Social Media Use and Business Performance in SMEs: The Mediating Roles of Relational Social Commerce Capability and Competitive Advantage

Social media (SM) enables micro, small, and medium sized enterprises (SMEs) to improve brand awareness and to engage their audience, which can lead to referrals, repeat business, and increased sales. However, the existing literature offers limited insights into how the ability to leverage SM for commercial activities that are beyond transactions (relational social commerce capability) can affect performance outcomes for SMEs. Drawing on the existing literature and insights from in-depth interviews with six SME managers/owners, we developed a conceptual research model and examined it empirically by using a dataset collected from Slovenian SMEs. This study identifies relational social commerce capability and competitive advantage as important mediators when exploring the impact of SM use on business performance. More specifically, the findings reveal the mediating role of relational social commerce capability between SM use and competitive advantage, while SM use was not found to have a direct impact on competitive advantage. Furthermore, the findings illustrate business performance as a result of the competitive advantage derived from relational s-commerce capability.