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Olva Academy – School of Researchers, Volume 4, Issue 1, March 2022. pp 96 - 103

Article
SOCIAL MEDIA AND SMALL BUSINESS GROWTH

Benson James Lyimo and Cosmas William

OLVA ACADEMY
Abstract: The growth and activity of several companies is the product of today's social media and e-commerce
technologies. This study sought to examine the impact of Social Media on Small Business Growth: A Case of SMEs at
Arusha City – Tanzania. Findings revealed that Social Media Marketing has a strong positive and significant correlation
with the growth of SMEs. Results showed that Social Media Personalization has a strong positive and significant
correlation with the growth of SMEs. Also, findings depicted that Social Media Customer Service has a positive and
significant correlation with the growth of SMEs at Arusha City. This study recommends that a wide-based study should be
done for instance SMEs in Tanzania. Further research could investigate how SMEs should successfully manage and
manipulate the business opportunity presented by various social media platforms.
Keywords: Social Media, Business Growth, Internet
1. Introduction
The Internet has transformed the way people, organisations, and culture as a whole interact. The internet now has more
immersive functionality than ever before. New networking strategies are constantly being developed, making it easier to
share information. People use the Internet to find updates about various topics while still engaging in social conversations
that affect their lives. Social media refers to these sites where people exchange content, knowledge, and opinions (Drury,
2019).
The growth and activity of several companies is the product of today's social media and e-commerce technologies
(Bennett, 2017). Social media has becoming widely common and are being used increasingly in daily activities by many
companies, particularly small and medium-sized firms (SMEs). Social networking can be viewed as a way for people to
consume and exchange information by using the internet (Cook, 2018). Social media have given more people links rather
than too many approaches to contact. Which has increased interaction, participation and collaboration among people
more easily and fastest way (Kaplan & Haenlein, 2017). Also customer awareness and accessibility has increased among
many small businesses adopted the use of social media. Some of the social media today are such as twitter, Facebook,
Instagram, YouTube and LinkedIn (Walsh, 2020). Social media is simply an online social interaction with different contents
distribution and exchange. Various companies therefore use these media to strengthen the relationship between
producers and consumers. Social networking is also an important tool for any company because it allows businesses to
communicate with consumers. It is also more effective and easier to learn from its clients and use them less expensively
than conventional media (Grewal & Levy, 2019).
Despite the widespread appreciation of SMEs' contributions to socio-economic progress, SMEs around the world face
many barriers to growth. Entry to and distribution of corporate knowledge is one of the restrictions faced by SMEs. While
small businesses face such a challenge, surveys have shown that various consumer groups, including entrepreneurs, are
increasingly using social media. Social media have the ability to offer entrepreneurs a chance to share their clients and
suppliers with their company knowledge. Moreover, social media creates highly interactive platforms through which
individuals and communities share, discuss, and modify user-generated content (information) (Kaplan & Michael, 2018).
They provide an excellent opportunity for businesses to interact with stakeholders and carry message to large audience
(Burson, 2010). With the increased use of internet based communications, more and more businesses use social media
to communicate with their stakeholders. Social media has recently been adapted by many businesses by infusing a mix
of advertisements, sales promotion, and public relations to create a customer focused message. This is evidence by the
existence of a noteworthy number of businesses using social medias like Twitter, Facebook, YouTube, Instagram,
WhatsApp and many more others.
In Tanzania there are numbers of blogs, prominent social media sites that small businesses use to sell their goods or
services. They are one of 45 percent of all countries that have used social media. Nearly any new company in the world
is estimated to rely on social media to promote itself. Tanzanians are among the most active in East Africa's social media
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Olva Academy – School of Researchers, Volume 4, Issue 1, March 2022. pp 96 - 103

