Social Media - Challenges and Opportunities for Small Businesses

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Social Media - Challenges and Opportunities for

Small Businesses

Master Thesis

Dual Masters Award in Advanced International Business and Management

Newcastle University Business School

and

Rijksuniversiteit Groningen Faculty of Economics and Business

Lisa Gathmann

120337563 / S2438437 l.gathmann@newcastle.ac.uk l.gathmann@student.rug.nl

Südring 50, 46348 Raesfeld, Germany

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List of Tables

Table 1: The Honeycomb of Social Media ... 10

Table 2: Factors determining an SME ... 13

Table 3: Process of Building Theory from Case Study Research ... 18

Table 4: Data Sources ... 24

Table 5: Comparison by Sector Type ... 39

Table 6: Comparison Customer Groups ... 40

Table 7: Comparison Degree of Internationalisation ... 42

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List of Figures

Figure 1: Research Design ... 5

Figure 2: Online Sources People have visited to get Information on a Company, Product or Brand ... 8

Figure 3: Increases in Ratios of Firms’ Social Media Participation (2009-2010) ... 9

Figure 4: Number of SMEs, Employment in SMEs and Value added of SMEs ... 14

Figure 5: Conceptual Model ... 15

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Acknowledgements

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Abstract

The purpose of this study is to shed more light on the relationship between social media and small firm performance. It aims to identify factors influencing this relationship to extend current management knowledge and contains practical implications regarding the challenges and benefits for small businesses when using social media. To answer the research questions an exploratory research design was chosen. Following the case study approach semi-structured interviews were conducted with four small businesses to compare their practical experiences. The analysis showed that social media usage, represented by the company’s media reputation and received user-generated content, is more likely to enhance firm performance when the product or service is ‘globally saleable’, meaning when it appeals to customers all over the world and can be sold everywhere. Furthermore, this relationship is moderated by specific capabilities of the firm, namely technological opportunism and marketing knowledge, and by an appropriate social media strategy. Additionally, industry traits and characteristics of the business owner were found to impact the use of social media. To verify the results future research could test the propositions of this study on a larger scale.

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Abbreviations

B2B Business to business B2C Business to consumer

DOI Degree of internationalisation

FTF Face to face

IT Information technology ROI Return on investment SBO Small business owner

SM Social media

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1 Introduction

1. Introduction

1.1 Introduction

The aim of this chapter is to present an overview of the main elements of the study. Section 1.2 presents the Background and Rationale for the Research topic. The Research Question is explained in Section 1.3 while Section 1.4 provides a discussion of The Research Objectives. The Research Methodology is explained in Section 1.5, followed by The Structure of the Thesis which is presented in Section 1.6.

1.2 Background and Rationale for the Research

The economic business environment is constantly changing and creates many new challenges for companies today. The technological progress heavily affected the way business is done as it facilitated communication between as well as within companies (Bharadwaj et al., 1999). Information technology (IT), the internet and lately social media (SM) reformed the traditional marketing and buying and selling channels (Drennan and McColl-Kennedy, 2003). It enables new opportunities but also brings challenges regarding the interaction between a company and its customers (Belicove, 2012). Especially small businesses benefit from internet technologies and SM as these developments contain the possibility to promote the company and its products or services at low costs (Media Measurement, 2012). However, there are also obstacles when using SM which have to be overcome to support firm performance.

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clarity about how SM as a new means of business communication influences and is influenced by IT capabilities and how this in turn affects firm performance. Additionally, the impact of a strategic fit between these elements has not been researched so far.

Despite the potential of SM especially for small businesses, a study conducted by the market research institute Manta revealed that around 60% of small business owners (SBOs) do not see a return on investment (ROI) from their SM activities (Manta Media Inc., 2013). More than half of the questioned small businesses dedicate only one person to manage the SM activities in their companies and point out that especially Facebook is a SM platform hard to maintain (see Appendix A). These facts show a contradiction as using SM represents precious opportunities especially for small firms, however, many of them do not develop superior firm performance. Hence, further research is needed that investigates the links between SM usage and firm performance, particularly regarding small businesses.

1.3 The Research Question

Derived from the brief introduction above, the main research question of this study is: How does social media usage of a small firm influence its performance?

The question allows the researcher to get a deeper insight into the ‘black box’ of performance drivers of small firms. In answering the question, a new framework could be developed shedding more light on the linkages between SM use and firm performance.

To answer the main research question, the following sub-questions will be addressed:

How do certain IT capabilities such as back-end integration, website customisation

capabilities or technological opportunism1 contribute to the use of social media?

How does the strategic fit between social media strategy and corporate strategy influence firm performance?

These sub-questions break down the linkage from the main question and try to identify moderators affecting the relationship between SM use and firm performance. IT capabilities are essential to enable firms to successfully launch a website, online adverts and pages in social networks. Thus, they are perceived to strengthen the effect of using SM. Moreover, the importance of aligning SM activities with the corporate strategy is mentioned. Another impact

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Introduction

is hence seen in the embeddedness of SM strategies in the overall strategy, namely the strategic fit.

1.4 The Research Objectives

This study aims to enhance the current knowledge in management theory. In researching performance indicators for small companies regarding SM it is intended to gain new insights and extent the current state of theory in this field. Additionally, practical recommendations can be developed which help SBOs improving their performance.

The already existing research about the impact of SM on business and its contradicting discoveries aroused the interest of the researcher. As pointed out before, small businesses use SM to overcome restrictions related to being small such as limited budgets for marketing activities and restricted range of customer acquisition (Media Measurement, 2012). They were early adopters of SM to promote their products and services to a broad customer range without spending much money. However, as shown by the Manta report, this seems to have changed recently. In the beginning of 2013, about 60% of the SBOs asked did not see a ROI of SM activities (Manta Media Inc., 2013).

