Social Media Reforms the SMES Management in the GCC

SOCIAL MEDIA REFORMS: THE SMEs Management IN THE GCC

Social Media Reforms the SMEs Management in the GCC

Growing consensus among academic and business communities reveals that forming, managing and nurturing social media are very critical to the success of SMEs (small medium enterprises) (Ngugi et al., 2010; Jones and Holt, 2008). Social media is a technology system used to connect, collaborate and create business and personal profiles. In a business community, social media assist SMEs to share opinions, information, and activities. Using this strategy, businesses are able to expose their business activities to consumers thereby gaining market advantages. (Peltier, & Naidu, 2012). In other word, social media represents the interactive method that formal organizations employ to get in contact and collaborate with distributors, consumers, suppliers, and consultants. Through interactive social networks platform, SMEs are in a better position to develop effective strategies to gain market advantages in an ever-changing competitive global market landscape. Typically, social media platform has revolutionized a method business community communicates among one another. With a social media network, information dissemination is no more solely in the hand of businesses; consumer can now respond to the environmental demand and speak freely to the global community. Essentially, social media now become a source of information networking opportunities to access new markets. Moreover, social media assists SMEs to reduce transactional costs, access new market and improve communication platforms. (Abid, Rahim & Scheepers, 2011).

In a business competitive environment, the success of small businesses is a good customer relation, however, trust is very critical to build good customer relations, and consumers place a greater trust on information from per group friends and other consumers. Social media has become an avenue where consumer, friends and peer group share information about values that businesses deliver to consumers. The Facebook, Twitter, and YouTube are the examples of social media and SMEs globally are taking the advantages delivered by the social media to compete effectively with larger global corporations. Despite the benefits that social media deliver to SMEs in the United States, the UK and other western countries, the questions are raised whether SMEs in the GCC (Gulf Cooperation Council) countries are taking the advantages of social media network.

The study generates the research problems and collect data from different academic literatures to address the problems and answer the research questions.

Problems of Study

GCC states are the oil rich countries that include Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, and the United Arab Emirates. (Indrupati, & Henari, 2012). Presently, the GCC supplies one third of the U.S. crude oil that worth approximately $500 billon. (GICWED, 2013). In the GCC region, the presence of social media have greatly altered the corporate brand landscape because many of the top SMEs in the region have signifies their presence on the top three social media sites such as Facebook, Twitter and YouTube.(Al Jenaibi, 2013). Within the GCC regions, the Facebook is the most popular choice with approximately 72% usage, followed by Twitter, 27% usage and Youtube 1%. Researchers have provided extensive literatures on the relationship between social media and the SMEs management in the western countries (Ngugi, Johnsen, and Erde'lyi, 2010); however, little is known about the relationships between social media and SME's management in the GCC countries. Moreover, there is no comprehensive data available on the relationships between social media and SMEs in the GCC states. Peltier et al. (2012) provide a comprehensive research on the relationships between social media and SMEs; however, their research mainly focuses on the SMEs in advances countries. Razak, & Marimuthu, (2012) explores the extent SMEs have been using the Facebook to generate value, however, the authors only focus on the western and Asian countries and there is no mention of Arab countries. Scarcity of the research between social media and SMEs management in the GCC countries generate research problems, which this study attempt to address. This study formulates research objective to enhance a greater understanding between social media and SME in the GCC countries.

Objectives

To investigate the relationships between Social Media and the SMEs Management in the GCC countries.

Important of Study (Value / Originality)

This study provides several contributions. First, the study will enhance a greater understanding of academic communities on the importance of social media to the market advantages of SMEs in the GCC region. Many SMEs in the United States, the UK and other western countries are taken the advantages of social media platform to compete effectively with large corporations to achieve market advantages. However, SMEs in the GCC states are still ignorant of the importance of social media to business advantages. The findings of the study will make the SMEs globally to understand the importance of SMEs for their businesses.

Moreover, the paper will enhance a greater understanding of the academic community on the significant relationship between Facebook, Twitter, Youtube and the SMEs Management in the GCC. Previous studies generally focus their researches on the relationships between social media and SMEs in advanced country. This study fills the gap created with paucity of research on the significant relationship between Facebook, Twitter, Youtube and the SMEs Management in the GCC region. Moreover, the study will build the knowledge of the general community and prospective business people on the relationships between social media and SMEs management in the GCC states.