(Hogarth-Scott, Watson, & Wilson, 2017). Also, in Tanzania, businesses are using social media to promote dialogue and
meaning interactions between organizations and their stakeholders (O’Rourke, 2018). This is attributed by the fact that
social media has a significant influence on social change particularly but not limited to issues that targeted organizational
customers.
Social media is known as a use of sophisticated and technological communication instruments in the development of
social relationships and interactions among small and medium-sized enterprises (Safko, 2018). Similarly, Kaplan (2019)
also accepted that social connection and contact were embraced by human beings too many years ago, but that it is
because social media technology is adopted that bringing the world together as one with simple interaction. Thanks to the
acquisition of global connectivity, several local firms have used social media to communicate with consumers. Late years
before the development of Social Media most Tanzanian firms depended on direct marketing which in turn wasn't two way
traffic. Thus customers were not retain able and there was less customer loyalty in firms leading to less performance and
inadequate opportunities. The coming of Social media in Tanzania has bridged the interactions between buyers and
sellers ,instilled loyalty and developed Firm Image in the market hence lead to more competition, innovation ,cost efficiency
and productivity among firms integrating social media and marketing. Despite of the development of technology and
accessibility of social media ,most SMEs in Tanzanian are less productive . However, the impact of social media on Small
and Medium Enterprises is still not apparent despite the benefits offered by social media. So, it is difficult for the Small
and Medium Enterprises to comprehend how social media can be productive. Hence creating a dilemma on what means
to trust and employ to boost productivity of these SMEs. Thus, this study sought to examine the impact of social media
on small business growth with special focus on the SMEs at Arusha City - Tanzania.
2. Literature Review
2.1 Theoretical Literature Review
Opportunity-Based Theory
Drucker (2017) holds that SMEs or entrepreneurs always excel or develop by looking and utilizing opportunities that have
set out through social change, technological and cultural changes. For instance an entrepreneur may identify there is a
need for a restaurant in his or her social setting, if the entrepreneur takes the opportunity for creating profit then there is
application of opportunity based theory. Theory further holds that in the process of development innovation of technology
is always experienced. Advancement of technology always has the aim of simplifying work, operational cost, increase
prodfit and increase efficiency. Currently the world is experiencing technological development in the telecommunication.
There have been increase of communication platforms such as social media. The telecommunication advancement has
highly facilitated communication. However, the theory is silent about how far such technological change in telecom industry
has facilitated development of SMEs in different parts of the world (Delmar, Davidson, and Gestner,2013).It has been
witnessed that social media utilization has highly increased as most of firms have been using social media for marketing
their brands. Therefore, arguments in this study was drawn from this theory by looking how far catering service providers
have utilized social media in marketing their products or services hence improve their businesses.
Evaluation Theory
The evaluation theory is based on the concept that choices must be guided by non-traditional methods (Wang &
Wolverton, 2012). Assessment methods must factor all possibilities in this respect to guarantee that the interests of all
performers within the sector are taken into account. The future growth rates within the SMEs will be associated with
scheduled consumer purchases, according to Perez (2014). He believes that the effect of social media on SMEs growth
will be felt further in the future (Perez, 2014). As a result, choices about the SMEs must be all-inclusive and this enables
the sector not to be monopolized by certain forces aimed at defending vested interests. Indeed, the social media platforms
have converted the SMEs in such a way as to bypass the traditional roles of doing marketing. Social media has assured
effectiveness where customers of SMEs products and services can access and make choices online without physical
presence. In summary, the theory of comparative strategy and assessment helps to build equilibrium within the small
businesses so that players can make appropriate use of digital advertising instruments (Mullar, 2016). Social media
platforms, for example, can assist marketers move beyond the market boundaries that require vendors to compare rates
with what rivals offer. This theory helped in understanding how social media impacting the growth of SMEs business.
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2.2 Empirical Literature Review