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1.5 The Research Methodology

The open research question posed in this dissertation requires an exploratory research, hence, a qualitative research approach was chosen. In this way the aims and objectives of this study, to explore the SM-performance relationship and to extend the current state of knowledge, can be addressed. To gain deeper insights about the theory of small businesses using SM an extensive literature review was conducted. According to the current state of knowledge a conceptual model was developed. Afterwards, derived from literature review and conceptual model, an interview schedule for semi-structured interviews was prepared. Four case companies were chosen to provide the data necessary to answer the research questions. After the analysis of the interviews and additional documents the results were discussed with a SM consultant to verify the findings and to explore opportunities for future research as well as to determine practical recommendations for SBOs. Figure 1 (p. 5) summarises the research design. A more detailed presentation of the research methodology is outlined in Chapter 3.

1.6 Structure of the Thesis

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Introduction

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2. Literature Review

The aim of this chapter is to provide the theoretical background for this study and to build the basis for the conceptual model. Section 2.2, IT in Business, describes the evolution of IT in the business environment and leads to Section 2.3 about the use of Social Media in Business. This part also includes a brief presentation of the most common SM platforms. The Sections 2.4 up to 2.6 incorporate a review of the latest research in Business Strategies, Performance Indicators and Small Businesses. Finally the Conceptual Model is presented in Section 2.7, while Section 2.8 provides a brief Summary of the review.

2.2 IT in Business

The internet as a new means of communication has been already recognised by many scholars and is intensively used by firms to optimise organisational processes and enhance performance. In 1999 Bharadwaj et al. contributed to the starting discussion about the influence of using IT on firm performance. They introduced a new measure to relate IT investment of a firm to performance outcomes and confirmed a positive effect. Teo and Choo (2001) investigated the relation between the usage of the internet and the competitive intelligence of a firm. The internet as a source of information generates high quality competitive intelligence information which in turn leads to strategic benefits. To analyse what distinguishes successful usage of internet and less successful usage, Tippins and Sohi (2003) developed a model which identifies organisational learning as a central element.

Other scholars focus more on the strategy a firm pursues and its specific resources when using IT. Lee and Grewal (2004) underline in their conceptual model the importance of the organisation’s tangible and intangible resources and their interaction with a strategic response of the firm (e.g. speed of communication or channel adoptions).

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Literature Review

objectives (Deephouse, 2000). Furthermore, Prasad et al. (2001) studied the influence of IT on a firm’s marketing actions and found a positive relationship. IT can enhance market orientation and the marketing competencies of a company which in turn positively affect export performance. Research by Saeed et al. (2003) focused on the importance of the website of a company and its relationship to performance. It is shown that an appealing website can increase purchases which lead to better firm performance.

To further investigate how IT elements like online reputation or website design impact firm performance, Reuber and Fischer (2011) developed a new model of IT factors. They identified the importance of online reputation, online technological capabilities and online brand community to successfully compete in internet-enabled markets.

2.3 Social Media in Business

Recent studies about IT and its impact on firms also include the impact of SM (Asur and Huberman, 2010; Kaplan and Haenlein, 2010; Kietzmann et al., 2011; Richard et al., 2011). Social networks like Facebook, Twitter or Instagram gain increasing prominence for private but also for commercial users. Large firms use SM mostly to raise product and brand awareness through online facilities (Belicove, 2012), but also to enable a more human and personal interaction between company and customer, to build networks and relationships with other companies and customers, to show animated and customised adverts, to include customers in interactive marketing campaigns or to implement innovative human resources practices like hiring staff online through SM (High Quality Social Media, 2012). Hence, not only marketing and PR but also customer service management, research and development as well as sales can benefit from SM.

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(WOM) can be received (Gefen, 2002; Salo and Karjaluoto, 2007). In addition, it emphasises the need for a SM plan with specific objectives to establish long-term relationships with the customer. Developing a sound SM plan and building up trust is seen to be more effective than the marketing message itself (Falls and Deckers, 2012).

The global number of internet users and therewith potential SM customers rises steadily (Euromonitor International, 2012). Kirtiş and Karahan (2011) show in their work about SM as an efficient marketing strategy, that customers know about the opportunity of collecting information through online channels. About 70% of them use SM websites to inform themselves about a specific company, their products and brands. Thereby the use of SM exceeds visits on the company website (68%) or online news (57%) (Kirtiş and Karahan, 2011). Figure 2 illustrates their findings.

Figure 2: Online Sources People have visited to get Information on a Company, Product or Brand

Source: own illustration, based on: Kirtiş and Karahan (2011, p. 262)

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Literature Review

sites (e.g. Facebook), creativity work sharing sites for video, photo or music sharing (e.g. YouTube and Instagram), user-sponsored blogs, company-sponsored websites or blogs etc. The complete list is presented in Appendix B. According to their main foci the platforms can be used by companies to reach different objectives, but they also represent different functionalities and implications (Kietzmann et al., 2011).

Figure 3: Increases in Ratios of Firms’ Social Media Participation (2009-2010)

Source: own illustration, based on: Kirtiş and Karahan (2011, p. 265)

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Table 1: The Honeycomb of Social Media

Social Media Functionality

Explanation Implication

Presence The extent to which users know if others _{are available} Creating and managing the reality, intimacy _{and immediacy of the context}

Relationships The extent to which users relate to each _other Managing the structural and flow properties _{in a network of relationships}

Identity The extent to which users reveal _themselves Data privacy controls, and tools for user self-_promotion

Reputation The extent to which users know the _{social standing of others and content} Monitoring the strength, passion, sentiment, _{and reach of users and brands}

Groups The extent to which users are ordered or _{form communities} Membership rules and protocols

Conversations The extent to which users communicate _{with each other} Conversation velocity, and the risks of _{starting and joining}

Sharing The extent to which exchange, distribute _{and receive content} Content management system and social _graph Source: own illustration, based on: Kietzmann et al. (2011, p. 243)

Since 2006 Facebook is also open for companies (Ellison et al., 2007). They can participate in opening a Facebook page for the business and connect their websites with Facebook. Through social plug-ins such as like buttons, subscribe buttons, comment plug-ins or single-sign-on-registration plug-ins, users can like and share posts of these companies with their networks (Facebook, 2013b).

