How Social Media Shapes Export Dynamics: Insights on Costs and Relationships Post-COVID-19

The study by researchers from the University of Murcia and Universitat Autònoma de Barcelona reveals that while social media enhances communication and relationship building with foreign customers, it does not directly reduce export costs, highlighting its evolving role in international business, especially post-COVID-19. The research emphasizes the importance of ICT capabilities and strategic social media use for long-term success in global markets.

A study conducted by Maria-del-Carmen Alarcon-del-Amo from the University of Murcia, and Alex Rialp, Josep Rialp, and Pilar Lopez-Belbeze from the Universitat Autonoma de Barcelona, delves into the transformative role of social media in the international operations of exporting firms. By analyzing data from Spanish exporters collected in 2013 and 2021, the researchers sought to understand how social media influences export costs and relationships with foreign customers, particularly in light of technological advancements and the global shift toward digital communication, especially after the COVID-19 pandemic.

ICT Capabilities: The Key to Social Media Success

The study reveals that while social media's potential to enhance communication and build relationships with foreign customers is evident, its impact on reducing export costs is not as straightforward. The researchers discovered that firms with better information and communication technology (ICT) capabilities were more likely to use social media effectively. These capabilities allowed companies to engage in more sophisticated and targeted social media communication, which in turn fostered stronger relationships with international customers. However, contrary to what might be expected, the use of social media did not directly reduce export costs. Instead, the cost-saving benefits of social media emerged indirectly through its role in relationship building.

From Communication to Relationship Building: A Shift in Social Media Strategy

The analysis shows a clear evolution in the role of social media from 2013 to 2021. In the earlier period, social media primarily served as a communication tool that helped reduce export costs by facilitating easier and more efficient interactions with customers across borders. Companies were able to bypass traditional marketing and communication channels, which often involved higher costs, by directly engaging with customers through platforms like Facebook, X (formerly known asTwitter), and LinkedIn. This direct line of communication allowed firms to address customer needs and concerns in real-time, thereby enhancing customer satisfaction and loyalty, which in turn helped lower costs associated with maintaining these relationships.

However, by 2021, the landscape had shifted. The onset of the COVID-19 pandemic accelerated the adoption of digital tools, including social media, as companies scrambled to maintain their international operations amid lockdowns and restrictions on travel. This period saw a significant increase in the use of social media by both companies and consumers, leading to a more profound role for these platforms in business operations. Social media evolved from being merely a tool for communication to a crucial platform for building and sustaining long-term relationships with foreign customers. The study found that in 2021, it was not the act of communication itself that reduced costs but the strength and quality of the relationships that firms were able to build through social media. These relationships, built on trust and ongoing engagement, became a key driver of cost reduction, as firms could rely on established connections to maintain business continuity and drive sales without the need for extensive additional marketing efforts.

The Strategic Advantage of Relationship Marketing

This shift underscores the growing importance of relationship marketing in the digital age. Social media platforms offer businesses unique opportunities to engage with customers on a more personal level, creating a sense of community and belonging that traditional marketing channels cannot match. The interactive nature of social media allows for continuous engagement, enabling firms to gather valuable insights into customer preferences and behaviors, which can be used to tailor products and services to meet the specific needs of different markets. This deeper understanding of customer needs not only enhances satisfaction but also fosters loyalty, which is crucial for long-term success in international markets.

Implications for Businesses and Policymakers

The study's findings have important implications for businesses and policymakers alike. For businesses, the research highlights the need to invest in ICT capabilities and social media strategies that prioritize relationship building over mere communication. Companies that can leverage these tools to create strong, trust-based relationships with foreign customers are more likely to see long-term benefits, including cost savings and increased market share. For policymakers, the research suggests that supporting the digital transformation of businesses, particularly SMEs, could play a crucial role in enhancing their competitiveness in the global market. By providing incentives for the adoption of ICT tools and social media, governments can help firms build the capabilities needed to succeed in the increasingly digital landscape of international trade.

The Future of Social Media in Global Trade

The research conducted by the University of Murcia and the Universitat Autònoma de Barcelona offers valuable insights into the evolving role of social media in international business. While social media's ability to reduce costs directly may be limited, its power to build and sustain strong relationships with foreign customers is undeniable. As the business environment continues to shift toward digital platforms, firms that can effectively harness the potential of social media will be well-positioned to thrive in the global marketplace.