Journal of Business and Organization Management Vol IV .
: 107-118, 2025 Factors Affecting Social Media Usage by MSMEs: Compatibility.
Cost-Effectiveness.
Interactivity, and Their Impact on MSMEs Performance Riani Amelia Putri1 and Abdul Ghofar2* Received: 25.
Abstract Reviewed: 30.
Accepted: 05.
This study aims to determine the compatibility, cost-effectiveness, and interactivity factors that influence the use of social media and its impact on the performance of fashion MSMEs in Yogyakarta City.
The phenomenon that is the main focus of this research is business competition in Indonesia which continues to increase from year to year which requires MSMEs to continue to be able to maintain their existence and improve their performance.
The development of innovation in technology also encourages MSMEs to be adaptive in order to continue to compete in fierce business The method in the study uses descriptive and quantitative analysis.
The population of this research is fashion MSMEs in Yogyakarta City.
Data collection was carried out through distributing questionnaires via Google Forms which were distributed to 96 fashion MSMEs in Yogyakarta City.
The method used to analyze the data uses Partial Least Square (SEM-PLS).
The results of the analysis in this study indicate that: .
compatibility has a positive and significant effect on the use of social media, .
cost effectiveness has a positive effect on the use of social media, .
interactivity has a positive and significant effect on the use of social media, .
the use of social media has a positive effect on the performance of MSMEs.
Keywords: compatibility, cost-effectiveness, interactivity, social media usage.
MSME Introduction The increasing business competition in Indonesia encourages entrepreneurs to continually innovate, particularly through the utilization of digital technology, in order to improve business performance and remain competitive in the increasingly intense market rivalry.
The Diffusion of Innovation (DOI) theory explains how new innovations or ideas are introduced, accepted, and adopted within a society or organization (Rogers, 1.
According to data from the Center for Economics and Development Studies Universitas Padjajaran (CEDS Unpa.
, the Business Competition Index (BCI) in Indonesia increased to a level of 4.
91 in 2023 compared 87 in 2022, with the maximum level being 7.
The rise in the Business Competition Index indicates an improvement in competitiveness performance (ANTARA, 2.
Therefore, business owners are required to continually enhance their business performance in order to remain competitive and sustainable.
Performance improvement is an essential effort that must be made to remain relevant and increase competitiveness.
The performance of SMEs (Small and Medium 1 UPN AuVeteranAy Yogyakarta 2 UPN AuVeteranAy Yogyakarta, email: abdulghofar2167@gmail.
*Corresponding author MANAGEMENT DEPARTMENT.
UPN AuVETERANAy YOGYAKARTA 108 | PUTRI.
GHOFAR
Enterprise.
is a measure of their success, assessed within a specified period (Aditya Sahputra, 2.
In the digital era, social media has become a crucial tool for SMEs, particularly in the fashion industry, to expand market reach, increase brand awareness, and strengthen customer relationships (Watajdid et al.
, 2.
The most popular and effective social media platform used by SMEs, especially in the fashion industry, to promote products and enhance brand awareness is Instagram (M.
Mufti Y.
, 2.
Instagram ranks among the top three most-used social media platforms in Indonesia, with 30.
51% of the population using it, spending an average of 1-2 hours per day on the platform (APJII, 2.
Instagram is chosen because it allows businesses to directly market fashion products to customers and even interact with them through the available features, all at a very affordable cost for SMEs.
The most popular and effective social media used by MSMEs, especially the fashion industry, in promoting products and increasing brand awareness is Instagram (M.
Mufti Y.
, 2.
Instagram is one of the social media platforms to make it easier for MSMEs to engage with consumers and also as a marketing tool through photosharing, video-sharing and social networking platforms (Lydiawati S & Anastasia R.
, 2.
Instagram is a social media that is in the top 3 most used by people in Indonesia, reaching 30.
51% of users and the average time spent is 1-2 hours (APJII.
Instagram was chosen because it is able to market fashion products directly to customers and can even interact directly through the features that have been provided at a very affordable cost for MSMEs.
Data according to Center for Economics and Development Studies Universitas Padjajaran (CEDS Unpa.
, the Business Competition Index (IPU) in Indonesia increased at the level of 4.
91 in 2023 compared to 2022 which was at 4.
87 with the maximum level being level 7.
The increasing Business Competition Index shows that competitiveness performance is also increasing (ANTARA, 2.
Therefore, business actors are required to continue to improve their business performance in order to compete and be sustainable.
Performance improvement is an effort that must be made in order to continue to exist and be able to increase competitiveness.
MSMEs that can compete are considered capable of continuing to grow and develop into a wider market.