Kileo (2016) studied ‘the contribution of social media advertisements in influencing consumption of beverages at Coca
Cola Mwanza’. The findings were: 5.3% of her sample test extremely disagreed that Coca Cola social media adverts
influenced them to consume more Coca Cola, 8% fairly disagreed, 29.3% were neutral, 44% fairly agreed and only 13%
extremely agreed. Also, upon finding out which is the most popular social media website for Coca Cola customers, 42.6%
of the customers use Instagram, 22.6% use Facebook, 30.6% use WhatsApp and 4% use Twitter. Kirtis and Karahan
(2017) indicated that the use of social media as a marketing tool is a marketing strategy that can save business costs as
through the use of social media, millions of consumers can be reached in a short period of time and the information can
be disseminated quickly. Nyambu (2013) found that social media marketing enhanced the growth of the organization as
it offers a stage for advertising at a cheaper cost contrasted with different types of marketing accessible. The study
additionally settled that special promotional campaign boosted performance of telecommunication firms in Kenya as it
expanded deals and income past the advancement time frame. Srinivasan, Bajaj and Bhanot (2016) found that social
media participation strong influence on brand trust, which thus, affects customer acquisition and retention. It was likewise
found that there is a solid positive connection a sales and amount of time spent on social media and that web-based social
networking promoting techniques affect customer acquisition and retention and to increment in piece of the overall
industry. Cherotich (2016) found that most MSEs in Kasarani Division use social media and specifically Facebook as a
marketing strategy. The study also found that MSE Owners personally engage or hire people to meet current and potential
customer on social media to enable them to received new customers on social media. Due to the higher level of education
of the women engaging in MSEs, the study found that social media marketing is user friendly and for that reason, majority
do not fear that hackers will damage the image of their business when they use social media for marketing their products.
However, there was fear that the use of social media for marketing may expose their business to legal suits. On
performance the study found that social media marketing has positively resulted to increase in sales revenue, number of
customer and the number of employees hence enable business to discover what the society needs. Shabir et al., (2018)
investigate the impact of social media personalization on small business entrepreneurs. Social media completely
transformed the way of businesses. Social media personalization in the present time have become most efficient and
effective tool for small business entrepreneurs and normally all small business use social media personalization for
the advertising and publicity of their products and services, they make fan pages for the followers and they warmly
welcome the suggestions and opinions which help in improving their business. However, based on literature review
concluded, there is a positive impact of social media personalization on growth of small business entrepreneurs. Jagongo
(2018) established that social media tools offer customer experience and increase customer trust and authority which in
turn have a significant impact on the growth of SMEs. On the other hand, the pricing of products and innovativeness
aspects offered by social media have had very little impact to cause any growth in the SMEs. It revealed that geographical
barriers can be broken down by the use of social media tools. Additionally, social media allows businesses to communicate
speedily and cheaply with customers as well as allow them to construct a database that can be used to generate business
leads that may translate to increased sales and thus grow the SMEs.

Joachim (2017) concluded that majority of respondents in this study disagree that Facebook leads to brand awareness of
small business only the large companies. Majority of respondents agreed that customers visit different business pages
before purchasing a product and promotions and discounts displayed on the business Facebook page increases sales.
The findings implied that Facebook leads to environmental preservation and majority of respondents agreed that
Facebook leads to customer relationship. Instagram leads to engagement with customers and leads to modification of
marketing strategies. Respondents agreed that Instagram leads to influencing buying decision. Respondents also agreed
that it is easy to connect with your customers through Instagram when passing marketing information. This indicate that
Instagram has led to increase of ecommerce. Moreover majority of respondents agreed that Using Twitter encourage
better understanding of customer’s needs. Moreover, respondents strongly disagreed that twitter. Massawe (2017)
depicted that all else being equal, the use of social media enhance business performance. WhatsApp was found to be
the most, preferred social media by MEs, followed by Facebook, Instagram and Twitter. On the other hand, awareness,
risks and insecurity of information, and costs was some of the observed challenges that hinder MEs from using social
media. It was concluded that effective use of social media is an efficient tool for enhancing MEs performance. Costantine
(2017) revealed that CSOs used social media to a large extent and had policies on social media, the use of social media
customer service significantly contributed to organizational efficiency; it contributed to organizational effectiveness for
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organizations which used social media together with mass media (Radio and TV). Moreover, limited internet access, lack
of technical competence on the use of social media and failure to control information flow were the main challenges facing
CSOs using social media. It was concluded that CSOs should regularly update their social media account, use social
media together with other channels of communication such as mass media and also develop policies/strategies
concerning the use of social media. CSOs should raise awareness and build capacity of their staffs on effective use of
social media while the government should develop adequate network infrastructure for internet access across the country.
Mshana (2020) evaluated the impact of social media on small and medium enterprises (SMEs) development in Tanzania
particularly in Kinondoni District. The major findings shows that due to the adoption of social media there have been
increase of sales, increase of customer demands hence social media has highly promoted business. Moreover, SMEs
have experienced quick accessibility of the market, easy feedback from customers, also SMEs have been easily
influencing customers through social media. Lastly, social media marketing has been influencing customer relationship
management through easy communication between customers and SMEs owners.

