Shandy et al.

, Cogent Business & Management (2023), 10: 2244211

https://doi.org/10.1080/23311975.2023.2244211

MANAGEMENT | RESEARCH ARTICLE

Social media richness, brand equity, and business
performance: An empirical analysis of food and
beverage SMEs
Received: 25 January 2023 Venny Mellandhia Shandy1, Asep Mulyana2 and Budi Harsanto3*
Accepted: 30 July 2023
Abstract: This study examines the effect of social media richness on business
*Corresponding author: Budi
Harsanto, Faculty of Economics and performance, mediated by brand equity. The study utilizes a quantitative methodol­
Business, Universitas Padjadjaran, ogy with a sample of 232 food and beverage SMEs in Indonesia. Data were analyzed
Bandung, Indonesia
E-mail: budi.harsanto@unpad.ac.id using structural equations models partial least squares (SEM PLS). The results
Reviewing editor: indicate that social media richness has influence on brand equity, as MSMEs that
Hung-Che Wu, Business School, provide abundant information on their social media platforms give more impression
Nanfang College Guangzhou, China
to consumers. Furthermore, social media richness influences business performance
Additional information is available at
the end of the article by facilitating information-sharing activities and providing a platform for consumers
to engage in transactions, ultimately leading to improved business performance.
Additionally, brand equity plays a role in affecting business performance, as it
creates a positive perception of a brand, thereby increasing the likelihood of con­
sumers trying and purchasing its products or services, consequently boosting rev­
enue. Moreover, brand equity acts as a mediator between social media richness and
business performance.

Subjects: Economics; Business, Management and Accounting; Industry & Industrial Studies

Keywords: social media richness; brand equity; business performance; food and beverage;
SMEs

1. Introduction
The COVID-19 pandemic has compelled numerous individuals to remain in their homes, resulting
in an increased usage of social media, including for online business activities. According to We Are
Social, the number of social media users has consistently risen, reaching 4.2 billion users in
January 2021, which reflects a 13.2% increase from the previous year (Katadata, 2021).

Social media is an internet-connected communication channel used to interact and express

oneself in real-time to a broad audience, deriving value and interaction from the created content
(Carr & Hayes, 2015). It can also be defined as online interactions and connections (van Looy,
2022). According to Safko (2010), social media serves four functions: communication, collabora­
tion, education, and entertainment. On the other hand, Kietzmann et al. (2011) identified seven
functions of social media: presence, relationship, identity, sharing, reputation, conversation, and
group. Additionally, Safko (2010) classify various types and tools of social media, including social
communities (such as Facebook, LinkedIn, Google+, and Yammer), social text publishing tools
(including blogs, Wikipedia, Slideshare, and Quora), microblogging tools (like Twitter and Tumblr),

© 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.
This is an Open Access article distributed under the terms of the Creative Commons Attribution
License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribu­
tion, and reproduction in any medium, provided the original work is properly cited. The terms on
which this article has been published allow the posting of the Accepted Manuscript in
a repository by the author(s) or with their consent.

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social photo publishing tools (such as Pinterest, Instagram, Flickr, and Picasa), social audio publish­
ing tools (such as Spotify, iTunes, and Podcast.com), social video publishing tools (including
YouTube, Vimeo, and Vine), social gaming tools (like World of Warcraft), Really Simple
Syndication (RSS 2.0 and Google FeedBurner), live casting tools (such as Live 365 and Justin.tv),
virtual worlds (like Second Life and Kaneya), mobile tools (including Foursquare and Swarm),
productivity tools (such as SurveyMonkey, Google Docs, and Doodle), and aggregators (like My
Yahoo and iGoogle, until November 2013).

