THE ROLE OF SOCIAL MEDIA IN INCREASING SOCIAL CAPITAL FOR SMALL BUSINESS GROWTH AND DEVELOPMENT DURING COVID-19 PANDEMIC

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International Journal of Business and Economy (IJBEC) eISSN: 2682-8359 [Vol. 3 No. 1 March 2021]

Journal website: http://myjms.mohe.gov.my/index.php/ijbec

THE ROLE OF SOCIAL MEDIA IN INCREASING SOCIAL CAPITAL FOR SMALL BUSINESS GROWTH AND

DEVELOPMENT DURING COVID-19 PANDEMIC

Rabitah Harun^1*, Shuhymee Ahmad² and Sabiroh Md Sabri³

1 2 School of Business Management, Universiti Utara Malaysia, Sintok, MALAYSIA

3 Faculty of Business and Management, Universiti Teknologi MARA, Arau Campus, Arau, MALAYSIA

*Corresponding author: [email protected]

Article Information:

Article history:

Received date : 30 January 2021 Revised date : 23 February 2021 Accepted date : 27 February 2021 Published date : 1 March 2021

To cite this document:

Harun, R., Ahmad, S., & Md Sabri, S.

(2021). THE ROLE OF SOCIAL MEDIA IN INCREASING SOCIAL CAPITAL FOR SMALL BUSINESS GROWTH AND DEVELOPMENT DURING COVID-19 PANDEMIC.

International Journal Of Business And Economy, 3(1), 47-59.

Abstract: Social capital has become a really interesting subject in discussing matters associated with micro- business. The development of social capital leads to high access to relevant information within the network and it demonstrates positive results to business performance.

Even though literature has shown that social capital could help micro-businesses in increasing their business performance, one of the challenges in developing social capital in Agrobazaar Kedai Rakyat (AKR) is their geographically dispersed locations, which impedes the development of relationships and networking among its members and supplier. The recent COVID-19 pandemic breakout has certainly posed greater challenges to micro-businesses in developing their social capital. With the implementation of Movement Control Order (MCO) in the country, micro-business owners are restricted from meeting their counterparts face-to-face thus hindering them from developing their social capital. To address this issue, this paper aims to explore the possibilities of the development of social capital using a social media platform for AKR outlets in Malaysia during the COVID-19 pandemic. This study adopted a systematic literature review method, where we reviewed articles and examined various issues related to social capital and social media. We conducted a literature search of online databases in the field of organizational social capital and micro business environment using keywords that we have defined earlier. Encouragingly, the authors propose that Malaysian micro-businesses may consider the use of social media such as Facebook, YouTube, WhatsApp. Messenger. WeChat, etc. as the technological tools in boosting social capital to foster

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1. Introduction 1.1 Overviews

In recent years, social capital has become a relatively interesting subject in discussing matters related to micro-business or small-scale business. Apart from finance, economics, and marketing factors that contribute to a business’ success, social capital has also been seen as a significant role in ensuring the sustainability of the business. Social capital started to be discussed among researchers, where it has begun by Bourdieu (1983), Coleman (1988), and Putnam (1993). Social Capital can be defined as “the degree to which the firm or its employees use such mechanisms as networks, trust, norms, and values in the group, community or society members to achieve organizational goals”. Accordingly, Oliveira (2013), indicates that emphasis on the development of social capital may lead to high access to relevant information within the network, strengthening of ties, and it shows a positive result to business performance. Social capital within the firm and across the firm seems to be a prerequisite for organizational learning, adaptability, and agility. It is generally acknowledged that social capital also contributed to employee retention, in the view of Valdis (2008), helping individuals and nascent entrepreneurs who are trying to start a business by getting valuable resources needed (Mueller, 2006), thus results to increase the performance of business or firm.

In Malaysia, the initiative of micro business development has been materialized through the Agrobazaar Kedai Rakyat (AKR) project, which was introduced mainly to promote business activities of agricultural produce cultivated by the local community in line with the government's campaign "Agriculture is Business". It also aspires to provide an alternative marketing outlet that is permanent and easily accessible to the local community. The AKR initiative has led to the establishment of 368 AKR outlets throughout Malaysia comprises of 14 states, thus making it difficult to connect the AKR owner, AKR members, and the retailers through the current practice due to its geographically dispersed locations. Besides, there is no proper channel developed to establish proper horizontal networking amongst AKR members.