3. Methodology
This study employed a descriptive survey design. Study population consisted of SME owners (or operators) who are
using social media for marketing of their products and services in Arusha city. Simple random sampling technique was
used to select 385 respondents. Both primary data and secondary data was collected for the study. Primary data was
collected closed ended questionnaire while secondary data was obtained from published sources and unpublished
sources. Statistical Package for Social Sciences version 26 was utilized as a data analysis tool to analyse quantitative
data using inferential statistics.
4. Results
4.1 Correlation Analysis
To quantify the strength of the relationship between the variables, the study used Karl Pearson’s coefficient of correlation.
The findings are presented in table 1 as follows;
Table 1: Correlations
Social Media
Social Media Social Media Customer SMEs
Marketing Personalization Service Growth
SMEs Growth Pearson Correlation .663** .637** .233** 1
Sig. (2-tailed) .000 .000 .000
N 323 323 323 323
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).
Results in table 1 above revealed that Social Media Marketing has a strong positive and significant correlation with the
growth of SMEs at Arusha City (R=0. 663, p value<0.005). This implies that the use of Social Media Marketing is
associated with an increase in growth of SMEs at Arusha City. Results showed that Social Media Personalization has a
strong positive and significant correlation with the growth of SMEs at Arusha City (R=0. 637, p value<0.005). This implies
that the use of Social Media Personalization is associated with an increase in growth of SMEs at Arusha City. Findings
depicted that Social Media Customer Service has a positive and significant correlation with the growth of SMEs at Arusha
City (R=0. 233, p value<0.005). This implies that the use of Social Media Customer Service is associated with an increase
in growth of SMEs at Arusha City.

4.2 Regression Analysis

A linear regression analysis was conducted to impact of social media on small business growth. Table 2 below shows the
results of the model summary showing how much of the variation in SMEs Growth (dependent variable) was accounted
by Social Media Marketing, Social Media Personalization and Social Media Customer Service (independent variables).
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Table 2: Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate
1 .743a .552 .548 3.54796
a. Predictors: (Constant), Social Media Customer Service, Social Media Personalization, Social Media Marketing

Coefficient of determination (r²) in the model summary explains 55.2% of the independent variables. This implies that

independent variable explains only 55.2% of the characteristics (Social Media Marketing, Social Media Personalization

and Social Media Customer Service) that affecting SMEs Growth. The coefficient of determination is significant because

48.8% of variations are brought about by characteristics not captured in the independent variables.