MSMEs play a crucial role in the development and distribution of national economic outcomes
(Putra, 2016). However, despite their significant role, MSMEs face various challenges, including
limited capital, a shortage of skilled human resources, and a lack of technological expertise .
Additionally, they often encounter issues such as unclear business prospects and unstable vision
and mission statements (R. Sudaryanto & Wijayanti, 2013). Moreover, the COVID-19 pandemic has
further exacerbated these problems, resulting in reduced or halted economic activities (Grondys
et al., 2021; Harsanto, 2020), making it increasingly difficult for MSME owners to sustain their
businesses. According to data from the Indonesian Ministry of Cooperatives and SMEs, 56% of
MSME owners have experienced a decline in sales (Andayani et al., 2021). These findings under­
score how the COVID-19 pandemic can have a detrimental impact on the business performance of
MSMEs.

From a marketing perspective, several factors can impact business performance, including social
media richness and brand equity. Media richness refers to a medium’s ability to effectively convey
a message containing diverse information (Carlson & Zmud, 1999). Research by R. Daft et al. (1987)
indicates that increasing the level of information dissemination can enhance Instagram users’
understanding of the products they are viewing. When social media platforms provide ample
information, it fosters customer relationships (Coursaris et al., 2014), ultimately leading to the
development of brand equity (Hepola et al., 2017). However, it’s important to note that social
media richness can also result in higher advertising and traffic costs (Tseng & Wei, 2020).
Businesses often need to create various types of advertisements to effectively promote their
products or services and of course, can impact their overall performance.

Business performance can also be influenced by brand equity, which plays a vital role in market­
ing. Brand equity contributes to marketing by encompassing two crucial aspects: brand awareness,
image, and associations, as well as market share, revenue, and premium prices (Anabila, 2020).
Consequently, brand equity can have an impact on business performance. The two facets of brand
equity can result in changes in sales volume and profit (Ailawadi et al., 2003; Oliveira-Castro et al.,
2008), which are key indicators of business performance. However, achieving brand equity poses
challenges for MSME owners, as they may lack a competitive advantage (Roslin & Melewar, 2008).
To overcome this, MSME owners need to demonstrate flexibility, make prompt decisions, and adapt
to changes in the market (Dominguez & Dominguez, 2017; Nieto & Santamaría, 2010) to establish
a competitive advantage and attain brand equity. Therefore, MSME actors need to take advantage
of these advantages to strengthen their brand equity which can be developed through relationship
marketing efforts, instilling brand knowledge into customers’ minds, and creating memorable
unique service value (J. Zhang et al., 2015).

Customers can obtain a wealth of information through social media. Richer content on social
media platforms can effectively convey more information about the products or services being
offered (Lim & Benbasat, 2000; Suh, 1999; Treviño et al., 2000). This information often comes in the
form of reviews and ratings from previous consumers. Positive reviews and ratings on social media
can generate interest among potential customers and influence their intention to purchase the
product (Flanagin et al., 2014), ultimately leading to increased sales. Therefore, social media has
the potential to significantly impact business performance (Tseng & Wei, 2020). For instance, Yang
and Kankanhalli (2014) examined the impact of social media marketing on the performance of
online small businesses and found a positive influence on sales, customer loyalty, and brand

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recognition. Similarly, in a literature review conducted by Emmanuel et al. (2022), it was discovered
that social media significantly affects various aspects of business performance, including customer
acquisition, brand recognition, and customer engagement. Moreover, social media has been found
to have a significant impact on business performance, enabling firms to enhance customer
engagement and loyalty (Almazrouei et al., 2021). However, research that discusses the relation­
ship between social media richness and business performance with the mediating role of brand
equity is still limited. This mediating role of brand equity has begun to be used recently as
a mediator in research on social media and purchase intention, but not on business performance
(Majeed et al. (2021).

The mediating effect of brand equity can contribute to achieving business performance. The
richness of information present in social media influences brand equity (M. Hasim et al., 2020a),
and in turn, social media affects business performance. The moderating effect of brand equity was
found to be significant, indicating that brand equity strengthens the relationship between media
richness on Instagram and consumer purchase intention (M. A. Hasim et al., 2020). Majeed et al.
(2021) found that brand equity plays a mediating role in the relationship between social media and
purchase intention. Their study revealed that social media positively influenced brand equity,
which, in turn, led to increased purchase intention. However, an effective process is required for
the dissemination of diverse information on social media. This process can involve a combination
of existing forms of marketing communication to effectively convey information and enhance the
delivery of meaningful content, thereby harnessing the synergistic benefits that social media can
provide (Naik et al., 2005). In this context, the desired synergistic benefit is an improvement in
business performance (BartosikPurgat, 2019).

