The Impact of Social media on Innovation in Small and Medium-Sized Businesses

This research explores the impact of social media on innovation in small and medium-sized businesses. Research during the recent years suggest that information systems in general and social media platforms in particular play a significant role in empowering open innovation networks, which involve a diverse set of partners, and have been known a key driver for the sustainable development of new products and services in organizations. Social media platforms present an opportunity for firms to create online communities where users engage in collaborative practices to create value by submitting product reviews, providing feedback, generating ideas, suggesting new solutions to the problems, and identifying new sources of innovation. There is a growing body of literature suggesting SMEs can reap significant benefits if they use social media to collaborate with their external partners, suppliers, customers, and other stakeholders, and to engage in open innovation activities with them, perhaps because they lack sufficient resources such as time, budget, and expertise, to innovate on their own. These benefits can be co-creation of new solutions, increased efficiency saving and economies of scale, improved metadata (knowledge of who knows what and who knows whom), and enhanced individual and organizational learning. However, previous studies have rarely examined the complexity of actual implementation of open innovation in the context of SMEs. Particularly, there have been few empirical studies to examine how social media can be integrated into the innovation process of SMEs. To examine the entire process of social media-enabled innovation in SMEs, this research has set out to address a main research question by exploring two sub-research questions as follow: How do social media-based interactions influence the innovation practices of small and medium-sized businesses? I. How does social media influence information sharing between small and medium-sized businesses and their external stakeholders? II. How is information from social media used internally by small and medium-sized businesses to support their innovation practices? The research focuses on two qualitative case studies of UK-based SMEs active in the education resources development, and legal aid services sectors. Netnography and semi-structured interviews were selected as the main methods for developing the case studies. In each case study, netnographic data was collected from the company’s social media interactions with external stakeholders. This was followed by semi-structured interviews with the key informants from each organization. The case studies were guided by the grounded theory principles, which also informed the assessment and analysis of the collected data to develop a new theoretical model that conceptualizes the social media-enabled innovation in the context of case studies. Hence, the newly-developed model has emerged from the empirical data and has been verified against the identified concepts from the literature review. The new model includes four main stages which are: Branding and socialization, information sharing, information use, and maturity. Each stage consists of two key components contributing to the fulfilment of the objectives set out for that stage. The research also identified two contextual factors that are likely to impact the successful adoption of the model in organizations. These two factors are: community culture and company size. This research is among the few empirical studies which have attempted to examine the end-to-end process of social media-enabled innovation in the context of SMEs and the methodological approach is novel in research into education resources development and legal aid services sectors.