ABSTRACT

This thesis attempts to explore the relationship between the components of Corporate Social Media Use (CSMU) and financial performance of small and medium sized enterprises (SMEs) in Bamenda II and III municipalities. This study adopted a structured questionnaire to get responses from the sampled population and this was administered both physically and online so as to reach the expected sample on time. A sample of 53 SMEs drawn from the SMEs operating in the two municipalities was used for this research. The data obtained was analysed using Microsoft Excel and SPSS. The SMEs taken into consideration are those who make use of social media and are located in Bamenda, Cameroon. The model specification taken into consideration here was the regression analysis. The main result of the regression analysis is that the use of WhatsApp and/or Facebook has a positive and significant effect on the financial performance of SMEs, while the use of Instagram and/or Twitter does not have a significant effect on the financial performance of SMEs. Some of the major recommendations based on the findings in this study is; SMEs should make efficient use of social media platforms in order to improve their awareness, increase customer base and in the long run increase profitability; SMEs need to learn more on how to communicate with their customers and the usage of Instagram and Twitter by learning from big businesses that use Instagram and Twitter to market their services and products.

Keywords: Corporate Social Media Use, Financial Performance of SMEs, Bamenda, Cameroon.

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study

Years ago, before the coming of the internet, companies made use of traditional methods such as radio announcements, television adverts, newspapers, magazines as well as telemarketing and pamphlets to create awareness, some of which are still in use today (Erikson, 2006). Before, being noticed in traditional media cost much more effort and money, all without guaranteeing that one would reach targeted audience or even think that the company could interact with the audience on a personal level. According to Blackwell (2006), the traditional marketing strategies such as advertising on TV, on billboards and posters might not be effective as they used to be. This type of mass communication still counts for more than 50% of the total advertising investment, but are considered less and less trustworthy and more and more offending and a survey done by Svenska Posten shows that 70% of people are zapping when commercials go on, (Karlof, 2007).

With the advent of social media (SM), consumers are rapidly adopting social networking sites, engaging in micro blogging and downloading applications for smartphones and computer tablets to enhance their social lives and promote sharing and communication with friends and family. Beyond simply using social media technology for updating pictures and posting status updates, consumers and members of society in general have found that social media applications can actually empower them when considering the flow of information. This is substantively important considering that it has been estimated that a week’s worth of reading New York Times contains more information than a person was likely to come across in a lifetime in the 1800s, (Richardson, 2010).

In the globalized open economic system, entrepreneurs find the continuous technological up-comings as a one of a kind challenge to face in the business environment, (Skoko, Ceric, & Huang, 2008). To face the challenges of technological changes, SMEs need to adopt Information and Communications Technology (ICT) to enhance business as well as economic activities at the competitive age, (Skoko, 2008). Evidence shows that the use of SM enlarges the SMEs sector’s successful environment, (Gibbs, 2007). Not to become the market leader but to survive in the competition, they need to adapt to up-to-date technological up-gradation, (Siddharthan & Narayanan, 2013) and (Khan et al., 2018). Many small and medium size enterprises in the world are adopting the use of social media marketing due to its free use and easy adaptation with an environment, hence many have been able to increase customer accessibility more easily too, (Qualman, 2010). Social media marketing can be adopted by any organization regardless of its size, that is, whether it is a big company or small company. The use of social media among small and medium size enterprises is referred to as adoption of sophisticated and technical tools towards communication in building up relationships and social interactions, (Safko, 2010).

Analysis shows that there are 4.76 billion social media users in the world as of January 2023 equating to 59.4 percent of the total global population. Social media user numbers have continued to grow over the past years, (Kepios, 2023). A global study of social media usage by UM Social Media Tracker Wave 5 (2010) found that almost 75 percent of the active internet universe has used online social networking sites, and almost half of them have joined an online brand community. This shows that consumers are actively using online social media to interact and communicate with companies. However, social media usage is not consistent around the world. Some organizations are faced with specific challenges when using social media. Recent social media usage data shows that globally there are significant differences in how social media is being used, content is being created and “crowd wisdom” is being shared, (King, 2010).

