The Impact of Social Media Adoption on Customer Orientation and SME Performance: An Empirical Study in Indonesia

This research aims to examine the effect of customer orientation on SME performance, and the role of adoption of social media on the relationship between customer orientation and SME performance. Using a quantitative research approach, data were obtained using a questionnaire by phone, email and paper survey. This study employs samples of 178 SME owners/managers in Indonesia, with convenience sampling techniques. Structural Equation Modeling-Partial Least Square (SEM-PLS) is used for analysis and hypothesis testing. The results showed that customer orientation was able to improve SME performance, and social media positively moderates the effect of customer orientation on SME performance. This shows that the influence of customer orientation on SME performance will be stronger with the utilization of social media because it helps businesses understand customer needs and wants, thereby creating value. This strengthens the concept of dynamic capability regarding the importance of the ability to adapt to environmental changes, particularly adaptation to developments in information technology. The findings of this study suggest the importance of SMEs adopting social media because it contributes to increasing the role of customer orientation in improving SME performance. Further research is needed to investigate the benefits obtained from using each social media channel on increasing customer orientation.