To develop social capital through networking among AKR members, social media is seen as one of the possible solutions. With low costs and most probably inexpensive medium, would rather help retailers to interact with one and another in sharing any related information, getting new information about products, suppliers, customers, improving sales, etc. The aspects of social capital that could be strengthened by using social media for the benefit of improving the performance of micro business would further discuss.

the sustainability of micro business performance especially during the COVID-19 pandemic

Keywords: Social Capital, Social Media, Micro Business, Agrobazaar Kedai Rakyat.

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1.2 Objectives

The development of social capital leads to high access to relevant information within the network and it demonstrates positive results in business performance, nevertheless, the link between social capital and business performance is still vague. Furthermore, this paper aims to explore the possibilities of the development of social capital using social media platforms for AKR outlets in Malaysia by reviewing the issues that are considered essential in understanding social capital and its development. The recent COVID-19 pandemic breakout has certainly posed greater challenges to micro-businesses in developing their social capital. With the implementation of the Movement Control Order (MCO) in the country, micro-business owners are restricted from meeting their counterparts face-to-face thus hindering them from developing their social capital. Hence, researchers highlight some of the important issues in the literature on organizational social capital and micro business environment and could be used by organizations to strategize the successful development of social capital using social media platforms. To address this issue, this paper aims to explore the possibilities of the development of social capital using a social media platform for AKR outlets in Malaysia during the COVID- 19 pandemic.

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The issued address here is related to networking and socializing amongst AKR members due to the geographically dispersed location. Even though literature has shown that social capital could help micro-businesses in increasing their business performance, one of the challenges in developing social capital in Agrobazaar Kedai Rakyat (AKR) is their geographically dispersed locations, which impedes the development of relationships and networking among its members and supplier. Hence, Figure 1 below shows the AKR outlets throughout Malaysia. Many AKR outlets can be found in Sabah and Sarawak as compared to other states in Peninsular Malaysia.

Ironically, there is no proper platform established to have appropriate horizontal networking amongst AKR members to exchange knowledge and information. As mentioned earlier, it may be useful to know the significance of using social media to support and enhancing the AKR business.

Figure 1: Distributed Location of Agrobazaar Kedai Rakyat (AKR) in Malaysia (Registered Outlets) from 2009 to 2018 (Federal Agricultural Marketing Authority, 2018)

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2. Literature Review

2.1 Agrobazaar Kedai Rakyat (AKR) as Micro Business

Malaysia is moving forward to address the issues and challenges that can strengthen economic resilience. Among the five (5) key challenges to be addressed by the Government during the 11th Malaysia Plan is the uncertainty of the world economy, slow productivity growth, fiscal policy management space is limited, low workers' compensation, and the gap in household income. These challenges can make a significant impact on the performance of the national economy and the cornerstone of its growth in the future (Economic Planning Unit, 2015).

Therefore, the Agrobazaar Kedai Rakyat (AKR) is a project initiated by the former Prime Minister with the main objective to help the entrepreneurs or the owner of small retail businesses. Federal Agricultural Marketing Authority (FAMA) is an agency under the Ministry that introduced many programs to help improve their economies of rural communities. The Agrobazaar Kedai Rakyat is retail business premises, which sells goods (daily necessities) at a reasonable price and has a uniform image of an attractive, organized, neat, and across the country. The concept used is the rebranding of existing grocery stores as Agrobazaar Kedai Rakyat to serve as an outlet for farmers to sell their goods and their output (Harun & Ahmad, 2020).

AKR is also one of the mechanisms to overcome the poverty issue and provide opportunities to increase the local community income level, especially those in rural areas (Implementation Co-ordination Unit, 2011). This is consistent with the mission of FAMA itself, to establish a proper marketing channel of food and agricultural products that are more efficient and effective to increase value to the customer or end-user. Starting with only 34 outlets in 2009, the number of AKR stores increased by 368 outlets in Dec 2018, which comprises 14 states in Malaysia (Federal Agricultural Marketing Authority, 2018).