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Literature Review

A similar strategy is pursued by Instagram, where users do not upload solely videos, but mainly pictures. The entertaining network aims to provide a platform where members can share their impressions with family and friends. Additionally, the accounts can be linked to the users’ Facebook or Twitter pages (Instagram, 2013a). Founded in 2010 the network grew fast and has currently over 150 million monthly active members (Instagram, 2013c). Companies can use Instagram to promote their businesses and advertise products in a creative way (Instagram, 2013b).

In contrast to YouTube and Instagram, blogs focus on the expression of communication through writing. The typical blog is created by a private person who writes about his/her opinion and attitudes toward specific topics. It is usually held in a journal style (Nardi et al., 2004). However, also companies use blogs to control information flows within and outside the organisation. In this way they are able to inform and communicate with employees, customers or the general public. Furthermore, blogs can be used to advertise products or publish company news (Wood, 2005).

2.4 Business Strategies

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companies are aggregated (De Wit and Meyer, 2010). When a strategy is formulated this can be done in several steps, starting usually with the formulation of a mission which explains the main purpose of the business. Subsequently there are objectives which give more concrete information about the future direction of the company. Finally a strategy is developed in order to reach the objectives and thus the mission. This plan of action is usually pursued by using certain policies which guide the decision making processes (Wheelen and Hunger, 2008). As small businesses generally concentrate on one key market and have a limited product range, strategic issues are usually less important compared to large organisations. They do not possess a separate strategy department as it is typically the founder with a small number of key staff to decide about the strategic direction. Furthermore, this is mostly done without specifically formulating a certain strategy (Johnson et al., 2008). Nevertheless, the strategy of a small company can be compared with the business level strategy. Different plans regarding certain domains of the business are combined to an overall strategic direction. Accordingly, every single plan has to be in line with the overall strategy. The concept of strategy embeddedness, meaning the alignment of strategy and other areas of the business, has been researched in various areas and shows a positive effect on firm success and performance (Garcia‐Pont et al., 2009; Bagnoli and Vedovato, 2012; Andersen, 2013; Chen et al., 2013). Davies (2000) further underlined the importance of a well-functioning interaction between the different levels of strategy. Only when they are aligned, the overall strategy can build a valuable part in his model. He defined the PSR troika (policy, strategy and resources) as a central element of effective strategy.

2.5 Performance Indicators

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Literature Review

consumer’s SM investments. Hence, brand awareness, brand engagement and WOM are presented to be appropriate measures for SM related performance outcomes and will also be used in this study (see also Appendix C). Brand awareness aims to increase the attention a brand receives in the customer’s mind. Brand engagement additionally includes the interaction of the customers. Campaigns in SM platforms can be used to create user-generated content and support customer loyalty and commitment. Through the enhanced communication facilities in SM platforms users can communicate more easily and recommend or dissuade from specific products. Therefore, WOM is an important factor to control as it influences customer satisfaction (Hoffman and Fodor, 2010).

2.6 Small Businesses

The term ‘small business’ characterises a company in terms of its turnover, employees, or asset value. The common abbreviation SME comprises small as well as medium-sized enterprises, however, the definitions vary between countries (Business Dictionary, 2013). The European Commission defines SMEs with the help of numbers of employees and either turnover or balance sheet total, and distinguishes between micro, small and medium-sized companies (see Table 2).

Table 2: Factors determining an SME

Company Category Employees Turnover or Balance Sheet Total

Medium-sized < 250 ≤ € 50 m ≤ € 43 m

Small < 50 ≤ € 10 m ≤ € 10 m

Micro < 10 ≤ € 2 m ≤ € 2 m

Source: taken from: European Commission (2013b)

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Figure 4 shows the development of SMEs regarding total number of SMEs, employment, and gross value added2, indicating their rising importance and steady recovery from the global economic crisis in 2008.

Figure 4: Number of SMEs, Employment in SMEs and Value added of SMEs

Source: taken from: European Commission (2012, p. 9)

Despite the rising value added, small businesses face certain strategic problems. The lack of financial resources restraints their strategic decisions and limits spending. This subsequently leads to marketing problems as the budget for advertising is comparably small. Furthermore, the SBO is typically focussing on his/her product and does not necessarily possess marketing knowledge. This and the small product range can lead to customer concentration meaning small companies usually depend on only a few customers. Moreover, the SBO represents the centre of the business; he/she is the leader and manager of the company. The lack of management and human resources can lead to an overstress and heavy reliance on the SBO. Missing procedures and control systems combined with limited technological capabilities additionally complicate the business of a small company (Carter and Jones-Evans, 2012; O'Gorman, 2012). However, there are also advantages of being small. The higher flexibility of small companies increases its ability to respond to customer wishes or changes in the external environment. They can easily adapt their production processes and adjust prices without having to follow specific rules or procedures. When SBOs consider these advantages over large firms and pursue a fit between themselves, the company, the strategy and the

2_{‘Gross Value Added (GVA) includes depreciation, rewards to labour, capital and entrepreneurial risk. GVA}

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Literature Review

external environment, they are able to successfully grow and develop their businesses (Carter and Jones-Evans, 2012). As already mentioned above, the internet represents a useful tool for small companies. Selling through online shops and using SM can increase revenues, attract new customers (especially online customers), extend the business internationally, provide the opportunity of unlimited opening hours, enable customer information as well as service and interaction, lower costs, improve efficiency, recognise business opportunities, analyse sales figures, build up credibility and establish a strong brand identity (Scarborough et al., 2009).

2.7 Conceptual Model

To visualise the basic ideas of this research, a conceptual model, based on the literature summarised above, was developed. The model, pictured in Figure 5, shows the relationships and causalities addressed in the research questions.

