Influence of Social Networking on E-Business: A Quantitative Study

World Applied Sciences Journal 27 (1): 92-97, 2013 ISSN 1818-4952 IDOSI Publications, 2013 DOI: 10.5829/idosi.wasj.2013.27.01.12280 Influence of Social Networking on E-Business: A Quantitative Study 1 1 Ruba Obiedat, Osama Harfoushi, 2 3 Bader Alfawwaz and Sahem Nawafleh 1 Department of Business Information Technology, The University of Jordan, Jordan 2 Department of Computer Information System, Al Bayt University, Jordan 3 Department of Management Information System, University of Petra, Jordan Abstract: Purchasing decisions are often strongly influenced by people who the consumers know and trusts. Moreover, many online shoppers tend to wait for the opinions of early adopters before making a purchase decision to reduce the risk of buying a new product. Web-based social communities, actively fostered by E- businessfirms, allow consumers to share their personal experiences by writing reviews, rating reviews and chatting among trusting members. They drive the volume of traffic to retail sites and become a starting point for Web shoppers. E-businessfirms have recently started to capture data on the social interaction between consumers in their websites, with the potential objective of understanding and leveraging social influence in consumers' purchase decision making to improve customer relationship management and increase sales. This paper presents an overview of the impact of social Networking in E-business decision making to provide guidance to researchers and firms who have an interest in related issues. We also provide a summary of technology for social network analysis and identify the research challenges of measuring and leveraging the impact of social influence on E-business decision making. Findings indicate that social media marketing and social networking website put strong influence on E-business over Internet. Key words: Social Networking E-business Online shopping INTRODUCTION filtering algorithm shapes a customer s area grounded on his or her likings of shared products and weighs the Surfing, searching and purchasing a product on E- attention of fellow citizen with related taste to commerce websites is a time consuming and annoying producenew recommendations [1]. job for consumers. Buying and selling on internet is Sinha and Swearingen [2], on the other hand, found commonly known as E-business. This is little different that consumers are far more expected to trust from the traditional business as it takes place on the recommendations from persons they know and trust, i.e., platform of internet. These days, firms are investing a family-members and friendsrelatively than from substantial investment to gain the potential customers computerized recommender systems in E-business through internet and online world. E-businessfirms are websites. In truth, anindividual s decision to purchase a trying to provision part of their likelyconsumers decision product is over and over againpowerfullyinclined by his making process by presenting personalized Web-based or her friends, associates and business associates, rather decision support systems such as recommender systems. than outsiders. However, online groupson the Web These recommender systems deliverconsumers with permitconsumers to express their ownlikings and to share modified recommendations grounded on their buying their endorsements by rating others assessments and history, past ratings interests or profile. These classifying trusting members. According to research by cooperative filtering constructed recommender systems [3], social network sites together withfacebook and have been functional to many E commerce websites and MySpace are driving agrowing volume of traffic to retail revealeddecent performance in forecasting a list of goods sites and are therefore becoming a preliminarypoint which a consumerfavors. A distinctive collaborative for internet users who areconcerned in E-business. Corresponding Author: RubaObiedat, Department of Business Information Technology, The University of Jordan, Jordan. 92

This increase in traffic from social network sites to research challenges of leveraging the impact of social online retailers displays that extremely significant influence on E-businesses. Though this paper does not consumers un swervingly disturb other consumers offer a precise methodology or procedure, the decision making. Consequently, E-businessfirmscan understanding of social influence in E-business could be take benefit of this social impact between consumers a preliminary point to improvepolicies and procedures for to care about customer relationship management and a social interaction based E-commerce decision making rise sales. system. In [8] and [7] work, viral marketing and network Literature Review: The Internet has been recognized as based marketing haverecognized to be more profitable one of the most important marketing tools in the global than traditional direct marketing, which gives the market [4]. Some researchers have dedicated on the customer as afree decision maker and disregards the consumers networks that are designed through the direct consequence of the surrounding network. The ground of and indirect connections (e.g., to read and rate reviews) viral marketing is that directing a small number of concerningconsumers to make the most of the influence persuasive consumers primarily can activate a flow of of direct marketing through social influence. Several inspiration through a social network in which friends will models have been proposed to classify a set of willingly share their experiences or recommend the extremelyimportantconsumers to make the most of word- product to other friends [8]. Therefore, a corporationcan of-mouth effects or to discover target avoidselling directly to consumers who is mainly consumersgrounded on the favorites and powerfuleffect motivated by networks and is not very expected to from earlierconsumers. A well-known researcher [5] purchase a product without suggested by families. offered a model to mine a customer s network value and Some online societies such as Epinions.com inspire enhance the choice ofconsumersinto the market. Further users to make available trust data, where users clearly another researcher [6] resolved the optimization difficulty express their trust of other participants, leading to the of pickinggreatlysignificantconsumers to capitalize on the creation of modifiednet of trust. VariousE-business spread of effect through a social network. In these websites such as Amazon.com permitconsumers to struggles, a measure of social effect such as dropping purchase a product as a gift for friends and to praise it to effects and network value is one of the key matters. The friends. Consumers write product reviews and also [7] suggested network based publicizing using express how valuable the reviews written by other prevailingconsumers to recognize potential consumers clients are. who are expected to purchase, based upon being inclined by precedingconsumers who have subscribed a service. Social Media Marketing and E-business Performance: This was completed in the area of telecommunication According to Markines (2009), Social media marketing services. refers to the process of gaining website traffic or product Even though some developingresearches sales through social media sites.social media marketing havehappening to include social influence in E-business, programs usually center on efforts to create content that it has been imperfect to data sources about social attracts attention and encourages readers to share it with collaborationtaken from E-businessconnections only, their social networks. The second generation of Internetwhich is only a subsection of the information that is based marketing (i.e., Social Media Marketing), in which becoming obtainable. In this paper, we present an users control communication, holds promise to overview of the effect of social influence in E-commerce significantly enhance promotional efforts within social decision making to offerdirection to researchers and E- marketing campaigns. Because of the novelty and businessfirms. Precisely, in this paper we examine potential effectiveness, social marketers may be enticed to numerous ways to seizure social influence utilizing an E- prematurely incorporate related applications into business platform and also debate how taken data about promotional plans and ultimately increase the domestic or social influence can be used by E-commerce websites to global sales [9]. support users decision making process. This paper The emergence of Internet-based social media has investigatesexisting technology for social network made it possible for one person to communicate with investigation which could be accepted and altered for hundreds or even thousands of other people about investigation of E-business social relations. It discusses products and services of the firms that provide them. 93