At the organizational level, at first, firms were slow to adopt the use of social media but later on saw the importance of its use. Witnessing the power of social media applications at the consumer level, many marketers have embraced the ability of this tools to spread their message. With the coming of the internet and digital platforms which can be used to promote brands and are available to maximum targeted audience, companies started using these digital platforms more frequently. So rather than spending marketing efforts and money on the traditional ways, marketers/businesses and companies are now switching to digital platforms such as social media for reaching out to the maximum number of targeted consumers and for generating more revenues and profit for their brand, (Babina, 2021). Now, both customers and companies have a window in which they can express themselves and also have the possibility of broadcasting their message to the people they want with much less effort in media or machinery.

Social media can be described as a way in which people consume and convey information by sharing among each other through the use of internet, (Cook, 2008). Social media has enabled many to many connections of people rather than one to many communication approaches which have increased interaction, participation and collaboration among people more easily and in the fastest way, (Kaplan & Haenlein, 2010). Also customer awareness and accessibility has increased among many small businesses which adopted the use of social media. Some of the social media today are; WhatsApp, Twitter, Facebook, Instagram, YouTube and LinkedIn, (Walsh, 2009). The success and operation of many businesses is as a result of social media and e-commerce technology in today’s life, (Bennett, 2012). The main reason behind this is that the internet (including social media such as Facebook and twitter) offers the view of familiarity and closeness with virtual interaction, (Barnes et al., 2012).

Social media is simply an online social interaction with a distribution and exchange of various contents. Hence various firms use social media to build their business relationship with producers and consumers. Hence social media is an important tool to any business due to its ability to enable business to communication with customers, listen to the customers and learn from the customers in a more efficient and quick way with less cost utilization than the traditional means of communication, (Grewal & Levy, 2013). Due to the easy operation and low cost of social media usage, many small and medium enterprises are adopting the use of social media marketing to connect with customers, (Kaplan & Haenlein, 2010).

Popularly used social media platforms include WhatsApp, twitter, Facebook, Snap chat and Instagram. These platforms are widely used and as such have a large audience that businesses can use to reach targeted and potential customers online. Companies today have their own pages online and so they work hard to use those pages to call for customers, influence people to stay loyal to their brand as well as exchange information about the company with the users of the platform, (Mangold & Faulds, 2009). The easy accessibility of social media applications on smartphones has made it easier for many internet users to adopt the use of social media in communicating.

Social media marketing plays a better role under pull-marketing strategy than tradition push-marketing approach. Meaning that marketer use social media to pass information about the commodity to enable consumer be attracted to the commodity, (Stelzner, 2015). Koroma, (2012) explained that today, a successful business is triggered with the use of social media marketing to increase customer accessibility and awareness of the product and services that the company is producing. McCartan-Quinn and Carson (2003) explained that before the use of social media, most businesses adopted the traditional way of communication to reach customers these includes the use of magazines, radio, newspapers and formal word of mouth. Today, most businesses have improved on customer accessibility by increasing their use of social media, given the fact that social media have revolutionised easier ways of interaction between the business and its customers.

Kaplan (2010) stated that social connection and interaction is something that human beings adopted so many years ago but bringing the world together as one with an easy interaction was due to the adoption of social media techniques. Due to social media taking over communication in the world, many small businesses have adopted its usage to interact with customers. Social media has abled small and medium size businesses to expand their market by increasing customer accessibility and awareness, hence growth in market share, (McCartan-Quinn & Carson, 2003). Most of these small businesses have been engaging on the use of social media in marketing simply because social media has taken over the means of communication in the world. Communication within the supply chain becomes effective with the use of social media which quickens the communication system. The adoption of social media by small business under small chain can result to an expansion of their supply chain which later results to more productive process hence more profit, (Colliander, 2012).

Small and medium size enterprises (SMEs) are important contributors to the economic development of many countries in the world. This is because of their contributions in creating jobs and facilitating regional development and innovation which have a positive impact on the country’s economic status, (Shemi, 2018). Social media has increased its popularity worldwide by following the development of the internet in the 21^st century, it fundamentally changed how entrepreneurs communicate with their target customers, and how companies promote their product or services, (Culnan, 2010). It can be said that SMEs nowadays rely strongly on social media as a potential means of communication and the way to deepen the relationship between SMEs and their customers, (Smekalova et al, 2014).