MSMEs are required to be adaptive in order to successfully deal with market dynamics or technological changes that continue to develop.
Figure 1.
Growth in the number of MSMEs in Yogyakarta City in 2020-2024 J - B O M .
VOL IV .
: 107-118, 2025
FACTORS AFFECTING SOCIAL MEDIA USAGE IN MSME.
109 MSMEs contribute 60.
5% of national GDP and absorb more than 96.
9% of total national employment (Menko Perekonomian, 2.
In Yogyakarta.
MSMEs are at the forefront of regional economic development (ANTARA, 2.
MSMEs are the main support for the economy in Yogyakarta, reaching 99.
56% (Harian Jogja, 2.
However, capital issues are still the main concern faced by MSMEs to date (Ritonga, , 2.
In Odoom's research .
, it is stated that social media now offers MSMEs a more low-cost option than traditional media.
The relatively lower costs associated with using social media are certainly beneficial for MSMEs to carry out marketing activities in the face of limited capital challenges.
Ease of access and use is also one of the reasons for businesses choosing to adopt social media.
It can be concluded that social media is a compatible technology used by MSMEs.
Compatibility is consistency and past experience adapted to innovation to adapt to current needs (Rogers, 1.
Social media is a medium that can be used interactively because it facilitates twoway communication between users.
Interactivity is a condition of the extent to which the user's ability to communicate directly through a technology (Aditya, 2.
The use of social media is one of the right strategies for MSMEs because it is easy to use.
Social media itself is now very attached to people's life activities.
Therefore, an indepth review of the importance of using social media for MSMEs is needed.
This becomes increasingly important with the aim of identifying the most effective patterns and strategies for MSME business growth, especially in the fashion industry.
Literature Review Diffusion of Innovation (DOI) Diffusion of Innovation (DOI) theory was developed by Everett M.
Rogers in 1962 in a book entitled AuDiffusion of InnovationAy.
Diffusion of Innovation is a theory that describes the process by which an innovation spreads within an organization or among people over time that can result in its adoption and use for some purpose (Bass, 1969.
Rogers, 1.
The innovation can be a product, service, idea, information, technology, or strategy that is considered new by society (Rogers, 2.
The novelty referred to in this theory does not depend on the date of creation of the item but rather refers to the novelty of the application to help address a need or to solve some type of problem (Agus Wibowo, 2.
Referring to the DOI theory, the adoption of an innovation goes through five stages: .
Knowledge.
Persuasion.
Decision.
Implementation.
Confirmation.
MSE Performance Company performance is the result of business activities that show growth in an effort to achieve business goals (Gozen and Ulgen, 2018 and Machaba-Hove and Vambe, 2.
Performance is the result of business activities that show growth in an effort to achieve business goals (Lydiawati, 2.
In line with the results of Aditya's research .
MSME performance is a measure of the success of an MSME which is measured every predetermined period of time.
Good performance can mean that these MSMEs are able to adapt to market dynamics, technological changes, and MSMEs that can continue to exist from time to time demonstrate their ability to compete in local and global markets.
Thus, this ability will also open up greater opportunities to survive and continue to develop in the long term.
MANAGEMENT DEPARTMENT.
UPN AuVETERANAy YOGYAKARTA 110 | PUTRI.
GHOFAR
Compatibility Compatibility is consistency and past experience adapted to innovation to adapt to current needs (Rogers, 1.
One of the factors MSMEs choose to use social media in their business is compatibility.
This is in line with the results of research from Odoom .
, that social media in accordance with the needs and practices of the company .
is a consideration that cannot be ignored in its use by MSMEs.
The use of technology in MSMEs can make business activities more effective and efficient both in marketing or internally if the technology is compatible for adoption or use.
Compatibility is a significant and positive predictor of the use of Instagram social media, especially for MSMEs (Lydiawati, 2.
Cost Effectiveness Cost Effectiveness is one of the references in the decision-making process related to the balance of costs against the priority of choosing the optimal alternative (Philips.
Cost effectiveness is the ability of social media to provide its features at a low cost (Hansiadi, 2.
An organization can interact directly and with higher efficiency when using social media compared to traditional forms of communication tools (Elbaz et al.
, 2018.
Qalati et al.
, 2.
MSMEs can save costs in their marketing communications by using social media (Hansiadi, 2.
Companies can reach a wider range of consumers with the various features provided by Instagram.
Interactivity Interactivity is a two-way communication between business owners and consumers so that consumer responses can be obtained (Wang and Chen, 2009.
and Hakansson and Snehota, 2017.
Li et, al 2002 in Kietzman, 2.