The social media chosen for research is Instagram. Businesses using Instagram as a marketing
tool should focus on creating high-quality content that promotes their brand equity to maximize
their impact on consumer purchase intention M. Hasim et al. (2020). The focus on Instagram is
driven by the fact that most MSME owners are highly aware of and utilize this social media
platform to operate and grow their businesses (Setiawati, 2017). This study examines the impact
of social media richness on business performance, with brand equity serving as a mediating factor,
specifically within MSMEs utilizing Instagram in Java and Sumatra. Furthermore, this study pro­
poses models and hypotheses based on existing literature. The study encompasses three variables:
social media richness, brand equity, and business performance. These variables were selected due
to the limited existing literature on the mediating effect of brand equity on the relationship
between social media richness and business performance.

2. Literature review

2.1. Social media richness

The relationship between social media richness, brand equity, and business performance is guided by
Media Richness Theory. According to Ishii et al. (2019), Media Richness Theory suggests that the
effectiveness of communication is influenced by the richness of the communication medium, which is
determined by its ability to convey multiple cues, provide immediate feedback, and enable persona­
lization. In the context of social media, this theory implies that platforms with higher levels of media
richness, such as Facebook and Instagram, can facilitate more effective communication between
brands and consumers, resulting in increased brand equity and improved business performance. The
study proposes that social media richness has an impact on various dimensions of brand equity,
which, in turn, influences business performance. Specifically, the study suggests that social media
richness positively influences brand awareness, brand associations, and proprietary brand assets,
ultimately leading to enhanced business performance for food and beverage MSMEs.

Media richness is commonly defined as a measure of a medium’s ability to transmit information

and induce changes in understanding over time (R. Daft & Lengel, 1983). It can also be described
as the extent to which a medium can effectively convey a comprehensive message with rich

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information (Jiang et al., 2013). Furthermore, media richness plays a crucial role in meeting the
information needs of electronic commerce users, as it provides the necessary information from
sellers, which ultimately stimulates consumer purchases (C. Chen & Chang, 2018). These findings
highlight the significance of media richness for media users (Liao et al., 2020) This explanation, it
shows that social media richness can be defined as the ability of social media to send and convey
rich information to meet user information needs and to change user understanding to motivate
the purchase of a product on social media.

Social media richness has the ability to enhance social rewards in social interactions (Jiang et al.,
2013). This is attributed to the fact that users experience greater pleasure and satisfaction when
they perceive higher levels of media richness. Furthermore, media richness plays a vital role in
determining users’ enjoyment, enthusiasm, and inclination to engage in word-of-mouth behavior,
particularly on social media platforms (Vazquez et al., 2017). It is important to note that different
social media platforms exhibit varying levels of information richness, and this discrepancy can
have distinct effects on their brand equity (Kaplan & Haenlein, 2010). Therefore, this will undoubt­
edly be a problem for business people, so they must need to determine the suitable social media to
trigger brand awareness and attention from consumers (Coulter et al., 2012; Coulter et al., 2012).
When consumers become aware of and pay attention to a brand through social media, it can lead
to increased trust and brand loyalty (Laroche et al., 2012), thereby contributing to the develop­
ment of brand equity. The research conducted by M. A. Hasim et al. (2020) provides evidence that
social media richness can indeed impact brand equity.

H1: Social media richness affects brand equity.

Technologies such as social media have been shown to enhance business performance (Qalati
et al., 2020). Social media has become a widely utilized business strategy (Öztamur & Karakadılar,
2014). R. Daft and Lengel (1983) propose that different types of media, particularly social media,
convey varying levels of information. These diverse levels of information are referred to as social
media richness. Social media platforms that offer richer information tend to instill greater con­
sumer confidence (Lu et al., 2014), leading to increased purchase intent (C. Chen & Chang, 2018)
and improved business performance. However, it is important to note that different social media
platforms exhibit distinct levels of media richness (Kaplan & Haenlein, 2010). Therefore, selecting
the most suitable social media platform is an effective means for business individuals to enhance
their business performance. Previous research conducted by Ainin et al. (2015) supports the notion
that business performance can be enhanced through the effective use of social media.

