The impact of social network on business performance: special reference to small businesses in Eastern Province

Abstract

A social network is a powerful new tool for small business. It provides a way for customers, vendors, employees, developers and partners to meet, share ideas and learn from one another. As with a large corporation, a small business can utilize a social network to increase its customer base as well as improve customer retention. Most business people are day to day engaged with social network. But problem is most of them do not aware about social networks. In this context, understanding the formation, evolution and utilization of social networks becomes important for the business. This study builds on the foundation of knowledge-based theories that illustrate how social network help to create competitive advantage among small businesses. The study is an attempts to isolate and examine the significant relationship among the social network and the small scale business to perform as a profit making entity in the short run as well as in the long run. Most of the time social network of small business includes relatives and friends with whom the entrepreneur interacts primarily at social level. Three constructs such as social network activity, social network density, social network centrality were measured on the main variable social network and found the relationship between the social network variables and business performance. Questionnaires and interviews were used as data collection techniques in order to absorb important information from the sample which had been selected as sample from Ampara, Batticaloa and Trincomalee areas in the Eastern Province. With a sampling frame of 200 respondents as the representative sample based on simple random sampling method. Descriptive statistics correlation regression were performed mainly to test the hypotheses using SPSS (Statistical Package for Social Science) as the primary data analysis tool. The finding showed that social network had a strong positive relationship on small business performance in the Eastern Province. Social network activity and social network density are the key driver which influence on small business performances. Customer is key element of social network. Therefore, it is important to give higher attention to customer. Since attracting and retention customer is directly or indirectly affect to business performance. Communication, resource sharing, help for small-scale businessmen for survival of social network as well as their business. Policy makers and others may take this as an advantage by means of facilitation some institutional support to enhance social network which will no doubt lead to business success.