Figure 5: Conceptual Model

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their online or media reputation as well as create platforms for user-generated contents. Here users can directly interact with the company, give feedback and discuss products and services with other customers. In this way SM can be seen as an enabler of the company’s media reputation and user-generated content. The different platforms can be used to merely present the product or service (passive platforms) or to interact with the user (interactive platforms). Nevertheless, a company needs to have specific knowledge about how to build up a good media representation. Skills necessary to customise a website and mechanisms to process user statistics, feedbacks etc. (back-end integration) are crucial to achieve a good reputation and to build up a platform for user-generated content. Technological opportunism stands in this context for the ability of a firm to recognise and understand new knowledge, as well as its ability to respond to this appropriately (Reuber and Fischer, 2011). This is why IT capabilities function as a moderator when using SM. If these capabilities do not exist, the positive effect of using SM regarding media reputation and user-generated content might be lower. As already researched by Mangold and Faulds (2009), Hoffman and Fodor (2010) and Curtis et al. (2010), SM can affect the marketing and PR activities of a company. Moreover, it is pointed out by Lee and Grewal (2004) that organisational resources have to be in line with the strategic response of the firm. Accordingly, the strategy regarding media reputation and user-generated content has to be created in line with the corporate strategy of a company to enhance performance. Hence, the embeddedness in corporate strategy also moderates their effect on small firm performance.

2.8 Summary

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Research Methodology

3. Research Methodology

Following the presentation of the conceptual model in Section 2.7, Chapter 2, the aim of this chapter is to explain the research methodology that addresses the research aims and objectives. When addressing an open research question like the one posed in this study, a qualitative research methodology is favourable. Thus, Section 3.2 presents the qualitative Research Strategy and illustrates the case study approach. Afterwards the Sections 3.3, Introduction to the Case Study Companies, and 3.4, Data Collection Methods, provide information about the sample companies and the methods used to gather and analyse the data. Finally, the Sections 3.5 up to 3.7, Limitations, Validity and Reliability of the research strategy as well as Ethical Issues, end the methodology chapter.

3.2 Research Strategy

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Table 3: Process of Building Theory from Case Study Research

Step Activity Reason

Getting Started

Definition of research question Possibly a priori constructs

Neither theory nor hypotheses

Focuses efforts

Provides better grounding of construct measures

Retains theoretical flexibility

Selecting Cases

Specified population

Theoretical, not random, sampling

Constrains extraneous variation and sharpens external validity

Focuses efforts on theoretically useful cases—i.e., those that replicate or extend theory by filling conceptual categories

Crafting Instruments and Protocols

Multiple data collection methods

Qualitative and quantitative data combined

Multiple investigators

Strengthens grounding of theory by triangulation of evidence

Synergistic view of evidence

Fosters divergent perspectives and strengthens grounding

Entering the Field

Overlap data collection and analysis, including field notes Flexible and opportunistic data collection methods

Speeds analyses and reveals helpful adjustments to data collection Allows investigators to take advantage of emergent themes and unique case features

Analysing Data

Within-case analysis

Cross-case pattern search using divergent techniques

Gains familiarity with data and preliminary theory generation Forces investigators to look beyond initial impressions and see evidence thru multiple lenses

Shaping Hypotheses

Iterative tabulation of evidence for each construct

Replication, not sampling, logic across cases

Search evidence for ‘why’ behind relationships

Sharpens construct definition, validity, and measurability Confirms, extends, and sharpens theory

Builds internal validity

Enfolding Literature

Comparison with conflicting literature

Comparison with similar literature

Builds internal validity, raises theoretical level, and sharpens construct definitions

Sharpens generalisability, improves construct definition, and raises theoretical level

Reaching Closure

Theoretical saturation when possible

Ends process when marginal improvement becomes small

Source: taken from: Eisenhardt (1989, p. 533)

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using multiple cases, contrasting companies can be compared, showing differences and similarities (Thomas, 2004). Thus, new insights can be gathered and existing theory can be extended (Eisenhardt, 1989).

When different cases are to be compared, a sample size consisting of four to ten cases is desirable (Eisenhardt, 1989). Therefore, four companies were chosen which use at least Facebook for business purposes as it represents the world’s largest and most popular SM platform (Doyle, 2011a). Hence, the units of analysis were identified using purposive sampling (Eisenhardt, 1989; Thomas, 2004). Furthermore, they were selected to enable a comparison between product and service industries, different target customers and degree of internationalisation (DOI). Hence, a mixed-methods approach regarding the case selection was chosen (Seawright and Gerring, 2008). The cases are embedded in their individual contexts and can be investigated regarding multiple-units of analysis. This allows investigating the usage of SM in different contexts and settings (Yin, 2009).

3.3 Introduction to the Case Study Companies

The first case company, Say it in Dutch (Groningen, The Netherlands), provides language courses and uses SM to inform about new conversation courses, to teach online and to keep contact. The target customers are students from all over the world. A similar strategy is used by Kleiderkreisel (Munich, Germany), a company providing a platform to sell second-hand clothes and accessories. It uses SM to inform about new campaigns and to attract new customers. Through the forum on the website users can discuss and interact with each other, representing an own social network.

Contrasting to these service companies are the more localised distillery Kornbrennerei J. Böckenhoff (Raesfeld-Erle, Germany) and the distributor of agricultural machinery and equipment Handelsonderneming E.H. Van Ravenzwaaij (Klazienaveen, The Netherlands). They use SM to promote their products and special offers. Böckenhoff sells its products mainly to customers in Germany, however, due to the online shop they increasingly deliver to consumers worldwide. Van Ravenzwaaij also supplies customers abroad as it is located close to the German border.

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a high DOI and target customer segments that are reachable through online channels. On the other hand, Böckenhoff and Van Ravenzwaaij are local product companies which focus on local customers using traditional channels. However, due to SM they can enhance their DOIs, target broader customer segments and promise an interesting comparison to the service companies.

3.3.1 Say it in Dutch

Say it in Dutch was founded by Yorien van den Hombergh in 2005. She represents the only staff and provides Dutch email and Skype lessons but also teaches in person through group conversation courses. Van den Hombergh studied communication where she learned about communication theories including sending messages and interacting with people and also HTML. Her main objective is to meet the specific needs of the customers who come from all over the world but are mostly native English speakers. Others come from Scandinavia, France, Germany, South Africa, and Latin America, also form the Dutch Antilles. They are e.g. expatriates who study Dutch for their work but also private persons who are interested for individual reasons. The age range spans from children with eight to older students with 65 years of age.