Independent Variables Dependent Variable Social Networking Social Networking Websites E-business of Goods and Services Social Media Marketing Fig. 1: Theoretical Framework Adapted from (Hill, 2006) and (Rosemary, 2008) Thus, the impact of consumers-to-consumers and Simple random sampling is used for gathering and consumers-to-business communications has been greatly collecting the data, because each sample will have equal magnified in the marketplace, which ultimately increases chances to be chosen. The sample is collected from the sales of the firms. Methods by which this can be around 120 different organizations from different sectors accomplished are definedhere. They include providing such as IT, banks, food, shopping which are doing E- consumers with networking platforms and using blogs, business activities and are using internet to market their social media tools and promotional tools to engage products and services.this study is targeting those firms consumers [10]. only, which are using internet and doing E-Business and By reviewing the literature it has been found that are using internet specifically to market their products and without any doubt social media marketing is becoming services. Samples are collected from several cities in another impressive tool as a dimension of selling products Jordan, the place where this study is conducted. and serviceson internet. Therefore there is a need to Five point Likert scale questionnaire ranging from study the impact of this variable on E-business of Strongly Agree to Strongly Disagree is used to collect organizations. data. Questionnaire tool was used in order to conduct the studies effectively. The questionnaire was spread through Theoretical Framework: The Theoretical Framework of Email, Online Survey tools and By Hand in order to this study is represented in the figure (1). This study achieve the better results. suggested two main hypotheses which are: H01: Social Networking Websites have impact on E- Data Analysis and Results: After collecting the data, it is business of goods and services analyzed by using SPSS 17. All the data was first record in MS-Excel then arrange the data in SPSS and had H02: Social Media Marketing has impact on E-business applied different tests. Descriptive test was applied for the of goods and services. analysis of properties of data. To empirically determine the relationship among Independent variables and Methodology: This is the most crucial part of the study Dependent variable, the study has uses various statistical and by this all of the findings and results are concluded. techniques, including OLS regression analysis. Table 1 Methodology of this research will be quantitative. The shows the Cronbach alpha test for the three research research philosophy for this study is Positivist. This is variable. The reliability test proves that all variables are because the concepts which are used in this study are accepted and will be included in the tested framework. first operationalized which enables the facts to be Moreover, This study sample accepted 111 questionnaire measured quantitatively. The generalization process in out of 120 and 9 samples were excluded due to different this study is done through sufficient sample size and this reason (Table 2). Furthermore, Table 3 shows that 62.3% leads to better explanation and understandings of the of the respondents are Services based firms and 37.7% of phenomenon.the research paradigm adapted for this the respondents are manufacturing based firms. study is Deductive because in this study the hypotheses are formulated and then selected the strategy Descriptive Analysis: Descriptive analysis is done by to test these hypotheses. In this approach the theoretical using Mean, Variance, Standard Deviation (S.D), framework is constructed which is tested by the empirical Regression Analysis, Correlation Analysis and t- data. statistics. Table 4 gives a complete picture of overall case. 94

