The Effect Of Social Media Usage On Profitability Of Smes In Umhlathuze Municipality

Some issues have become more relevant in recent years than the surge in social media usage across the world. Social media can be an effective mechanism for businesses to enhance profits and increase market share based on network capabilities, image transformation and personal extensibilities in the market. Despite this plausible prominence however, the impact of social media usage on business performance remains less understood in empirical terms. It is against this background that we seek to examine the significance of social media usage on profitability of SMEs in uMhlathuze Municipality. This study investigated the effect of social media usage on profitability of SMEs in uMhlathuze Municipality of KwaZulu-Natal province in South Africa using primary data and to achieve this objective, a survey was conducted using a structured questionnaire administered. Furthermore, a common approach in earlier studies treats profitability as a continuous variable in a linear regression framework. The findings reveal a positive and significant association between social media usage and profitability using an ordered logit model. Notwithstanding this encouraging result, not all of the SMEs use social media for selling and advertising.