Table 3: Coefficientsa
Unstandardized Standardized
Coefficients Coefficients t Sig.
Model B Std. Error Beta
1 (Constant) 5.913 1.574 3.757 .000
Social Media Marketing .268 .036 .371
7.403 .000
Social Media Personalization .410 .050 .410
8.257 .000
Social Media Customer Service .356 .071 .195
5.040 .000
a. Dependent Variable: SMEs Growth
Using the results above, we have the regression equation as: Y = 5.913 + 0.268X1 + 0.410X2 + 0.356X3 + 0.824α.
According to the regression equation established, taking all factors into account with constant at zero, outcomes will be
5.913. Taking all other independent variables at zero, Social Media Marketing increase SMEs Growth by 0.268 and Social
Media Personalization increase SMEs Growth by 0.410 while Social Media Customer Service increase SMEs Growth by
0.356. The study findings from table 4.9 above, showed that there was a significant relationship between Social Media
Marketing and SMEs Growth as it shows value is 0.000. There was a significant relationship between Social Media
Personalization and SMEs Growth as it shows value is 0.000. Also, there was a significant relationship between Social
Media Customer Service and SMEs Growth as it shows value is 0.000.

4.3 Discussion of Findings

Social Media Marketing
Social media marketing is an efficient tool for businesses of all sizes to connect with prospects and consumers. Findings
of this study revealed that social media marketing helps business to keep eye on the competition, stay on top of industry
news and influence buying decision to customers and increase more selling. These findings support the supposition of
the opportunity-based theory, which indicated that advancement of technology always has the aim of simplifying work,
operational cost, increase profit and increase efficiency. The findings concur with Mshana (2020) that due to the adoption
of social media there have been increase of sales, increase of customer demands hence social media has highly promoted
business. Social media marketing enables businesses to communicate directly with their consumers and supporters, as
well as enabling them to interact directly with their brand. Unlike traditional media, which only allows for one-way
communication, social media allows for two-way conversation. Findings portrayed that social media marketing has
decrease of operational cost, improve customer and audience engagement and increase wider range of customers in
business. These findings are in line with findings of Kirtis and Karahan (2017) who study indicated that the use of social
media as a marketing tool is a marketing strategy that can save business costs as through the use of social media, millions
of consumers can be reached in a short period of time and the information can be disseminated quickly. In real-time,
social media marketing creates a massive quantity of data on clients. SMEs may utilize this data to make better business
decisions. All of the main social networks include analytics that give demographic information on users that engage with
their accounts. This can assist SMEs in tailoring their social media marketing plan to better communicate with their actual
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consumers. Findings of this study depicted that the social media marketing helps the business to learn more about
customers. This is in line with Mshana (2020) that social media marketing has been influencing customer relationship
management through easy communication between customers and SMEs owners. Also there have been high and quick
involvement of customers in the business whereas has eventually led to trust. Social media has an advantage over
conventional media in that it allows SMEs to get their brand in front of consumers much more rapidly and easily.
Furthermore, it draws the attention of the audience to the SMEs' brand even when they are not thinking about it. In this
study, researcher discovered that social media marketing has become a major source of interactive with customers,
increase in brand awareness of SMEs products and services. This finding match finding of Joachim (2017) that social
media marketing has leads to engagement with customers and leads to modification of marketing strategies and better
understanding of customer’s needs. Findings unveiled that social media marketing enabled the business to measure its
success with analytics. Google Analytics is an excellent social media marketing tool that may assist business owners in
determining which social media marketing initiatives are effective and which should be abandoned. Moreover, findings
indicated that social media marketing has increased business, number of customers helped the business to partner with
influencers. Also, findings revealed that Social Media Marketing has a strong positive and significant correlation with the
growth of SMEs at Arusha City. This implies that the use of Social Media Marketing is associated with an increase in
growth of SMEs at Arusha City. These findings correlate with Nyambu (2013) who found that social media marketing
enhanced the growth of the organization as it offers a stage for advertising at a cheaper cost contrasted with different
types of marketing accessible. Also. These findings are consistent with Massawe (2017) who posited that social media is
an efficient tool for enhancing business performance.