Table 1: Reliability Statistics Reliability Test Variables Cronbach Alpha Online Sale through e-business.71 Social Media Marketing.69 Social Networking websites.73 Table 2: Sample Summary N % Cases Valid 111 85.5 Excluded 9 14.5 Total 120 100.0 Table 3: Type of Industry Freq. Percent Valid Percent Cumulative Percent Valid Manufacturing 20 32.3 37.7 37.7 Service 33 53.2 62.3 100.0 Total 53 85.5 100.0 Missing System 9 14.5 Total 62 100.0 Table 4: Scale Statistics Mean Variance Std. Deviation N of Items 5.2642 1.698 1.30312 120 Table 5: Correlation Analysis Variables Online Sales through E-business Social Media Marketing Social Networking websites Online Sales through E-business 1.0 0.71 0.65 Social Media Marketing.84 1.0.63 Social Networking websites.59.68 1.0 Table 6: Regression Analysis Dependent Variable Independent Variables S.E R R square Adj R Square B t-stats E-Business Social Media Marketing.3424.538.290.195.296 2.119 Social Networking websites.343 2.464 Here, mean values are showing positive trend. effective marketing techniques will be implemented, then Moreover, Variance is showing that values are not business on internet will also be very effective and sales deviating from the mean and standard deviation is will increase. showing that all values are related to each other. There is Regression Analysis is done and results and in no such deviation occurs from the mean which is Table 6. T-stats are also given in the last column. acceptable. Dependent variable is E-business of goods and services Correlation analysis is actually tells the strength of whereas independent variables are social media marketing relationship and the degree of relationship between the and social networking websites. These all results are variables. In Table 5, results shows that variables are consistent and as the t-stats of each variable are more positively correlated with each other. The correlation than 2 which means major relationship and forecasting result between Online Sales through E-business and qualities of the coefficients. Furthermore the R square is Social Media Marketing is 0.71 which shows that if social given but as the Independent Variables are more than one media marketing increases, then online sales through E- that is why Adjusted R square is given which is more business also increases. Likewise, the correlation Social reliable for this case. The standard error is also very less Media Marketing and Online Sales through E-business is and acceptable. The beta coefficients are also given which 0.84 which is very strong relationship which means that if are consistent with the results. 95

RESULTS AND DISCUSSIONS t-value is 2.464 which is also greater than 2, so on the basis of this empirical findings we will accept the H2. The analysis of question items which were comprised on various sections such as Online Sales through E- CONCLUSION business, Social Media Marketing and Social Networking websites suggest that these variables are positively Although social influence has impact on E-business depend on the E-Business industry. The respondents decision making, limited studies have measured social were asked that to what extent the social networking put influence in an E-business decision support system, impact on E-business of goods and services. Majority of because tillnewly data about social interaction has not the respondents said that these social media marketing been sufficientlytaken in E-business. Presently, however, and social networking websites put strong impact in E- the E-businessorganizations are at a turning point from a business. Informational social influence is a learning transaction-based society to a relationship-based society. process through which people observe the experience of As Web-based social networks have become more early adopters in their social network and decide whether prevalent, consumers who might not have complete to buy the new product. Thus, informational social information about a product or service frequently make influence can have a moderating role between consumers use of previous consumers views. It has turn out to attitudes toward a product and their intention to buy it, by bedeceptive that the consumer s decision process is enhancing consumers confidence in their preferences inclined by information from reliable people, not from and beliefs toward the product [11]. product manufacturers or recommendation systems. The The Social networking websites includes all micro social influence from high quality reviews written by blogging websites, Facebook. Professional social earlierconsumers can have a straight, positive effect on networking such as LInkedin, twitter, MySpace and likelyconsumers decision making and this effect can other major websites which are high in traffic and people propagate through a social network. E-businessfirms are are using them extensively. This Social Media Marketing well placed to take benefit of the social influence between put impact in a way that people got a platform where they consumers as a decision support tool by allowing can share their experiences regarding any commercial consumers to assess the suitability of endorsements and product and services and so they tend to buy that reviews. E-businessfirms can ultimately escalation sales product or service. When we talk about Social Media with less marketing cost. Thus, we have faith in that social Marketing then it is actually when organizations start influence becomes a natural enhancement that can be marketing their products and services on social media favorably used by corporations in the E-business websites, just because the fact they possess huge human decision making process. traffic which is discussing the products and services with In this paper, we present asynopsis of the impact of each other. So without any doubt, it is a wonderful social influence in E-business to point researchers and platform for such firms. 62.2% respondents says yes they such firms in the right way. The foremostmatters we are having more than 80% of social media marketing should emphasis on are how to capture social interactions practices. 48.8% respondents said that if they follow in websites, how to syndicate social influence data into social media tactics then it will increase their brand image. user likings and how to work out social influence on consumers purchase decision making, in order to Discussion on Hypothesis Testing: This section presents presume the utmost impact of social networking in E- the discussion on each hypothesis which we propose on business strategies. the basis of substantive literature. Empirical reflection on each hypothesis will be analyzed to decide whether REFERENCES hypothesis projected have a significant or insignificant relationship. On the basis of regression and correlation 1. Carroll, J., 2001. Beyond Recommender Systems, results we will accept or reject the hypothesis. As in Helping People Help Each Other. Human-Computer Table 6, when we see the T-stats vale we found that Interaction in the New Millennium. almost all the value of T-stats the results are more than 2 2. Sinha, R.A., 2001. Comparing Recommendations which is a good indication. The Social Media Marketing Made by Online Systems and Friends. t-value is 2.119 which is slightly greater than 2 so on the In Proceedings of the DELOS-NSF Workshop on basis of this empirical finding we will accept the H1. Same Personalization and Recommender Systems in Digital in the case of Social Networking websites practices the Libraries. 96

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