The role of technological and environmental factors in creating business value from social media dynamic capabilities for SMEs in Saudi Arabia

Small and medium-sized enterprises (SMEs) are also a significant engine of economic diversification and innovation, especially in developing economies like Saudi Arabia, where they represent 99% of private firms. Despite government support, SMEs are unable to realize measurable business value from social media and digital platforms. This current study aims to explore the influence of technological and environmental factors on business value creation through Saudi SMEs’ social media dynamic capabilities. A systematic questionnaire was distributed to 300 SMEs, and a response rate of 92.4% was obtained. SmartPLS 3.0 was employed to conduct data analysis, and its robustness was confirmed through acceptable R² values of 0.658 for social media dynamic capabilities and 0.611 for business value. Path analysis showed that technological factors have positive impacts on social media capabilities (β = 0.421, p < 0.001), as do environmental factors (β = 0.486, p < 0.001). Besides, social media capabilities significantly contribute to business value creation (β = 0.529, p < 0.001). The fit indices of the model achieved traditional cutoff values, and all constructs exhibited composite reliability of more than 0.80 and AVE of more than 0.50, thus confirming convergent validity. The results reflect that if SMEs have appropriate technological infrastructure and are in a supportive external environment, social media usage by them becomes a strong driver of business performance. The research contributes to the limited empirical evidence regarding the combined effect of contextual factors on digital value creation in emerging economies. Practical implications highlight the need for SME-focused digital policy, expert training, and infrastructure support. The research has limitations due to the cross-sectional design and country-level study; hence, longitudinal studies or cross-country research in many developing countries must be pursued.