Social media business networks and SME performance: A rural–urban comparative analysis

Abstract

Social media business networks provide small- and medium-sized enterprises (SMEs) with a modern platform to network, resulting in improved business performance. However, rural SMEs are less likely to access these networks and often underperform urban counterparts. This paper provides a rural–urban comparative analysis of business performance across SMEs for both members and non-members of social media business networks. Empirically, the analysis draws on data of over 13,000 SMEs from the 2015-UK Government's Small Business Survey. Inverse Probability Weighting is used to control for selection bias of firms selecting into a location and business network and for variations in business characteristics. The results reveal that rural SMEs that are members of social media business networks tend to register higher turnover and seek to grow sales compared to rural and urban SMEs that are non-members. For turnover, rural firms that are members of these business networks perform as well as urban SMEs that are members. However, for sales growth, they underperform urban counterparts. Therefore, the development of SMEs’ performance in rural areas requires enhanced online business support environments, improved digital infrastructure and connectivity, the creation of online co-working spaces, and increased digital and technological skills.