The role of social media usage in enhancing Indonesian SMEs performance mediated by entrepreneurial orientation

The rapid development of digital technology nowadays opens opportunities for SMEs to empower their limited resources, especially their owners or managers, through digital oriented entrepreneurship. However, lack of creativity and innovation, lack of ability to see business opportunities, and lack of courage in taking risks are common problems faced by SMEs in developing countries. This study aims to investigate whether entrepreneurial orientation provides a mediating effect on the relationship between social media usage and financial and non-financial performance improvement of manufacturing SMEs in Indonesia. Entrepreneurial orientation (EO) refers to entrepreneurial characteristics possessed by SME top management (owner or managers), namely Innovativeness, Risk-taking, and Proactiveness. Whereas social media is related to its use in marketing programs, customer relations, and information accessibility. Innovation Diffusion Theory and Resourcebased View Theory are the underpinning theories of this study. A quantitative approach was used in 220 of 836 SMEs located in the former Surakarta Residency, Central Java Province, Indonesia. The samples surveyed were SMEs that run businesses in batik clothing material and production; wood, rattan, copper, leather and guitar crafts; dried food, and herbal medicine industry. Data were collected using a questionnaire survey and direct interviews with the SMEs' top management to support the quantitative results. Data analysis was performed using Partial Least Square - Structural Equation Modeling (PLS-SEM). The findings showed that Innovativeness, Risk-taking, and Pro-activeness have a mediating effect that varies from the level of full, partial mediation to no mediating effect at all on the relationship between social media usage and SMEs performance both financial and non-financial. It indicates that social media usage can be a stimulus, trigger, and motivator to "awaken" the entrepreneurial characteristics of SME's top management in managing their business. The findings are expected to provide a positive contribution both theoretical and methodological, and more practical for top management of manufacturing SMEs in Indonesia.