Research Questions

The gap in the literatures on the relationships between social media and SMEs in GCC states emerges the following research questions:

1. How do social media such as Facebook, Twitter and Youtube enhance business advantages of the SMEs in the GCC states?

2. Does the SMEs in the GCCs are taking the advantages of social media opportunities to build their market advantages?

3. Is there a significant relationship between SMEs in GCC states and social media such as facebook, Twitter and Youtube?

Literature Review

The growth of social media reflects age-old social needs of human where men are required to connect and communicate with one another. However, men have taken the advantages of the recent development of information technology by using social media to reach large number of customers. Typically, SMEs globally are taking the advantages of the growth of social networking channel such as Facebook, Twitter and Youtube to reach their customers. Indrupati, & Henari, (2012) argue that if SMEs are to effectively reach their customers, they must do so by going through social media. Thus, the growth of online social media has assisted businesses to effectively reach their customers. Formerly, businesses use the traditional media vehicles such as newspapers, television and radio to reach customers. Presently, businesses use online social media to reach customer, and businesses cannot ignore the highly interactive nature of social media if they intend to reach potential customers. At presently Facebook top the social media vehicle with approximately 585.9 Million users at the end of 2010. However, Facebook has 7 Million users from GCC states.

(Ramady, 2010, Indrupati, & Henari, 2012)

Peltier et al. (2012) provide the theoretical framework to reveal the relationship between social media networks and business organizations. The authors claim that social media is built on the principle of creating assets for business organizations. The social network theory argues that social capital assists organizations to access knowledge, information, resources as well as financing. Casson and Della Giusta, (2007) point out that social media is communication network that assist organizations and individual to receive support in form of knowledge and business contacts. Essentially, social media assist organizations to have access to resources not possessed internally in order to achieve economic exchange. Anderson and Jack (2002) point out that social media assist organizations to achieve economic performances because large pool of people engaging in social interaction. Typically, social media facilitate interactions among people, organizations and institutions. Scot (2007) identifies social media as a social platform that allows transformation of electronic information. The social media allows organizations to manage information according to their requirements and preferences. The definition of social media reveals that they are human-machine platform having power to assist information transfer.

While the SMEs in the advanced countries have extensively used social media vehicle to build market advantages, however, the current usage of SMEs is still at low level in the GCC states. Al Jenaib, (2013) argues that corporate organizations in the GCCs states are registering their presence in the top social media sites such Facebook, Twitter and YouTube. However, Al Jenaib, (2013) point out that social media usage is impressive in the GCC region between 2009 and 2010; 5.5 million users are subscribing to twitter revealing 135.6% annual growth. Within the GCC states, the presence of social media has altered the information landscape and despite the rapid usage of social media in the region, the governments continue to introduce regulations to censor popular sites such as Facebook. Typically, online privacy is an important and sensitive issue in the Arab world, and Facebook and Youtube allow people to display anything including women exposing their body. In the GCC states, the Sharia law forbids people watching these types of video or pictures.

Razak, (2012) point out that internet has assisted SMEs to integrate social media in SMEs marketing strategies globally. Typically, internet has become accessible to billion of people globally, and the phenomenon has revolutionized the use of social media for business advantages. Razak, (2012) point out that 75% of internet users use social media to carry out various activities such as linking to shopping site, and since 2007, social network has increased tremendously. Essentially, Facebook proves very useful in term of business communication and socialization created by Facebook continues to expand with over 800 million users subscribes to Facebook. The study reviews the literatures on the GCC states to enhance a greater understanding on the extent the GCC states have taken the advantages of the social media.