In Africa, the SMEs sector accounts for almost ninety percent of all the enterprises or firms, located in both the rural and urban areas, whereby they provide more equitable distributions of income in all spheres of the countries. Nigeria, being the focus country of discussion, SMEs account for about 70% of industrial employment, (Adebusuyi, 1997). Odeyemi (2003) describes Nigeria SMEs as a very heterogeneous group of businesses that operate in different sectors of the economy. This means that the SMEs are the major source of providing job opportunities to the people, and also stimulate the development of the country by promoting business skills and entrepreneurship amongst communities and strengthening the local or domestic production sector as well as the industrial base. Therefore, SMEs in Africa have been recognized to be an essential engine for obtaining national development goals, which include economic growth and poverty alleviation, (Mokaddem, 2006).

With social media opportunities, there are specific challenges for marketers in less developed countries such as Cameroon, many who naively treated the online channel as they would treat a magazine or a television spot and ultimately alienating themselves from their targeted audience. Marketers are faced with difficulties resulting from the dramatic rise of social media to how they can use it to generate value for their firms. Whereas the importance of social media for brand management and customer relationship management is widely recognized, it is unclear whether social media can also help Cameroonian firms market sell products and increase engagement with their brands, (Afolabi, 2015). This study seeks to examine if indeed corporate social media use has an effect on the financial performance of SMEs in Bamenda II and III Municipalities, Cameroon.

1.2    Statement of the problem

Small and medium sized enterprises (SMEs) play a major role when it comes to the improvement of national economies in developing countries. Small and medium sized enterprises have the potential to uplift local economies and therefore governments invest in the development of SMEs. These enterprises continue to struggle to survive in the Cameroonian economy despite the participation of the government. According to the Department of Trade and Industry (DTI) (Strategies 2006), the majority of SMEs fail after an average of 3.5 years of their establishment. The Global Entrepreneurship Monitor (GEM) argues that most start-up businesses hardly survive and the survival rate of SMEs in developing countries is even less (Small Enterprise Development Agency [SEDA] 2016). According to DTI (2018b), the failure of SMEs in Cameroon is partly caused by the lack of appropriate technology, production capacity and access to markets. According to some researchers and stakeholders in the domain of SMEs, the adoption of Social Media (SM) is known to have a certain degree of relationship to the status quo of SMEs especially in the domain of competition, (Pillay 2016).

Despite all the efforts made by the government and related private stakeholders to see the that the SMEs sector flourishes in order to achieve the required financial performance, it is worrisome that SMEs have not attained this expected financial performance. It seems that there are fundamental issues or problems that confront SMEs which until now have not been wholesomely tackled. Despite its rapid evolution in Cameroon, social media use seems not to have addressed the SMEs issues related to marketing. Furthermore, other aspects such as lack of capabilities to create innovation, image, exclusive branding, and lack of appropriate support from marketing infrastructure are still raising a lot of doubts in their ability to attain expected financial performance, (Brush et al., 2009) and (APO, 2001). With this in mind, this researcher is bound to question the ability of the existing social media use in making meaningful improvements on the financial performance of SMEs in the Bamenda II and III municipalities. It is on the basis of these challenges that this researcher is questioning the use of social media on improving the financial performance of SMEs at a time when the SMEs in Cameroon are facing fierce competition from well-established large national and international businesses.

This study is therefore set to find out whether the effective use of WhatsApp, Facebook, Instagram and Twitter by the SMEs can improve on their financial performance as expected. Based on the above arguments, this study is designed to provide answers to the following set of questions.

1.3    Research Questions

Main Research Question

What is the effect of corporate social media use on the financial performance of small and medium size enterprises in Bamenda II and III Municipalities?

Specific Research Questions

1. What is the effect of the use of WhatsApp on the financial performance of SMEs in Bamenda II and III Municipalities?
2. How does the use of Facebook affect the financial performance of SMEs in Bamenda II and III Municipalities?

• How does the use of Instagram affect the financial performance of SMEs in Bamenda II and III Municipalities?

1. What is the effect of the use of twitter on the financial performance of SMEs in Bamenda II and III Municipalities?

1.4    Objectives of the Study

Main Objective of the Study

The main objective of this study was to evaluate the effect of corporate social media use on the financial performance of SMEs in Bamenda II and III Municipalities.

Specific Objectives

1. To examine the effect of the use of WhatsApp on the financial performance of SMEs in Bamenda II and III Municipalities.
2. To find out whether the use of Facebook affect the financial performance of SMEs in Bamenda II and III Municipalities.

• To determine the effect of the use of Instagram on the financial performance of SMEs in Bamenda II and III Municipalities.

1. To evaluate the effect of the use of Twitter on the financial performance of SMEs in Bamenda II and III Municipalities.