Interactivity is a condition of the extent to which the user's ability to communicate directly through a technology (Aditya, 2.
Interactivity is one of the factors considered in adopting social media.
Instagram is a social media that can be a tool to interact between MSME actors and customers in real time through the direct message feature and post comments.
high level of interactivity can certainly increase consumer engagement and strengthen customer relationships so as to increase customer loyalty and business performance, especially for MSMEs.
Social Media Usage The use of Social Media is a group of internet-based applications developed to be useful for individuals and communities, and can generate interactions and disseminate information that is beneficial to MSMEs and consumers (Kietzman, 2012 and Larson & Watson, 2.
Social media is a group of internet-based applications developed to be useful for individuals and communities, and can generate interactions and disseminate information that is beneficial to MSMEs and consumers (Kietzman, 2012 and Larson & Watson, 2.
The use of social media by MSMEs significantly influences conspicuous consumption which can increase social appeal and brand awareness in the eyes of consumers (Firat, 2.
The gap between those who have maximally utilized social media and those who have not is growing.
As a result, long-term survival for non-adopters is reduced (Dwivedi & Pawsey, 2.
Social media platforms offer MSMEs modern, more cost-effective, and interactive ways to increase their competitiveness and solidify their status in the eyes of customers and competitors.
J - B O M .
VOL IV .
: 107-118, 2025
FACTORS AFFECTING SOCIAL MEDIA USAGE IN MSME.
111 Hipothesis Hypotheses in this research are as follows:
H1.
Compatibility has a positive impact on social media usage in fashion SMEs in Yogyakarta.
H2.
Cost-efectiveness has a positive impact on social media usage in fashion SMEs in Yogyakarta.
H3.
Interactivity has a positive impact on social media usage in fashion SMEs in Yogyakarta.
H4.
Social media usage has a positive impact on SMEs performance of fashion SMEs in Yogyakarta.
Methods Sampling and Procedures The population in this study were 96 fashion MSMEs in Yogyakarta City (Pemda Daerah Istimewa Yogyakarta, 2.
In determining the sample size, researchers used the entire population to be sampled in the study due to the limited number.
accordance with the theory from Sekaran and Bougie .
, if the population size is very small, using all members of the population as a sample is allowed and even recommended so that no information is missed.
So, the sample size needed to conduct this research is 96 fashion MSMEs in Yogyakarta City.
Data was collected using questionnaires.
Measures MSE Performance is measured using 3 statements.
All the statements are valid, with the value of alpha is 0,721 .
Compatibility is measured using 4 statements.
All the statements are valid, with the value of alpha is 0,757 .
Figure 2.
Research Model MANAGEMENT DEPARTMENT.
UPN AuVETERANAy YOGYAKARTA 112 | PUTRI.
GHOFAR
Figure 3.
Inner Model Testing Results Table 1.
R2 Result Penggunaan Media Sosial Kinerja UMKM R-square R-square adjusted Cost Effectiveness is measured using 3 statements.
All the statements are valid, with the value of alpha is 0,755 .
Interactivity is measured using 3 statements.
All the statements are valid, with the value of alpha is 0,776 .
Social Media Usage is measured using 6 statements.
All the statements are valid, with the value of alpha is 0,885 .
Data Analysis The data analysis technique in this research uses PLS-SEM (Partial Least SquareStructural Equation Mode.
with SmartPLS 4.
Result and Discussion Result Coefficient Determinantion (R-Squar.
Based on the Table 1, it can be seen that the R-square value of social media usage is This means that the model's ability .
ompatibility, cost-effectiveness, and interactivit.
in explaining the dependent variable .
se of social medi.
has an influence of 0.
91% .
Then, it can also be seen that the R-square value of MSME performance is 0.
This means that the ability of the model .
J - B O M .
VOL IV .
: 107-118, 2025 FACTORS AFFECTING SOCIAL MEDIA USAGE IN MSME.
113 Table 2.
Hypothesis Test Results X1 -> Z
X2 -> Z
X3 -> Z
Z -> Y
Original (O) Sample (M) Standard
(STDEV)
T statistics (|O/STDEV|) 2,524 21,371 2,586 8,915 cost-effectiveness, and interactivit.
in explaining the dependent variable (MSME performanc.
has an influence of 0.
515% .
Hypothesis Test Hypothesis testing can be done by looking at the t-statistic value and p-value.
Hypotheses that have a t-statistic value> 1.
96 or if the p-value <0.
05, the hypothesis is supported and there is a significant influence between the variables.
The result of hyphothesis testing can be seen in Table 2.
