced customer service
Imp5_CS Increased customer loyalty and retention
Imp6_CS Improved customer relationship
Imp7_BnC Improved brand visibility
Imp8_BnC Improved company image
Imp9_BnC Improved competitive position
Imp10_Info Enabled easier access to customer information
Imp11_Info Enabled easier access to competitor information
Imp12_Info Enabled easier access to market information
Imp13_Info Enabled faster delivery of information to customers
Compatibility and cost effectiveness of Facebook […]
Comp1 Facebook usage is compatible with the company’s IT infrastructure
Comp2 Facebook usage is consistent with the company’s beliefs and values
Comp3 Facebook usage is consistent with the company’s business strategy
CE1 Facebook is more cost effective than other types of marketing or customer service
technologies
CE2 Organization can avoid unnecessary cost and time by using Facebook
CE3 Facebook saves costs (time and effort in marketing, branding and customer service)
Indicate the organizations’ performance after using Facebook
5-10% 11-15% 16-20% W20%
Perf1 Increase in sales transactions
Perf2 Increase in sales volume
Perf3 Increase in sales enquiries TableAI.
Perf4 Increase in number of customers Survey questionnaire
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588
115,3

criterion
IMDS

TableAII.
Fornell-Larcker

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CR Compatibility Cost effectiveness Cust. Rela FB Usage1 FB Usage2 FB Usage3 FP Info. Access SM interactivity Trust

CR 0.919
Compatibility 0.5292 0.895
Cost Effectiveness 0.5821 0.7373 0.903
Cust. Rela 0.6526 0.6852 0.649 0.857
FB Usage1 0.3384 0.3797 0.376 0.3855 0.893
FB Usage2 0.5393 0.5531 0.5955 0.6915 0.6387 0.852
FB Usage3 0.3314 0.3255 0.3255 0.4057 0.4957 0.5732 0.902
FP 0.3841 0.3605 0.3645 0.3836 0.3354 0.4686 0.2397 0.934
Info. Access 0.6485 0.6771 0.6334 0.826 0.4251 0.6767 0.5371 0.3575 0.861
SM Interactivity 0.467 0.5119 0.5439 0.6686 0.4314 0.5987 0.4107 0.3067 0.6571 0.861
Trust 0.1533 0.3828 0.2618 0.4173 0.2494 0.3725 0.2712 0.2165 0.3492 0.5044 0.809