H2: Social media richness affects business performance.

2.2. Brand equity

Brand equity is defined as the power that a brand possesses, which keeps it consistently present in
the minds of consumers (Keller & Brexendorf, 2019). It can also be described as a unique market­
ing effect that is closely associated with a brand (D. Aaker, 1991; Keller, 1993; Kotler & Armstrong,
2010). Consequently, brand equity is regarded as an additional value that becomes ingrained in
the minds of consumers (Keller & Brexendorf, 2019). Based on this definition, brand equity can be
understood as the added value and marketing effect that ensures the brand remains present in
the minds of customers.

Brand equity holds significant importance for both companies and consumers. This is because
brand equity is associated with the value inherent in a product or service brand (French & Smith,
2013). Brand equity plays a vital role in enhancing the efficiency and effectiveness of marketing
initiatives, fostering customer loyalty, and facilitating competitive promotional activities
(Chaudhuri & Holbrook, 2001; Erdem, 1998; Farquhar, 1989). Moreover, brand equity is equally

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crucial for consumers as it aids in better information processing, instills trust in purchase decisions,
and leads to increased consumer satisfaction (D. A. Aaker, 1996).

Brand equity plays a crucial role in enhancing various aspects such as value, market share,
benefits, brand awareness, brand knowledge, brand image, price, and revenue (Anabila, 2020;
Y. H. Lin, 2015). It also serves as a motivating factor for customers to repurchase products, be
willing to pay a premium price, promote brand expansion, and recommend the brand to others
(Bendixen et al., 2004; Michell et al., 2001). Consequently, the role of brand equity significantly
impacts a business’s revenue and overall performance. However, the impact of brand equity varies
across industries, with some experiencing immediate and simultaneous effects, while others
observe long-term effects on profitability (Mizik, 2014). As a result, there is still a research gap
regarding the influence of brand equity on business performance. Previous studies have indicated
a positive relationship between brand equity and business performance (Nurittamont &
Ussahawanitchakit, 2008), and Mohan and Sequeira (2013) have highlighted the potential impact
of brand equity on business performance. Furthermore, research by Anabila (2020) demonstrates
that brand equity can indeed drive business performance.

H3: Brand equity affects business performance.

2.3. Business performance

Business performance is an indicator that measures how well an organization achieves its goals
(Prakash et al., 2017). It can also be defined as the overall concept of organizational effectiveness,
encompassing both operational (non-financial) and financial performance indicators
(Venkatraman & Ramanujam, 1986). This definition emphasizes that business performance
encompasses a range of factors, including operational performance and financial outcomes, that
are used to assess the extent to which an organization successfully fulfills its objectives.

Innovation is critical to improving business performance (C. Y. Y. Lin & Chen, 2007; Walker et al.,
2015). It plays a crucial role in driving sales growth and enhancing internal efficiency. Furthermore,
innovation can lead to a reduction in production costs as increased labor productivity contributes
to the company’s profitability (Añón-Higón et al., 2015; Foreman-Peck, 2013). By embracing
innovation, businesses can enhance their competitive edge, achieve growth, and optimize their
operations and ultimately business performance increases.

Various studies have shown that information from marketing activities on social media can have
an impact on brand equity (A. Kim & Ko, 2012). This influence can help companies increase brand
awareness, strengthen brand trust (Laroche et al., 2012), and ultimately improve profitability and
business performance (Baldauf et al., 2003). The richness of social media also plays a role in
predicting customer decision quality (Kahai & Cooper, 2003), as it allows for the conveyance of
more information (Lim & Benbasat, 2000; Treviño et al., 2000). Consequently, organizations and
businesses often adopt and utilize social media to enhance brand image and awareness (Rapp
et al., 2013), with the ultimate goal of improving their business performance (M. Zhang et al.,
2017).