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2.2 The Importance of Micro Business to Malaysia’s Economy

Different countries may have different definitions of micro-businesses. For instance, in the United Kingdom, a micro-business can be defined as a business with 0-9 employees (Ward &

Rhodes, 2014). Meanwhile, the European definition of small businesses in the area of retail business measured according to the number of employees, which 1-2 persons and sales turnover 250,000 Euro (Loecher, 2000). However, in Malaysia, SME Corporation Malaysia endorsed a new SME definition at the 14th NSDC Meeting in July 2013. Three categories of SMEs business either medium, small, or micro determines, based on two criteria which are sales turnover and the number of full-time employees. A micro business is a business with a sales turnover of less than RM300, 000.00, or a number of full-time employees less than 5 people (SME Corporation Malaysia, 2017). Details descriptions of SMEs are summarized in Table 1 below.

Table 1: Description of Small Medium Enterprises (SMEs)

Source: SME Corporation Malaysia, (2015)

Micro-businesses play an important role in Malaysia's economic growth. Micro-businesses can significantly give benefit to employees in rural and urban areas by offering jobs and providing income. Based on the record, micro-enterprises accounted for 80% of the total Small and Medium Enterprises (SMEs) and contribute to 78.7% of total business establishments in Malaysia (Nawai & Shariff, 2011).

2.3 The significance of Social Capital to Micro Business Performance

Although the use of the term social capital is growing, there is no collective uniform definition due to each researcher presents a different interpretation. Social capital can be defined in plentiful ways. A more explicit definition by three well-known social scientists (Bourdieu, 1986) “benefits accruing to an individual by participation in groups and on the deliberate construction of sociability to create this resource”. Meanwhile, Coleman, (1988) point out the aspects of social structure that actors can use as resources to achieve their interests; and Putnam, (1996) emphasize the elements of trust, norms, and networks that facilitate cooperation for mutual benefit, also the group-based interactions of people in a community.

Business Size Manufacturing Services & other Sectors MICRO

Sales turnover: < RM300,000 OR

Number of Employees: < 5

Sales turnover: < RM300,000 OR

Number of Employees: <5 SMALL

Sales turnover:

RM300,000 < RM15 million, OR

Number of Employees: 5 < 75

Sales turnover:

RM300,000 < RM3 mil, OR

Number of Employees:5 < 30 MEDIUM

Sales turnover:

RM15 mil < RM50 mil, OR

Sales turnover:

RM3 Mil <RM20 mil, OR

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The concept of social capital can thus be defined as a trust put into a relationship with other agents, as pointed out by Adler & Kwon (2002). Meanwhile, Perreault, Brenner, Menzies, Filion, & Ramangalahy (2007) defined social capital as “from the intuition that the goodwill that others have towards us is a valuable resource”. However, from a different perspective, Wallis, (1998) portrayed social capital as involving a series of formal and informal social among individuals who share norms and values, especially the norm of mutual benefit. To sum up, trust has become an important element in discussing social capital.

Significantly, Andriani (2013) believes that bridging social capital would lead to specify the bridges between the bonding groups amongst friends, neighbours, and consociates.

Relationships with individuals from other groups can unlock access to resources that are different from others. The ties with individuals belonging to other groups open the access to resources differs from those embedded in the initial bonding group. Therefore, the information and knowledge that are traded between the groups allow them to benefit and contribute to the welfare of society. Besides, Perreault, et.al (2007) proposed social capital, which is suited for use in measuring the performance of the business and has proven to be a factor that also has a very significant effect.

Additionally, AKR entrepreneurs are dealing with several groups of stakeholders and channel members in running their daily business. Horizontal and vertical networking exists in the transaction and crucial for AKR members. Franco, de Fátima Santos, Ramalho, & Nunes, (2014) found that networking is important to bring opportunities and promoting business. In the context of channel management, the social capital element seems to be necessary.

Generally, AKR performs a function as an intermediary to supply or sell goods or products from the manufacturer to customers. Initially, the manufacturer or producer supply and transport the good and product thru selected agent or distributors, or they supply direct to AKR outlet, or otherwise AKR entrepreneur bought directly from the manufacturer. Then, the goods or products will sell direct to target customers. Hence, the Agrobazaar Kedai Rakyat process flow can be seen in Figure 2.