Apart from the group courses Say it in Dutch uses mainly online channels to teach and also to acquire new students. Its website provides information about the different teaching possibilities and enables customers to buy the courses as well as eBooks or learning material. Furthermore, there is a blog presenting Dutch idioms and expressions and a Facebook and Twitter page (Van den Hombergh, 2013).

3.3.2 Kleiderkreisel

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Next to the German and Lithuanian web pages there are also sites in the Czech Republic, France and Poland. The parent company MIJU PROJECTS, VŠĮ (Vilnius, Lithuania) comprises the international network consisting of the local sites and has about 50 employees. It hosts the centralised IT department which programs and customises the web pages. The team of Kleiderkreisel in Germany consists of about 15 out of the 50 employees. Localised tasks deal mainly with PR, SM, customer support and community management.

3.3.3 Böckenhoff

The distillery J. Böckenhoff produces Kornbrand, liquor distilled from wheat and rye, since 1832. It is a family business in the sixth generation which also sells juniper liquors, fine wines, cream liqueur, fruit juice liqueurs, herb liqueurs and fruit brandy. Additionally, they offer gift boxes and tours through the distillery. The company is located in a small village with about 11,000 inhabitants (Böckenhoff, 2013).

Johannes Böckenhoff is responsible for the fine distillery and guides the tours through the distillery. The administration of the business, purchasing and sales, customs and the bookkeeping of the warehouse are managed by Daniela Böckenhoff. Moreover, she works in the shop and keeps contact with the customers. The permanent employee Helmut Kölking is in charge of the product development, warehouse stocking, bottling, distilling and development of the labels. Furthermore, he maintains the website and the Facebook page of the company.

The customer groups consist of gastronomy, hotel businesses, retail industry and private customers. They are able to buy through the online shop on the website or directly in the shop next to the distillery. The customers are mainly local businesses and privates, however, through the online shop products can be ordered from all over the world.

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3.3.4 Van Ravenzwaaij

The family business Handelsonderneming E.H. Van Ravenzwaaij was founded in 1962 as a lending service for agricultural machines. Today they also purchase and sell agricultural tractors and machinery as well as spare parts and offer repair services. Additionally, the product range includes spare parts for automotives and agricultural kids’ toys. Currently the business is run by three generations. Jasper van Ravenzwaaij is responsible for the administration and customer service, whereas his father Erik van Ravenzwaaij and grandfather Jaap van Ravenzwaaij deal with the manual labour. The customers are mainly farmers: a few big clients account for the main amount of sales, accompanied by numerous smaller ones. They are primarily located in the Netherlands and Germany, however, new customers are acquired all over Europe.

Van Ravenzwaaij, too, is located in a small city in a rural area. It has a strong brand name which is well-known by the about 18,000 inhabitants and is mainly associated with agricultural products.

Jasper van Ravenzwaaij is responsible for the IT in the company. He does not have a certain education for that, however, he attained the necessary skills through self-study. Currently he is doing his masters degree in International Business and Management.

3.4 Data Collection Methods

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The interviews were conducted with the person responsible for the SM activities of the firm, however, this person also had to be informed about the overall strategy and performance to be able to answer all the questions necessary to address the theoretical framework. The interview schedule, based on current literature, is attached in Appendix E. All of the interviews were audio recorded for further processing. Table 4 (p. 24) summarises the interviewing process and the additional data sources used.

After the interviews were conducted they were transcribed and analysed applying the coding technique (Thomas, 2004).3 In the first step the interviews were read several times and codes which appeared regularly throughout all the interviews were identified. According to the topic of the codes the text parts were clustered to several themes which were used as main topics for the analysis. In addition to the interviews a document analysis regarding the company websites, pages on SM platforms and newspaper articles was conducted. This triangulation of data strengthens the results and leads to stronger concepts (Eisenhardt, 1989). To verify the interview results, each company was contacted to confirm the interview summaries and for additional questions. The simultaneous data collection and data analysis enabled the researcher to adjust and improve the interview schedule during the interview process (Eisenhardt, 1989).

The method of analysis used for the interpretation of the data was content analysis. Here, the content of the interview is classified and quantified, which allows to group different and similar statements, interests, and attitudes of the interviewees and to draw conclusions (Stemler, 2001; Thomas, 2004). In the final stage of analysis and interpretation a comparison between the different companies was made (Eisenhardt, 1989). The dimensions for the comparison are the different industries, varying customer groups and diverse DOIs. Afterwards, the findings were sent to a SM expert to discuss the results from a different perspective. Melanie Mackie, owner and managing consultant of Scarletta Media Marketing (Wokingham, UK), was suitable for this study because she is specialised in SM marketing for small businesses and possesses long-time experience in consulting and SM. Furthermore, as the owner of the consultancy she has also SBO experiences.4 Her comments, confirmations and additional insights are included in the discussion in Chapter 5.

3

The transcriptions are provided by the author on request.

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Table 4: Data Sources

Company Interviewee(s) Function Abbr. Interview Date Location Additional Sources

Böckenhoff _{Daniela Böckenhoff}

Helmut Kölking Administration Various tasks including SM activities DB HK 49 min. 29.08.13 Company office, Raesfeld-Erle Company website Online Shop Facebook page Email conversation Say it in Dutch

Yorien van den

Hombergh Founder YH 43 min. 02.09.13

Private house, Groningen

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25 Research Methodology

3.5 Limitations

The results of a case study research are usually limited to the actual cases investigated; meaning a generalisation of findings is difficult. Accordingly, the results of this research are first of all valid for the four case companies and only subordinately for other small businesses as case studies often generate theory only about specific incidents. Furthermore, investigators might be too close to evaluate the importance of certain relationships or try to incorporate too many details in a new framework, whereas these should be designed as simple as possible (Eisenhardt, 1989).

Specific challenges also exist regarding the interview process. Asking the right questions at the right time, using the right language as well as adequate question phrasing have to be considered (Thomas, 2004). So even if the interviewer tried to ask as objective as possible, investigator bias cannot be completely excluded. This also applies to the interpretation process (Thomas, 2004). Another difficulty consists of the answers given in the interviews. Even though the interviewees try to answer the questions as diligently as possible, they are only able to describe the perceived SM performance. Performance indicators like brand awareness, brand engagement etc. are subject to the interviewees’ individual interpretation and could not be verified.