H4: Brand equity affects business performance.

3. Research methods
We aim to investigate the relationship among constructs in our research. We have employed
a quantitative methodology and utilized a snowball sampling method to collect data (Qalati, Ostic,
Shuibin, et al., 2022). The data was gathered through an online questionnaire distributed to food
and beverage MSMEs in Java and Sumatra, Indonesia. Indonesia is an important context as one of
the major markets in Asean which is predicted to become one of the largest single markets in the
world by 2030 (Harsanto & Firmansyah, 2023; Harsanto & Permana, 2019; Harsanto et al., 2018).

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Figure 1. Conceptual
Brand Equity H3
framework. H1

H2
Social Media Richness H1 Business Performance
H4: Mediating

The population in this study consists of MSMEs in Java and Sumatra that utilize Instagram. As of
March 2021, there were 64.2 million MSMEs in Indonesia (Kementerian Keuangan Republik
Indonesia, 2022). According to data from BPS (2016), there were 15,931,889 MSMEs on Java
Island and 4,897,457 MSMEs on Sumatra Island in 2016. MSMEs are important actors and major
contributors to the Indonesian economy (Azis et al., 2017; Harsanto & Permana, 2021; Harsanto
et al., 2022; Widianto & Harsanto, 2017).

The questionnaire was distributed in 2022 to food and beverage MSMEs, with a total sample size
of 232 MSMEs. The data will be analyzed using Structural Equations Models Partial Least Square
(SEM PLS), as recommended by Hair et al. (2019). This analysis can be efficiently conducted and
does not require a substantial sample size.

This study examines the relationship among three variables: social media richness, brand equity,
and business performance (Figure 1). The measurement of social media richness is based on three
indicator items as used by R. Daft et al. (1987). Brand equity is assessed through four dimensions:
perceived quality, brand associations, brand loyalty, and brand awareness. Each dimension is
measured using three indicator items, following the approaches of D. Aaker (1996), Aji et al.
(2020), and Seo and Park (2017). Business performance is measured using five non-financial
indicators: employees’ commitment, customer satisfaction, market share, sales, and profit, as
employed by Šályová et al. (2015). All indicators are rated on a Likert scale ranging from 1 to 5.

For data analysis, the study employs the Structural Equations Models Partial Least Square (SEM
PLS) method, following the recommendations of Hair et al. (2021). This method is suitable for
models with weak theoretical foundations or predictive purposes, and it is particularly suitable for
analyzing complex models, as suggested by Fan et al (2021, 2022). Qalati, Ostic, Shuibin, et al.
(2022), and Qalati, Ostic, Sulaiman, et al. (2022).

To ensure the quality of the analysis, the researcher employed the internal variance inflation
factor, specifically the total collinearity approach, using the PLS-SEM method with SmartPLS.
The values of the inner variance inflation factor range from 1.307 to 1.67, which are signifi­
cantly lower than the acceptable limit of 3.33 (Hair et al., 2019; Qalati et al., 2021; Qalati,
Ostic, Shuibin, et al., 2022). Thus, it can be concluded that the data used in the analysis is
sufficient for the studyThis study uses three variables, such as: social media richness, brand
equity, and business performance. To measure social media richness, R. Daft et al. (1987) used
three indicator items to measure social media richness. Brand equity consists of four dimen­
sions, namely: perceived quality, brand associations, brand loyalty, and brand awareness.
Perceived quality is measured by three indicator items (D. Aaker, 1996), brand association is
measured by three indicator items (Aji et al., 2020), brand loyalty is measured by three
indicator items (D. Aaker, 1996), and brand awareness is measured by three indicator items
(Seo & Park, 2017). To measure business performance, Šályová et al. (2015) used five indicator
items through the non-financial indicators which is employees’’ commitment, customer satis­
factions: employees’ commitment, customer satisfaction, market share of the business, sales
of business, and profit of the business. Each of these indicator is measured using a Likert scale
of 1 to 5.

