Colegio de San Ignacio Inc.

Diversion Road, Buhangin, Davao City

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A Correlation Between Social Media Engagement

and the Success of Small Business
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In Partial Fulfillment of the Requirements in

Practical Research 2

Proponents:
Bautista, Marielle S.
Bringcula, Cathlene Mae
Casado, Jenelyn P.
Castillote, Althea Mary A.
Demeray, Princess Anne A.
Mateo, Chrizel Jean C.
Macadagat, Paloma T.

Submitted to:
Joseph T. Maway
Practical Research 2 Teacher
October 2023
 Chapter 1

Introduction

Markets are ruled by consumers. No business can function without customers

and as technology has developed, customers are increasingly using social media as
their common source of influence for their purchasing decisions.

Social media and other digital communication tools like the internet have grown
into becoming an essential part of people’s daily lives (Dwivedi et al., 2017). As the
internet evolved in the twenty-first century, the growth of social media has increased
globally, in how business owners interact with their customers and the way they
advertise their goods and services (Culnan, et al., 2017).

Based on the report by Statistica (2021), the use of social media has gradually
expanded, reaching by 2020, there will be 3.6 billion active users, an increase of 740
million users in just three years. With the growing popularity of social media platforms,
these enterprises have developed creative methods to connect with their target
customers, established brand identity, and increase sales, enabling them to broaden
their customer base and strengthen brand awareness. Due to this, traditional marketing
has changed. Campaigns with business emphasizing the use of social media channels
to their advantage.
 Review of Related Literature and Studies

In Davao City, using digital technology in business is a standard practice.

Businesses in Davao City must keep up with new digital trends and make adjustments
as necessary. Businesses can improve customer service and gain a competitive edge
by keeping up with these developments (JII, 2023). Based on the research conducted
by Bastian et al., (2023), Filipino marketers used social media since the Philippines
became known as “The Social Networking Capital of the World”.

According to Aguinaldo (2020), the GoDaddy 2020 Global Entrepreneurship

Survey in the Philippines found that 60% of small business owners rely on technology to
maintain their ventures during the pandemic, with 51% using social media and
messaging apps as their main communication channels. 43% of Filipino business
owners are considering creating a website, and 38% are considering e-commerce.
Despite the pandemic’s negative impact, 72% of respondents prioritized positive
community impact, with 30% using their businesses for donations or charity.

Based on the report of StatCounter (2019), as of September 91.58% of Filipino

social media users use Facebook as their primary platform making it one of the most
popular and beginning-friendly platforms for small business to advertise their products
and services. As of 2020, Facebook holds 93% of the country’s social media market
share. A study conducted by Apending et al., (2020) showed that there is a positive
relationship in terms of profitability through the engagement of Facebook. Gligor and
Bozkurt (2020) pointed out that the broad adoption of social media platforms has
significantly increased customer interaction with enterprises. This has then resulted in
improved performance, which has a favorable effect on SMEs' financial results through
increased revenue generation.

By maintaining customer relationships, social media platforms can improve the

financial stability of small and medium enterprises (Nasir, 2015). Therefore, social
media is known as an important edge in the field of business growth and success. For
instance, Kuchciak (2013) highlighted that the Bank of America used twitter to provide
immediate solutions for customer's issues, which significantly improved its financial
performance

Wang et al., (2016) claimed that companies with social media presence were
becoming more well-known in the retail sector. According to Jones et al., (2015), using
social media as a technique can efficiently target more customers and is meant to reach
a variety of audiences. In order to help small businesses raise sales and come up with
additional ideas, Bolat et al., (2016) offered novel marketing tactics and forums. These
suggestions included ways to lower expenses and increase revenues when doing online
marketing. In-depth examination of the advantages that internet media can provide
SMEs, including flexible communication and successful financial performance.

Theoretical Framework

This research builds upon Prahalad and Ramaswamy’s (2004) model of co-
creation in the service sector and adopts this model to create a parsimonious theoretical
framework to explain SMEs. Social media engagement is the social interactions among
users that are facilitated by the social media platform offered by an organization that is
subject to an extension of the model, which was originally developed as a model of
interaction between a user and an organization. By using socio-technical systems
viewpoint, the researchers expand on Prahalad and Ramaswamy’s work by addressing
why the user experience affects engagement and subsequent utilization.

Furthermore, one theory that relates to and supports this is Chaffey’s theory.
According to Chaffey (2012), social media marketing is informal (Gonzales-Lafaysse
and Lapassouse Madrid, 2016). According to the theory, communication and networking
are at the core of human behavior. Interaction between a corporation and its customers
affects customers' behavior. In order to improve customer purchasing options, promote
purchases, and maintain brand loyalty, businesses employ social media (Wang and Kim
2017).

Another supporting theory is marketing communication. The theory of marketing

communication is basically a concept used in order to transmit messages, I.e. for
promotional purposes, regarding goods and services. According to Buttle (1995),
marketing communication is a mediated kind of interpersonal communication that aims
to influence target audiences who may be internal or external to the company to
produce behavioral, emotive, or cognitive consequences. The goal is to draw in current
or potential customers who might then buy the supplied goods or services.