3.6 Validity and Reliability

In order to prevent problems that can occur when using case studies, the data has to be checked for internal as well as external validity (Thomas, 2004). To ensure internal validity several methods of data collection (interviews with verification of results, document analysis including company homepage, brochures, and newspaper articles as well as an expert interview) were used to prevent investigator bias and to reach data triangulation (Eisenhardt, 1989).

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The comparison was conducted analysing the similarities and differences between the case companies. This was done using the aforementioned dimensions. Hence, the researcher was forced to look at the interviews in a structured way and from different perspectives which enhances the accuracy and reliability of the results (Eisenhardt, 1989).

The research strategy could have been improved by using several interviewers and analysts to prevent investigator bias. Another benefit would be gained in combining qualitative with quantitative research to test the results on a large scale (Eisenhardt, 1989; Ellet, 2007). However, both possibilities for improvement were not feasible due to the regulations and time constraints this thesis underlies.

3.7 Ethical Issues

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Results

4. Results

The aim of this chapter is to present the results of the analysis of the semi-structured interviews with key personnel in the cooperating case study companies. Section 4.2, Analysis of Case Study Companies, introduces the results of the sample companies. They are presented for each company separately and divided into the five themes of the conceptual model. Section 4.3 provides a Comparison of the Case Study Companies by Sector Type, while the Sections 4.4 and 4.5 contrast the different Customer Groups and varying Degrees of Internationalisation. A Summary in Section 4.6 highlights the most important findings.

4.2 Analysis of Case Study Companies

This section contains the results of each case company, organised according to the themes SM usage, media reputation and user-generated content, IT capabilities, strategy embeddedness and performance. Moreover, they are supported by quotes from the interviewees.

4.2.1 Say it in Dutch

Social Media Usage

Say it in Dutch uses SM including a Facebook page, a Twitter page and a blog. Posts on the Facebook page are used to visually entertain current and prospective students, whereas Twitter on the other hand is seen to be more textually and interactive. It is used to inform about new conversation groups and other news. The blog of Say it in Dutch is linked to the Facebook page so that new entries are immediately posted on both pages. Hence, Say it in Dutch uses a range of different platforms to pursue different objectives. Nevertheless, the successful participation had to be learned and it took time to develop a functioning strategy. Afterwards the number of shares and likes increased and the benefits of WOM through SM could be obtained.

Media Reputation and User-generated Content

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YH: ‘First of all it tells you who is listening. And secondly what they are looking for.’ Thus, Say it in Dutch found a means to overcome lacking market research and is able to respond directly to customer needs.

IT Capabilities

Website customisation skills exist as the websites were created by Van den Hombergh herself. Nevertheless, the creation of the online shop and the blog were guided by professional providers. Other necessary skills are self-taught or adopted through learning-by-doing. However, IT skills are not perceived necessary to participate in SM. It is more important to know about the opportunities it offers. Back-end integration is not standardised, but this is also regarded less important considering the manageable amount of user-generated content. Say it in Dutch responds to customer feedback but is also able to recognise the potential of new technology itself. Hence, it was a combination of feedback and technological opportunism that fostered the business. Say it in Dutch has the ability to recognise new technologies and evaluate their usefulness for the company so that SM developed into an inherent part of the company.

Strategy Embeddedness

The lessons provided are adapted to the customer needs and try to respond to them as best as possible. Hence, the overall strategy of Say it in Dutch consists of a strong customer focus and flexibility. Regarding SM the main aims are to stay in contact with previous students and to expand the customer base; however, a specific strategy was not formulated. Nevertheless, there are certain policies which guide the plan of actions. Enabling personal communication and avoiding automatic posts are seen as important when participating in SM.

YH: ‘People must have the feeling that they are communicating with a person instead of a system or robot.’

Performance

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Results

Conclusion

Most important for Say it in Dutch is to know about the potential of SM and how to use it. However, maintaining information about media reputation, brand awareness and evaluating the impact of SM on these issues is difficult as the necessary research is too expensive and therefore missing.

4.2.2 Kleiderkreisel

Kleiderkreisel is active on Facebook, Twitter and Instagram and also provides a blog and a forum on its website. The SM activities are managed by the local teams in contrast to the centralised IT. This means that the basics including the web pages, the apps and the mobile pages are the same for every country, however, the local adaptation is assured through the individual design and campaigns in the SM. Shortly after foundation Kleiderkreisel joined Facebook and since then customer awareness rose continuously so that the page has currently over 300,000 likes. The posts on Facebook are used to raise brand awareness, attract new customers and to address existing customers inducing them to visit the website. Twitter on the other hand is used for direct communication with the customers.

Kleiderkreisel’s huge fan community is represented by its members on the website as well as fans on Facebook and Twitter. Following the development of the parent company, the community is seen as one of the unique characteristics of Kleiderkreisel. However, this community has to be nurtured and supported to remain growing. In order to maintain it Kleiderkreisel established a community management which tasks are to deal with the customer requests, emails, complaints and praises. The vivid exchange within the community is seen as more important than increasing the number of members.

IT Capabilities

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The parent company follows a corporate strategy of centralisation and local adaptation, however, another strategic aspect of the company lies in its vision: To fight against waste and to promote collaborative consumption and sustainability. SM campaigns are able to support these aims because no print adverts like posters or brochures need to be printed. In this way the strategies are aligned as they aim to save resources and support efficiency. Additionally, the SM strategy regarding customer acquisition, reattaching existing customers and raising brand awareness successfully supports the community management as there is a continuous rise in members, likes and followers.

Performance

Kleiderkreisel is sure about the influence SM had on the development of its business. In the beginning they emailed friends about the new company and informed about it on StudiVZ5 and Facebook to raise brand awareness. Instead of expensive marketing campaigns they searched for fashion blogs to write about their website, increasing brand awareness and engagement. Through WOM more and more people recognised the page, became friends, followers and finally members.

