A dynamic capability theory perspective: borderless media breakthrough to enhance SMEs performance

Abstract

Social media technology as borderless media has made it easier for small and medium-sized businesses (SMEs) to interact with their customers. The application of social media has impacted the operation and information sharing of SMEs, allowing them to develop innovation opportunities, to meet customer needs, and to improve firm performance. This study examined the influence of social media use on business networking quality and product innovativeness of SMEs. The data for this cross-sectional study were gathered from jewelry crafting SMEs in Bali, Indonesia using the survey method. The data were analyzed using the covariance-based statistical analysis technique with SPSS via AMOS 23. The results indicate that, while the direct link between social media adoption and firm performance is not significant, this path is fully mediated through business networking quality and product innovativeness. Hence, these SMEs should leverage their social media adoption due to strong business networking quality and product innovativeness enabling competitive advantage that heightens firm performance. Firm-level product innovation can harness the economic performance of the SMEs. The study limitations and future research endeavors are presented at the end of this paper.