Conceptual Framework

Figure 1. shows the conceptual underpinning of our study, illuminating the

relationship between social media engagement and small businesses success. In this
conceptual framework, the independent variable is Social Media engagement, while the
dependent variable is Small Business Success.
 Social Media Engagement Small Business Success

Figure 1. Conceptual Framework

Statement of the Problem

The purpose of this study was to determine the relationship between social
media engagement in the success of small businesses. Specifically, the study aims to
answer the following questions:

1. What are the social media platforms used by the business owners?

2. What are the factors that contribute to the success and sustainability of a small
business?

3. Is there a significant relationship between social media engagement and the success
of small business?
Hypothesis

Significance of the Study

The purpose of this study is to provide more information about the function of social
media marketing in small enterprises. Additionally, the researchers sought to contribute
new insights to the field of social media marketing within the context of small
enterprises. It’s essential to emphasize that some small businesses are still hesitant to
fully integrate social media into their marketing plan. Social media integration might be a
game-changer for some businesses as they switch from traditional marketing strategies

Scope and Delimitation

This study’s focus will be on how social media marketing influences a business’s
capacity to generate more income. Additionally, it will track how frequently businesses
use social media and what type of social media platforms they use to advertise their
products and services. The data used for this study was collected randomly only within
Davao City, wherein the target respondents will be the small businesses owner.

Definition of Terms
 1

2
 LOCAL

According to the research conducted by Bastian et at. (2023), Filipino marketers use social media since
the Philippines is known as “the Social Networking Capital of the World.” According to Stat Counter
(2019), as of September 91.58% of Filipino social media users use Facebook as their primary platform,
making it one of the most popular and beginner-friendly platforms for small businesses to advertise
their products and services. As of 2020, Facebook holds 93% of the country's social media market share.
Social networking can boost local business visibility at little expense. In Region, the Department of Trade
and Industries (DTI) and some government agencies helped Micro-Small and Medium Enterprises
(MSME’s) adopt online business systems. More than 80% of the 20,000 micro, small, and medium
enterprises in the region are online. Local entrepreneurs post their products, contact details, addresses,
and promotions on social media. Lawyer Sam Gallardo said Baguio and Benguet have at least 17,000
MSMEs. Trade name registration and local government business permissions determined the number
(PNA, 2022).

According to JII (2023), In Davao City, using digital technology in business is a standard practice.
Businesses in Davao City must keep up with new digital trends and make adjustments as necessary.
Utilizing artificial intelligence, optimizing voice searches, and using tailored marketing are a few of the
new trends. Businesses can improve customer service and gain a competitive edge by keeping up with
these developments. This is especially true in Davao City, where a greater proportion of customers are
using digital channels to learn about and buy goods and services.

According to Deyoung, Robert (2019) We test whether rural versus urban location, and the amount of
social capital present in those locations, influence the performance of Small Business Administration
(SBA) loans originated between 1984 and 2012. On average, we find that rural loans are about 11% less
likely to default than urban loans, and that a standard deviation increase in social capital reduces default
by about 5%. Surprisingly, these two effects are largely independent of each other, even though social
capital is substantially higher in rural places than in urban places. Our findings advance the small
business lending literature and offer insights for a more efficient allocation of SBA funds.
 According to Scheinkman, Jose A. (2020) Between March 28 and April 4, 2020, we surveyed more than
5,800 small enterprises to determine how the coronavirus disease 2019 (COVID-19) has affected them.
There developed a few themes. Just a few weeks into the crisis, there had already been widespread
layoffs and closures. Second, the anticipated duration of the crisis was inversely correlated with the risk
of closure. Additionally, opinions among firms regarding the probable length of disruptions caused by
COVID varied greatly. Third, many small firms are in a precarious financial situation. The median
company with monthly expenses of more than $10,000 had only around two weeks' worth of cash on
hand at the time of the survey. Fourth, the majority of companies intended to apply for assistance
through CARES, which stands for Coronavirus Aid, Relief, and Economic Security.

NATIONAL

According to Zoleta, Venus (2023), social media also creates a level playing field for smaller companies
with less marketing resources, enabling them to compete with bigger companies for consumers’
attention. Social media is massive in the Philippines—a truth that’s too difficult to ignore if you’re
seeking for strategies to develop your business more quickly. A larger audience is exposed to your brand
thanks to a strong social media presence. With both current and potential clients, you can develop
relationships. It enables you to keep one step ahead of the competition. As of January 2020, 67% of the
population of the Philippines—73 million people—used social media. This indicates that more than 6 in
10 Filipinos utilize social media. The Philippines has a social media penetration rate of 67%, greater than
the global average of 49%.

According to Aguinaldo, Mariel (2020), The GoDaddy 2020 Global Entrepreneurship Survey in the
Philippines found that 60% of small business owners rely on technology to maintain their ventures
during the pandemic, with 51% using social media and messaging apps as their main communication
channels. 43% of Filipino business owners are considering creating a website, and 38% are considering
e-commerce. Despite the pandemic’s negative impact, 72% of respondents prioritized positive
community impact, with 30% using their businesses for donations or charity.

INTERNATIONAL

According to Junaedi, J. et al. (2021). Social media marketing affects the performance of micro, small,
medium-sized businesses (SMMEs). At the time of COVID-19 epidemic.
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