Compatibility has a positive and significant effect on the use of social media in fashion MSMEs in Yogyakarta City Based on the results of the analysis of the effect of compatibility variables on the use of social media, it shows that the path coefficient value is 0.
139, which means that it has a positive relationship direction.
The result of the t-statistic value of 2.
524> 1.
and a p-value of 0.
012 <0.
05 which indicates that the model has a significant effect.
These results indicate that compatibility directly has a positive and significant effect on social media usage.
Thus, hypothesis 1 is supported.
This can be interpreted that technological innovation in the form of using the Instagram platform is in accordance with the technological equipment and needs possessed by fashion MSMEs in Yogyakarta City so that it can improve the performance of fashion MSMEs in Yogyakarta City.
Cost Effectiveness has a positive and significant effect on the Use of Social Media in fashion MSMEs in Yogyakarta City Based on the results of the analysis of the effect of the cost effectiveness variable on the use of social media, it shows that the path coefficient value is 0.
801, which means that it has a positive relationship direction.
The result of the t-statistic value of 371> 1.
96 and a p-value of 0.
000 <0.
05 which indicates that the model has a significant effect.
These results indicate that cost effectiveness directly has a positive and significant effect on social media usage.
Thus, hypothesis 2 is supported.
This can be interpreted that technological innovation in the form of using the Instagram platform can encourage effectiveness in terms of costs by fashion MSMEs in Yogyakarta City so as to improve the performance of fashion MSMEs in Yogyakarta City.
Interactivity has a positive and significant effect on the use of social media in fashion MSMEs in Yogyakarta City Based on the results of the analysis of the effect of interactivity variables on the use of social media, it shows that the path coefficient value is 0.
134, which means that it has a positive relationship direction.
The result of the t-statistic value of 2.
586> 1.
and a p-value of 0.
010 <0.
05 which indicates that the model has a significant effect.
MANAGEMENT DEPARTMENT.
UPN AuVETERANAy YOGYAKARTA 114 | PUTRI.
GHOFAR
These results indicate that interactivity directly has a positive and significant effect on social media usage.
Thus, hypothesis 3 is supported.
This means that technological innovation in the form of using the Instagram platform can become an interactive communication bridge between fashion MSMEs in Yogyakarta City and consumers so that it can improve the performance of fashion MSMEs in Yogyakarta City.
Social Media Usage has a positive and significant effect on Company Performance in fashion MSMEs in Yogyakarta City Based on the results of the analysis of the influence of the variable use of social media on the performance of MSMEs, it shows that the path coefficient value is 0.
718, which means that it has a positive relationship direction.
The result of the t-statistic value 915> 1.
96 and a p-value of 0.
000 <0.
05 which indicates that the model has a significant effect.
These results indicate that the use of social media directly has a positive and significant effect on the performance of MSMEs.
Thus, hypothesis 4 is This means that technological innovation in the form of using the Instagram platform is suitable for use by fashion MSMEs in Yogyakarta City in their business operations and marketing activities so as to improve the performance of fashion MSMEs in Yogyakarta City.
Discussion Compatibility Has a Positive and Significant Effect on Social Media Usage The results of the research conducted by testing H1 show that compatibility directly has a positive and significant effect on the use of Instagram social media for fashion MSMEs in Yogyakarta City.
Compatibility is one of the important factors that MSMEs consider in using social media.
in line with the results of research from Odoom .
, that social media in accordance with the needs and practices of the company .
is a consideration that cannot be ignored in its use by MSMEs.
Compatibility is consistency and past experience that is adapted to innovation to adapt to current needs (Rogers, 1.
Companies that can compete are companies that can quickly adapt to technology.
In this study, it shows that compatibility with the suitability of technological innovation for business needs and ease of use and access can motivate the use of Instagram social media in fashion MSMEs in Yogyakarta City.
Instagram social media is very compatible or in accordance with the business model of fashion MSMEs because it has features and visuals that can be maximized on fashion products.
Fashion MSMEs can easily create content and upload related products that they want to market using the features and trends provided by Instagram social media.
Cost Effectiveness Has a Positive and Significant Effect on Social Media Usage The results of research conducted by testing H2 show that cost effectiveness directly has a positive and significant effect on the use of Instagram social media for fashion MSMEs in Yogyakarta City.
It can be concluded that cost effectiveness related to cost savings in making business decisions and in the implementation process is able to encourage the use of Instagram social media in fashion MSMEs in Yogyakarta City.
In using social media, cost-effectiveness means the ability of social media to provide its features at a low cost (Hansiadi, 2.
Of course, by using the features provided by Instagram social media .
pload photos or videos.