However, to be successful specific knowledge about the platforms, marketing skills and experience is needed. Furthermore, it has to be analysed which target groups are reachable through SM and if the product or service itself is suitable for online customers.

MH: ‘I think it also depends on the product. And it depends on how it is done. (…) You

can reach the mass with a boring subject, too, you only have to know how to do it.’6

Conclusion

Kleiderkreisel is an example for a company which heavily depends on its SM activities. To be successful they had to learn how to use the different platforms and how to approach their target groups. It is important to develop clear strategies and implementation plans. In addition, a thorough analysis of the target group, its needs and desires, should be conducted to develop matching marketing and SM strategies. Following this, they built up a strong brand community.

5

German social network for students.

6_{Original statement: ‘Ich denke es kommt da auch auf das Produkt an. Es kommt darauf an wie es gemacht wird.}

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Results

4.2.3 Böckenhoff

Böckenhoff uses Facebook to promote its products, inform about the distillery process and to stay in contact with business partners. YouTube is used to show customers the production process in the distillery. Hence, Böckenhoff can inform about the processing and quality of its products and increase brand awareness. Nevertheless, SM activities are a non-priority task.

HK: ‘When there are moments where you have less to do then you can have a look and post something.’7

The foci of the family business are production, sale and customer care. SM is used, but with low significance.

Böckenhoff has a strong reputation of a traditional family business, emphasising the purity and quality of its liquors. Starting to participate in SM, the main task was not to establish a new company image, but to transfer the already existing positive reputation into the online world. User-generated content like comments or shares exists only limited. Feedback is received mainly face to face (FTF) instead of online. Especially because of the locality of the company, most of the customer interaction happens personally either in the shop or during the deliveries and distillery tours.

HK: ‘Facebook is too anonymous, there is nobody behind it. Here [in the shop] there is Ms Böckenhoff who has a very good charisma and who knows how to interact with people.’8

Hence, the personal contact to the customer ranks first. Especially for the older generation personal contact is still much more important than giving feedback in SM.

IT Capabilities

As already mentioned, the company does not possess professional IT skills. That is why the website with the online shop was created by a consultant. Böckenhoff only maintains it by adding new products and completing the offers with pictures and texts. Regarding Facebook, Kölking stated that there are no particular IT skills necessary to open and maintain the

7_{Original statement: ‘Wenn man mal im Moment weniger zu tun hat dann guckt man nochmal und postet ein}

bisschen.’

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Facebook page. Everything is presented self-explanatory or can be acquired through trial and error. Back-end integration is not necessary because of the little amount of comments. The initial incentive to open a Facebook page was due to curiosity and also because of the initiative of the association of rural businesses (‘Feines vom Land’). In this way Kölking has the motivation to look for new technologies, however, the example of acquainted business represented the final incentive to participate.

Böckenhoff’s strategy consists of relying on the traditional product assortment and to sustain the familiarity and quality of the business in the future. Furthermore, they want to keep their customers and attract new ones through their individual service and reliability. Regarding SM, the strategy is to promote old as well as new products and to inform about the distillery. Customers are made aware of the markets and trade fairs Böckenhoff visits and posts from acquainted businesses are shared. Overall, SM is used to promote the products and to support the company image. Accordingly, the SM strategy supports the aims of the overall strategy. Performance

Böckenhoff focuses on personal contact and uses SM only subordinately. Thus, it is hard for them to evaluate the development of online brand awareness. The company attracts more new customers through individual service and customer wishes than through Facebook. Furthermore, WOM exists strongly regarding personal interactions of the customers within the village, but is not yet visible on Facebook.

Conclusion

It is most important for Böckenhoff to be found on the internet. The advantage of a Facebook page is that it ranks high in the Google search lists. Other than that SM represent for Böckenhoff an obligation to join, but is not associated with advantages. The promotion of products and raising awareness are appreciated, but the lack of response complicates evaluating these benefits. However, as part of a continuously changing business environment SM is seen as a new challenge which has to be acknowledged.

4.2.4 Van Ravenzwaaij

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Results

is not yet regarded as a priority for the business. Van Ravenzwaaij sees the potential Facebook can have to support raising brand awareness and sales, but also admits that the page needs more care and development in the future.

In the town Klazienaveen the name Van Ravenzwaaij is immediately associated with agricultural products. The family business with a long tradition has a strong brand name. Nevertheless, only a few customers know about their other products. Through SM they aim to expand this reputation and to promote also the non-agricultural products.

JR: ‘I want to show our city that we are not just providing to farmers but that we are much more than that.’

As the Facebook page is not yet well-known and the SM activities are limited, there is not much user-generated content. Sometimes posts are shared, but comments are rare.

IT Capabilities

The website with the online shop was created by Jasper van Ravenzwaaij’s mother. This was done with the help of a web shop program and Van Ravenzwaaij’s skills. Although he has no IT education he knows how to deal with the tasks required for the business.

JR: ‘Basically everything you want to know you can find online. When there’s something I don’t know, I just google it and try to figure it out myself.’

In this way website customisation skills exist, but when there is a major problem which cannot be fixed internally, consultants are called. Nevertheless, it was stated that IT skills are not necessary to be successful in SM. To advertise products and attract new customers, marketing skills and customer knowledge are perceived much more important.

Back-end integration is not yet possible because of the limited participation. However, personal feedback is evaluated and used to adjust the business accordingly. Regarding technological opportunism Van Ravenzwaaij started the Facebook page because of the positive example of acquainted companies.

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also an incentive to spread this information is given. With the help of WOM, brand awareness is expected to increase and new potential customers emerge.

A corporate strategy does not exist in the business. Nevertheless, Van Ravenzwaaij focuses on customer service and product quality to increase sales. Facebook is used to support this strategy and to increase sales in the long-term through further customer acquisition.

Performance

Van Ravenzwaaij has a high brand awareness and a loyal customer base, nevertheless, this is mainly on a personal basis. The SM activities are not yet sufficient to support FTF interactions through online communication. Consequently, it is hard to evaluate the development of brand awareness and engagement. Also concerning WOM, personal conversations prevail.