GCC ( Gulf Cooperation Council)

GCC (Gulf Cooperation Council) states comprise of United Arab Emirate, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman, In the GCC states; the SMEs (small medium enterprises) are very critical for the development of national economies. Typically, the SMEs are very essential for the economic growth, apart from generating employment opportunities for the residents, the SMEs provides source of income for the government. In the GCC countries, SMEs consist of over 95% of the active business in the countries, and contribute significantly to the economic growth of the GCC states. SMEs generate employment opportunities for people and assist in the innovation and international competitiveness. The SMEs are therefore the main drivers for development and economic diversifications. Typically, SMEs are the backbone of sustainable economies of the GCCs, and assist in successful economic diversification. Thus, it is generally agreed that job creation opportunities and economic diversification of GCC rely on the SMEs management. (Ashoor, 2013). Since the SMEs in the GCC countries consist of largest bulk of the business in the financial sector, non-financial sector, and manufacturing sector SMEs are to take the advantages of new and innovative technologies of social media platform. SMEs assist in job creation, innovation, growth and development in the GCC region. Essentially, SMEs are the main drivers for economic diversification in the region. Apart from creating local jobs, SMEs exploit opportunities created by the new technology and globalization.

In the GCC states, SMEs have not developed up to their potentials because of the general believe that growth is not essential at all cost. In the GCCs, the SMEs are defined as follows: SMEs are the organization having between 50 and 150 employee. According to this definition, small enterprises should have up to 50 employees while medium enterprises should have up to 150 employees. However, an exception is considered for textiles sector with up to 300 employees and still being considered as medium enterprises because they are generally labor-intensive. (Ministry of Commerce and Industry, 2013).

Jones, (2013) provides the findings of the recent survey conducted to establish the relationships between social media and 1,800 SME in United Arabia Emirates and Saudi Arabia. The results reveal that only 18% of the SMEs in the UAE have established online presence while 15% of SMEs in Saudi Arabia have established online presence compared to the 60% in France and 70% in the United States. Jones, (2013) further reveals 75% of SMEs in the UAE have not considered building websites to promote their product and services. However, in Saudi Arabia, only 35% of the SMEs have websites while 65% do not have websites. The major reason is that over 90% of SMEs are not sure of the benefits their organizations could derive from the internet.

However, the Emirate News Agency (2011) reveals that only 5% of the UAE are taking the advantages of the social media as marketing tools. (Emirates News Agency, 2011). Starting from 2011, many SMEs in the UAE have just started considering using social media to educate, communicate and share information to their prospective customers. Alansari, (2012) point out that many SMES in the GCC states are facing challenges to use social media, and some of the challenges include shortage of professionals capable of handling social media tools for the companies. Essentially, SMEs will need professionals to handle the social media functions because some SMEs believe they will need to integrate the automated tools to handle the social media effectively. Many SMEs in the GCC are also facing administrative challenges from the governments. Sometimes, governments impose regulations to restrict the use of social media in the GCC states.

Methodology

The study reviews selected literatures as a method of data collection, and the study will search secondary data from various electronic database such as Science Direct, and EBSCOS database. These databases have high quality research articles, electronic journal, e-books and data on small and medium enterprises. Apart from searching electronic database to search for relevant literatures, the study also searches for GCC SMEs data from Government investment Corporation. Moreover, the study collects data of all SMEs in GCC subscribing to Facebook, Twitter and Youtube from the SocialBakers. Typically, the SocialBakers contains a comprehensive data on the number of SMEs of all countries subscribed to social media such as Facebook, Twitter and Youtube. The study uses the statistical quantitative technique to demonstrate relationships between social media and SMEs in the GCC countries.

The study also uses different technique for the search strategy. First, the study searchers for the peer-reviewed literatures relevant to the study. The research also uses standard keywords such as SMEs, small and medium enterprises, social media GCC, Gulf Cooperation Council, Facebook, Twitter, Youtube and SME management to search for secondary data from the electronic database. The study also handpicks some important research papers to establish the significant relationships between social media and SMEs in the GCC countries. The data collected assists the study to test the hypotheses cited in the next section.

Hypothesis:

Ho1: There is no significant statistical relationship between Social Media and the SMEs Management in the GCC.

Ho1a: There is no significant statistical relationship between Facebook and the SMEs Management in the GCC.

Ho1b: There is no significant statistical relationship between Twitter and the SMEs Management in the GCC.

Ho1c: There is no significant statistical relationship between YouTube and the SMEs Management in the GCC.