Instagram stories, reels, reply to J - B O M .
VOL IV .
: 107-118, 2025 FACTORS AFFECTING SOCIAL MEDIA USAGE IN MSME.
115 comments, etc.
) MSMEs can save costs in their marketing communications.
Companies can reach a wider range of consumers with the various features provided by Instagram.
In this study, it shows that Instagram social media offers lower operational costs compared to conventional media to expand the reach of disseminating product information belonging to fashion MSMEs in Yogyakarta City.
This certainly answers the problem of fashion MSMEs in Yogyakarta City which have limited capital or budget for marketing their products.
Interactivity Has a Positive and Significant Effect on Social Media Usage The results of research conducted by testing H3 show that interactivity directly has a positive and significant effect on the use of Instagram social media for fashion MSMEs in Yogyakarta City.
The results of this study support the results of research from Tajudeen.
Jaafar and Ainin .
, which found that interactivity has a positive effect on social media usage.
Thus, it can be concluded that the interactive ability of social media can be used in communicating and sharing product information actively with consumers and other parties can encourage MSMEs to use Instagram social Interactivity is a two-way communication between business owners and consumers so that consumer responses can be obtained (Wang and Chen, 2009.
and Hakansson and Snehota, 2017.
Li et, al 2002 in Kietzman, 2.
In this study, it shows that Instagram social media has interactive features that can be utilized by fashion MSME players in Yogyakarta City in conducting two-way communication with potential customers.
In the fashion business, it is important to maintain an emotional connection with customers and can increase the trust of potential customers by actively interacting through Instagram social media.
Social Media Usage Has a Positive and Significant Effect on the SMEs Performance The results of research conducted by testing H4 show that the use of social media directly has a positive and significant effect on the performance of fashion MSMEs in Yogyakarta City.
It can be concluded that the use of social media in the business process is able to encourage the performance of fashion MSMEs in Yogyakarta City.
Instagram social media can be used by MSME players as a medium for promotion and marketing, creating brand awareness, marketing research and trends, and a means of communication in maintaining relationships with customers.
Optimizing the use of social media by MSMEs is important because it can improve performance and expand business opportunities (Aditya, 2.
Social media is a tool or method used by consumers to share information in the form of text, images, audio, and video with other people and companies or vice versa (Kotler, 2.
Social media is an internet-based application that facilitates conversations between users (Maria, 2.
MSMEs that have used social media will find it easier to connect with potential partners and customers and can improve overall business performance (Omar, 2.
In this study, it shows that Instagram social media can be maximally utilized by fashion MSME players in Yogyakarta City so as to improve their performance.
Many fashion MSME players in Yogyakarta City admit that they get more potential customers from other cities or even countries.
This can prove that by maximizing brand existence through Instagram social media can affect business performance MANAGEMENT DEPARTMENT.
UPN AuVETERANAy YOGYAKARTA 116 | PUTRI.
GHOFAR
both to increase turnover and brand awareness.
MSMEs that are more likely to be quickly adaptive to the development of technological innovation are MSMEs that have higher competitive value than those that are less adaptive.
Conclusion Based on the results of data collection and analysis in the study to determine the compatibility, cost-effectiveness, and interactivity factors that influence the use of social media and its impact on the performance of MSMEs that have been described previously, the following conclusions can be drawn:
Ae Compatibility directly has a positive and significant effect on the use of social Ae Cost Effectiveness directly has a positive and significant effect on the use of social Ae Interactivity directly has a positive and significant effect on the use of social Ae The use of social media directly has a positive and significant effect on the performance of MSMEs.
Limitation This research has limitations related to time and objects that only focus on examining fashion MSMEs in Yogyakarta City and discussing the use of Instagram social media.
Of course, differences in industry or type of business and social media platforms will also have a different impact.
Thus, the results of this study cannot be generalized to other sectors or industries and the use of other social media platforms.
Thus, suggestions for future research are to use objects with different MSME industries and other social media platforms, such as Tiktok and Facebook.
Management Implication The use of social media also certainly improves the performance of MSMEs.
It would be nice if business actors could maximize the use of social media in their business This is suggested by researchers based on the urgency of the research, namely the increasingly intense competition from year to year which encourages business actors to continue to be adaptive in order to survive or win the competition.
Changes in trends that are very dynamic are also certainly a challenge for MSME The existence of government support from the Yogyakarta City Cooperative and MSME Office is certainly an opportunity for fashion MSME players in Yogyakarta City to continue to develop and maintain their business existence so that they can go MSME players also need to review the marketing strategies that will be used in their digital-based marketing.
References