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Figure 2: AKR distribution channel

3. Methodology

This study adopted a systematic review method to investigate the use of social media in developing social capital. A systematic review is a literature review following a rigorous, transparent and reproducible process, which aims to identify, select, appraise, analyze and synthesize, systematically and comprehensively, research evidence on a specific research topic (Md Sabri, Haron, Jamil, & Mior Ibrahim, 2014). This method is chosen because it is widely considered as the least biased and the most rational way to synthesize research evidence. It is also known as a powerful tool to provide the best available knowledge for decision making.

For this purpose, we followed the basic steps suggested by Md Sabri, Haron, Jamil, & Mior Ibrahim (2014) which include: 1) formulate research questions, 2) determine criteria for literature inclusion and exclusion, 3) search for relevant studies, 4) select the research based on the inclusion and exclusion criteria, 5) assess the selected studies, 6) synthesize and summarize study results, and 7) interpret the review results.

This study sets out to answer the two following research questions: 1) what are the issues faced by micro-businesses in developing their social capital? 2) how can social media play a role in enhancing social capital in micro-businesses? To answer these questions, a literature search on online databases in the field of marketing and e-commerce was conducted using keywords that were defined earlier. Peer-reviewed papers were retrieved from a reputable database that could provide more insights into the research topic.

A total of 12,525 papers appeared as a result of our keyword search. We skimmed through the title and abstract and downloaded 172 papers that look relevant to our study. After a thorough evaluation, 67 papers that are related to our research were retained for further review and synthesis. Figure 3 shows the flow diagram of the systematic review methods that were carried out in this study.

Manufacturer/ Producer

Agent/ Distributor

Agrobazaar Kedai Rakyat (AKR)

Customer

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4. Results and Discussion

The documents that were retained after the evaluation process has gone through a thorough review and synthesis as part of the systematic literature review process. The results of our review are written in subsequent sections as issues that need to be considered in using social media in enhancing social capital for AKR.

4.1 The use of Social Media as an Important Tool to Develop Social Capital

Nowadays there is much software available to support the building and tracking of social capital within and between organizations. Social media, especially social network sites (SNS) such as Facebook have grown rapidly in popularity in the last ten years. In the beginning, the two most popular social networking services are LinkedIn and Facebook. Both allow employees to track their business or social networks and provide a place online for people to meet and keep up with their associates, colleagues, and friends (Valdis, 2008). However, in 2019 Facebook has become the number one social media use worldwide with nearly 2.23 billion Monthly Active Users (MAU) which constitutes nearly one-third of the population.

Table 2 below listed the 10 most popular social media sites in 2019.

Table 2: 10 Most Popular Social Media Sites In 2019

Rank Social Media Monthly Active Users (MAU)

1 Facebook 2.23 billion MAUs

2 YouTube 1.9 billion MAUs

3 WhatsApp 1.5 billion MAUs

4 Messenger 1.3 billion MAUs

5 WeChat 1.06 billion MAUs

6 Instagram 1 billion MAUs

7 QQ 861 million MAUs

8 Tumblr 642 million MUVs

9 Qzone 632 million MAUs

10 Tik Tok 500 million MAUs

Source: Alfred Lua (2019) cited in https://buffer.com/library/social-media-sites

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Research carried out by Rosemann & Brocke (2010) stated that the use of social media technology resources may enhance organizational capabilities, and, ultimately, business performance. Meanwhile, Smits & Mogos (2013) successfully analyzed the impact of six social media applications on six business capabilities and on business performance, the result significantly proved that the use of social media enhances business capabilities and business performance. Supported by other studies for small family-style restaurants that implementing social media strategies leads to increased sales and contributes significantly to increase job demand as sales increase more employees are needed to meet customer needs (Lucas, 2018).