Qualitative or/and Quantitative Methods

The study uses the quantitative technique to test the hypothesis and answers the research questions. The quantitative technique analyzes numbers using a statistical tool and the robust benefits of quantitative technique is that it presents results with graphs, chart and table, which assist in comparing the results. Moreover, the quantitative method saves time, costs, and is appropriate for a researcher with limited budget and time. However, the shortcoming of quantitative method is that it does not allow a research to immense in the phenomenon, which is the benefit of qualitative research; however, qualitative research will involve a lot of costs and time. Based on the shortcomings identified in the qualitative research, the study uses quantitative technique to presents results.

Sample GCC (Gulf Cooperation Council)

The sample GCC consist of:

Bahrain

Kuwait

Oman

Qatar

Saudi Arabia and United Arab Emirates.

Typically, all GCC countries heavily rely on export of crude oil.

Results (Findings)

Facebook seems to be the top social media that the SMEs in the GCC states are using to communicate with their customers. Social Bakers (2010) presents data of all SMEs in GCC subscribing to Facebook, Twitter, and Youtube. The data reveal that only 314 SMEs in Saudi Arabia subscribed to the Facebook in 2012.

"In 2008, a total of 785,000 establishments were registered in Saudi Arabia, of which 764,000 were sole proprietorships. This means that there are more than 700,000 SMEs active in the kingdom or about one SME per 25 Saudi nationals." (Hertog, 2013 p15).

Out of the of 700,000 SMEs in Saudi Arabia, only 314 SMEs subscribed to the Facebook in 2012 showing that majority of the SMEs in Saudi Arabia are not taking the advantages of social medial network. (Ramady, 2010). The table 1 reveals the number of SMEs in the GCC subscribing to the social media vs. The total number of the SMEs in the region. The table 2 reveals the percentages of the SMEs not subscribing to the social media. Moreover, the Appendices 1, 2,3, 4, 5 and 6 presents the illustrations of the number SMEs in the GCC subscribing to the social media.

Table 1: Number of SMEs in GCC subscribing to Social Media

Facebook

Twitter

Youtube

SMEs

Saudi Arabia

93

700,000

Kuwait

88

15

33,000

United Arab Emirate

97

82,526

Bahrain

26

4

40,000

Oman

67

16

4

29,234

Oatar

72

39

15

13,466

Source: Social Bakers (2010)

Table 2: Percentages of SMEs in GCC not taking advantages of the Social Media

Facebook

Twitter

Youtube

Saudi Arabia

99.95%

99.97%

99.98%

Kuwait

99.47%

99.73%

99.95%

United Arab Emirate

99.32%

99.78%

99.88%

Bahrain

99.73%

99.93%

99.99%

Oman

99.77%

99.94%

99.98%

Oatar

99.46%

99.71

99.88%

The results reveal that SMEs management of the GCC is not taking the advantages of the social media. Thus, the results show that there are no significant statistical relationships between Social Media and the SMEs Management in the GCC. The findings make the study to accept the following hypotheses:

Ho1: There is no significant statistical relationship between Social Media and the SMEs Management in the GCC.

Ho1a: There is no significant statistical relationship between Facebook and the SMEs Management in the GCC.

Ho1b: There is no significant statistical relationship between Twitter and the SMEs Management in the GCC.

Ho1c: There is no significant statistical relationship between YouTube and the SMEs

Discussion

Similar to many of the emerging countries, the SMEs of the GCC states consist of more than 95% of the organizations in the countries. The SMEs in the regions are the mainstay of the economies because they contribute to the economic growth and offer employment opportunities to the residents. However, recent rapid development of information technology has made many SMEs organization across the world to take the advantages of information technology to reach their potential customers. Social media are among the avenues that internet offers to the global community. Overview of the literatures reveals that increasing number of SMEs in the advanced countries is taking the advantages of the top social media such as Facebook, Twitter and Youtube to reach their potential customers. Analysis of the literatures also reveals that 99% of SMEs management in the GCC is not taking the advantages of the social media. Management of the SMEs in the region is ignorant of the benefits they could derive from the social media. Moreover, some of the management of SMEs in the region lack IT skills to integrate the social medial tools in the business process.