Social Media Personalization

Findings unveiled that social media has pushed business towards E-commerce use, enabled business to communicate
open and clear messages hence led to more creativity in advertising and personal selling when meeting customer’s needs.
These findings support the supposition of the evaluation theory, which designated that social media platforms have
converted the SMEs in such a way as to bypass the traditional roles of doing marketing. Social media has assured
effectiveness where customers of SMEs products and services can access and make choices online without physical
presence. Likewise, Mshana (2020) acquiesced that SMEs have experienced quick accessibility of the market, easy
feedback from customers, creativity in advertising also SMEs have been easily influencing customers through social
media. Findings depicted that the social media personalization helps customer identify with SME’s product brand, increase
customer retention and share products and services to the targeted customers as well as promoting green retailing such
as reduction of packages. This supports Srinivasan, Bajaj and Bhanot (2016) findings that social media strategies affect
customer acquisition and retention and to increment in piece of the overall industry. The study also found that social media
improve customer experience, increase customer trust and authority as well as modifying marketing strategies and push
to internet marketing. The findings support findings of Jagongo (2018) that social media tools offer customer experience
and increase customer trust and authority which in turn have a significant impact on the growth of SMEs. Also, results
showed that social media personalization has a strong positive and significant correlation with the growth of SMEs at
Arusha City. Shabir et al., (2018) also found that there is a positive impact of social media personalization on growth of
small business entrepreneurs.
Social Media Customer Service
Creating a loyal client base is one of practically all businesses' key aims. Given that customer happiness and brand loyalty
often go hand in hand, it is vital for SMEs to contact with consumers on a regular basis and begin building a relationship
with them. Customers see these platforms as a service channel via which they may engage with the company directly.
The millennial generation has the highest level of brand loyalty of any generation. SMEs must employ social media
customer service to grab the attention of their most influential clients. Results of this showed that, social media customer
service enables easily provision of feedback to customers, convince customers easily, increase customer satisfaction
hence enable provision 24/7 customer service. These results match result of Jagongo (2018) that social media allows
businesses to communicate speedily and cheaply with customers as well as allow them to construct a database that can
be used to generate business leads that may translate to increased sales and thus grow the SMEs. Findings indicated
that social media customer service provides effective crisis management, improve brand loyalty and enable the business
to engage easily with customers by sending samples, as well as promoting environmental messages. SMEs may
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proactively handle concerns in the social media world for all to see by successfully managing social media for such
communication. Customers that receive responses from businesses on social media are frequently happy and may even
share their happiness with others. Costantine (2017) consented that the use of social media customer service significantly
contributed to organizational efficiency. Similarly, findings depicted that social media customer service enables business
to view their consumer’s comments easily, enables business to connect deeper with the consumer and enable business
to discover what the society needs. Further, findings depicted that Social Media Customer Service has a positive and
significant correlation with the growth of SMEs at Arusha City. These findings concur findings of Cherotich (2016) that
social media has positively resulted to increase in sales revenue, number of customer and the number of employees
hence enable business to discover what the society needs

5. Conclusion and Recommendations

The study concludes that of social media marketing influence the the growth of SMEs at Arusha City. Social media
marketing is one of the most important elements of SMEs growth, and it has caused a revolution in business operation. It
has altered how SMEs interact with their target audience. The study also concludes that the usage of social media
personalization influences the growth of SMEs at Arusha City. Personalization is a great strategy which let customers
know that business owners care for them, and their choices and preferences matter the most to the business. However,
business owners should engage them at the right times and accordingly. Either, with social media personalization, SMEs
shall not invade the privacy of the consumers. Furthermore, this study concludes that the use of social media customer
service lead into the growth of SMEs at Arusha City. It is beneficial for SMEs to pay attention to social media customer
service when it comes to providing customers with the highest quality of care. Consumers prefer to buy from people they
serve them with quality care. Social media customer service is a great way for SMEs to gain a competitive edge. As a
result, generalizations based on their geographical locations and markets served cannot be relied on sufficiently. Based
on these and other factors, it is advised that a broad-based study be conducted, for example, on SMEs in Tanzania. More
research might look into how SMEs can successfully handle and utilize the commercial opportunities provided by various
social media sites. SMEs must learn how to use social media to fulfil their diverse goals.

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