Examining the Impact of Social Networking Sites on Performance of Service Firms: Evidence from Romania

The purpose of this study is to extend research on social networking sites and the role of these tools on business performance of service firms. To date, there has been little investigation of the contribution of these tools in order to identify the opportunities for improving business performance. Using cross-section data from a sample in Romania, we empirically investigated the mediating effects of service innovation on the relationship between social networking sites and business performance. Confirmatory Factor Analysis (CFA) was used to perform reliability and validity checks, and structural equation modelling (SEM) was used to test the research model. The findings fill the gap in the literature by demonstrating social networking sites influence the collaboration, ideas and knowledge sharing among employees, customers, and business partners, leading to growth the business performance. The results also indicate that innovation capability played a key role on business performance but its mediating role between social networking sites and business performance of service firms was not confirmed. Finally, the theoretical and practical implications are discussed.