The use of social media is increasingly pervasive in business, it appears to deliver greater benefits to businesses to closely reach their customers. As a result, indirectly will facilitate cost reduction, revenue increase, and efficiency. The result of the study reveals that social media will increase advocacy as believed by most businesses. However, only 38 per cent of customers agree, and more than 60 per cent of respondents believe the spirit of the business or brand is a prerequisite for social media engagement. Therefore, companies should be more sensitive and find a creative way to harness the power of a trusted social community (Baird & Parasnis, 2011). Feedback from respondents indicates that Facebook is a great way to build and maintain relationships with current and potential customers and capable enough to increase sales for a small business (Lucas, 2018). Moreover, Facebook proved to be a popular online social network and has a strong relationship to bridging social (Ellison, Steinfield, & Lampe, 2007).

Facebook usage has a strong impact on the financial and non-financial performance of SMEs that benefit in customer relations, improved information accessibility, and reduce marketing cost and customer service (Ainin, Parveen, Moghavvemi, Jaafar, & Shuib, 2015).

Youtube is a second famous tool that can be used by the entrepreneur in promoting goods and products to customers besides having good networking amongst members. To proceed with good marketing strategies, YouTube would be an ideal social media platform (Xiao, Wang, &

Chan-Olmsted, 2018). As recorded, almost every day, more than 2 billion videos were viewed on YouTube which indicates that social media grow into an essential part of our lives and being acceptable worldwide (Looy, 2016).

Subsequently, further studies and a thorough analysis should be conducted to identify the best and appropriate medium to enhance the interactions between entrepreneurs and stakeholders, and also amongst AKR members which ultimately benefits the entire parties.

4.2 How can Social Media Enhances Social Capital

The key to building social capital is communication. One of the challenges in developing social capital in AKR in their geographically dispersed locations, which hinders the development of relationships and networking among its members and supplier. The introduction of information and communication technology has changed the way people connect and communicate with each other regardless of their locations. The introduction of social media and social networks further enhanced the way people connect and socialize with each other.

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“Social media” is a name given to web-based and mobile technologies that are used to turn communication into an interactive dialogue. This interactive dialogue can occur between organizations, communities, and individuals. The Internet allows millions of people to connect, and also allows business owners to promote their businesses to people all over the world by using web-based applications. We currently live in a world in which traditional communication strategies are not good enough. Social media not only allows for tremendous outreach and networking but also allows for interactivity that can be very beneficial to businesses for a variety of reasons. Figure 4 illustrates how social media leveraging social capital for micro- businesses can.

Figure 4: Social Media Enhances Social Capital for Micro Business

As illustrated in Figure 4 above, social media can help enhances the development of social capital in many ways. Leveraging social media could help AKR owners to monitor and manage their reputation and at the same time increase their visibility. Business reputation is vital to social capital both offline and online since it helps to determine the moving forward of your business. Apart from that, using social media could also help AKR owners to build and cultivate a network among the owners, customers, and also suppliers. This is particularly important because through social media AKR owners will able to infiltrate into diverse resources at different levels, locations, and experiences. This means a high-quality relationship is available and can be tapped when needed by the business owner in expanding their business.

Once the owner has developed a good network, social media could facilitate the owners to engage in real-time interaction with its network members. This also could finally the generation of new leads in establishing connections and at the same time find reasons to interact with those outsides of your typical sphere of influence.

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5. Conclusion

The article concludes by considering how social media can be used as a way of bringing social capital together to advance the performance of the micro business in a recent pandemic breakout which leads to challenges for many entrepreneurs. Although many techniques are used in enhancing social capital, social media appear to be one of the best alternatives due to the emerging of information technology nowadays. Malaysian businesses may consider the use of recently famous social media platforms such as Facebook, YouTube, WhatsApp, Messenger, WeChat, etc. as one of the technological tools in boosting social capital to foster the sustainability of micro business performance. These tools would significantly valuable in establishing proper horizontal and vertical networking amongst AKR members. Entrepreneur business knowledge can be increased through sharing an idea, product information, purchases, and establish business networks are essential to further strengthening and enhancing their business performance especially during the COVID-19 pandemic. The use of social media is not merely beneficial to AKR members but also to the FAMA as the implementing agency, and Implementation Coordination Unit, Prime Minister's Department (ICU PMD) to ensure the success and continuity of the project after a decade.

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