JR: ‘I had much more success when the bar owner talked about it [a new product] and told his friends than I had on Facebook.’

Nevertheless, the company intends to use Facebook as a tool to increase virtual interactions. When the customer base of small customers grows, online communication is regarded helpful to interact with them, as it does not imply high costs or effort. Another benefit of Facebook regarding the main customers is that it also enables the company to learn about the customer and respond to his needs. Furthermore, it facilitates the acquisition of customers worldwide, however, this is seen to be dependent on the international potential of the particular product or service.

Conclusion

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Results

4.3 Comparison of Case Study Companies by Sector Type

After having analysed the results for each company separately, this section includes a comparative analysis of the four case study companies. It is organised in terms of service-based companies and product-service-based companies, followed by a summary providing the most important findings.

4.3.1 Service based Companies: Say it in Dutch and Kleiderkreisel

The two service companies both use many different platforms in SM. They do not concentrate on only one network but join numerous pages to inform about their businesses, attract new customers and to interact with them. Furthermore, these different platforms are used for different purposes. Both perceive Facebook to be more informal and entertaining, whereas Twitter is more communicative and interactive.

Regarding the media reputation and the user-generated content of the two businesses it has to be noticed that Kleiderkreisel is relatively bigger than Say it in Dutch. They receive much more comments and have built up their own community. Say it in Dutch does not receive as much feedback as it would like and has hence no sufficient information to evaluate its media reputation.

IT Capabilities

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Regarding strategy embeddedness it is difficult to compare corporate and SM strategy. As already stated these are often pursued implicitly and are not clearly formulated. Say it in Dutch concentrates on customer needs and tailors its lessons according to the wishes of the individual client. In SM it is important to convey personality. These attitudes go along and support each other as a personal approach in SM is suggestive of a personal and individual teaching environment. Kleiderkreisel has a clear strategy for its Facebook page which supports the focus on its community, however, the overall strategy is difficult to describe. The implemented system of centralisation and localisation of tasks to save resources and the mission to fight excessive consumption and support clothes sharing do not contradict. Hence, the two companies follow an overall strategy which is encouraged by their SM activities. Performance

Say it in Dutch as well as Kleiderkreisel benefit from using SM concerning brand awareness and brand engagement. Both businesses show a continuous grow in likes, friends, followers and members. Through the forum on their website, Kleiderkreisel created a high brand engagement and built up a strong brand community. WOM represents for both companies an important catalyst to increase brand awareness. The like and share functions on Facebook e.g. support WOM so that information can be spread all over the network. In this way Say it in Dutch experienced a rise in Skype lesson requests and the amount of members on Kleiderkreisel continuously grows. Hence, both service companies support the presumption that SM can help to increase performance regarding brand awareness and brand engagement through WOM. It applies especially, because both did not support this through traditional marketing campaigns.

4.3.2 Product based Companies: Böckenhoff and Van Ravenzwaaij

The two product companies show a more limited use of SM. They participate primarily through Facebook. Böckenhoff sometimes uploads videos on YouTube, but these are also used to be linked to the Facebook page. Van Ravenzwaaij was active on Hyves9, however, since the potential was restricted to Dutch users they focus now on their Facebook activities.

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Results

Both of the product firms are traditional family companies which already have been operating for several generations. Hence, SM is a relatively new topic for their businesses. They concentrate on the production of their products and customer service, whereas Facebook activities are done only subordinately. Accordingly, both media reputation and user-generated content are difficult to evaluate. The companies have a strong image through their long tradition, but a strong media reputation has not yet been established. Because of the recent start of using SM, comments or shares are still on a low level.

IT Capabilities

Neither Böckenhoff nor Van Ravenzwaaij possess professional IT skills. They attained the necessary capabilities through self-study and ask consultants for help when tasks exceed their abilities. Nevertheless, they, too, state that IT skills are not necessary to participate on Facebook. Van Ravenzwaaij explained that knowledge of the customers, the local region and marketing skills are much more important.

The companies differ regarding their SM strategies. Van Ravenzwaaij developed a certain strategy to increase awareness in the future, whereas Böckenhoff solely aims to inform about the company, its products and markets. Böckenhoff does not see any more potential in Facebook than to inform and to provide an opportunity for customers to be found on the internet. Van Ravenzwaaij on the other hand aims to increase the awareness of its Facebook page to promote and grow sales numbers in the long term.

Performance

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4.3.3 Summary of Comparison by Sector Type

The main differences between service and product companies which could be recognised throughout the interviews were the attitudes towards SM, the aims when using it and the time spent on online activities. The service companies use far more different platforms than the product companies and also differentiate regarding how to use them. The product companies mainly rely on Facebook as their only means of SM. Hence, the service companies receive much more user-generated content and also aim to interact with their customers to improve their businesses. This is not intended by the product companies who merely aim to inform and promote, but not to interact.

Both, product as well as service companies state that IT capabilities are not necessary to participate in SM, but that businesses have to reflect about what their aims are and who they want to reach. Marketing and customer information as well as knowledge about SM in general and the different platforms are rated to be more important to be successful in SM. This also means that a certain strategy regarding SM activities should be developed. It should be clear what customers are looking for when they use SM and how the company appeals to that. Then different activities for different customer groups can be developed.

The four companies differ to a great extent concerning their brand awareness, brand engagement and WOM. The product companies possess a strong image and name recognition, however, this stems from their long tradition. For them it is a challenge to transfer this awareness into SM, however, for Van Ravenzwaaij it also represents a chance to broaden this image. The service companies heavily relied on SM to establish a reputation in the first place. Accordingly, the rising online brand awareness supported brand engagement and resulted in an online community. Kleiderkreisel even exceeded this and established its own social network for people interested in fashion. Nevertheless, service as well as product companies note WOM in SM and see its potential to raise brand awareness. It is seen as an enabler of superior performance in SM. But again it is a challenge for the traditional product companies to achieve the same level of WOM in SM compared to what they already perceive via FTF interactions.

Social Media - Challenges and Opportunities for Small Businesses