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This study uses an analytical method in the form of Structural Equations Models Partial Least
Square (SEM PLS) (Hair et al., 2021) to analyze the various data that have been collected. This
method was chosen because PLS -SEM is suitable for analysis that has a weak theoretical basis or
is predictive, and tit is suggested for evaluating complex models (Fan et al., 2021, 2022; Qalati,
Ostic, Shuibin, et al., 2022; Qalati, Ostic, Sulaiman, et al., 2022).

The researcher use the internal variance inflation factor (also known as the fultotal collinearity
approach) in the analysis, which was carried out using the PLS-SEM method with SmartPLS. The
values for the inner variance inflation factor inner variance inflation factor values ranged between
1.307 and 1.67, which is considerably lower than the acceptable limit of 3.33 (Hair et al., 2019;
Qalati et al., 2021; Qalati, Ostic, Shuibin, et al., 2022). As a result, it can be concluded that the data
used in the analysis is adequate for the study.

4. Results
The demographic of respondents is shown in Table 1. Each hypothesized relationship tested
through simulations using PLS. The test involve bootstrapping calculations conducted in
SmartPLS (v.3.2.9). The purpose of this test is to address any issues related to data abnormality
in the study. The bootstrapping method is a resampling technique that aims to improve the
representativeness of the sample data, thus providing more stable results for hypothesis testing
(Hair et al., 2010). By employing this method, the processed data are expected to be more robust,
leading to more reliable results in hypothesis testing. The results of the bootstrapping calculation
can be seen in Figure 2 below.

After bootstrapping, the total effects are obtained to assess the significance level of hypothesis
testing, which is indicated by the path coefficients. In two-tailed hypothesis testing, the t-statistic
value with a 95% confidence level (5% significance level) should be above 1.96 (Hair et al., 2010). If
the t-statistic value is greater than the critical t-value from the table, the hypothesis is accepted.
The values of the total effects can be found in Table 2 below.

4.1. Hypothesis 1
The results of testing the first hypothesis indicate a significant influence of social media richness
on brand equity, with a t-statistic value of 15.222 (t-statistic >1.96) and the p-value is 0.000
(p-value <0.05). The original sample value indicates a positive influence of 0.767 between the
constructs of social media richness and brand equity. This suggests that social media richness has
a significant and positive effect on brand equity. Therefore, the first hypothesis of this study is
accepted.

Figure 2. Output bootstrapping.

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Table 1. The demographic of respondents

Variables Categories Frequency Percentage
MSME Age 3 years 117 50,43%
4 years 73 31,46%
5 years 29 12,50%
>5 years 13 5,60%
Income per month < IDR 5.000.000 80 34,48%
IDR 5.000.000 – IDR 80 34,48%
10.000.000
IDR 10.000.000 – IDR 36 15,52%
20.000.000
IDR 20.000.000 – IDR 22 9,48%
30.000.000
IDR 30.000.000 – IDR 10 4,31%
40.000.000
IDR 40.000.000 – IDR 3 1,29%
50.000.000
> IDR 50.000.000 1 0,43%
MSME Location Sumatera 132 56,90%
Java 100 43,10%
*Demographic data from MSMEs.

Table 2. Total effect (Mean, STDEV, t-statistic, and P-Values)

Original Sample Mean Standard T-Statistics P-Values
Sample Deviation
SMR → BE 0,767 0,765 0,050 15,222 0,000
BE → BP 0,635 0,631 0,053 12,013 0,000
SMR → BP 0,678 0,678 0,060 11,360 0,000
SMR → BE → BP 0,487 0,483 0,056 8,699 0,000
*Processed using SmartPLS (v.3.2.9).

4.2. Hypothesis 2
The results of testing the second hypothesis demonstrate a significant influence of brand equity on
business performance, with a t-statistic value of 12,013 (t-statistic >1.96) and a p-value of 0.000
(p-value <0.05). The original sample value indicates a positive influence of 0.635 between the
constructs of brand equity and business performance. This suggests that brand equity has
a significant and positive effect on business performance. Therefore, the second hypothesis of
this study is accepted.

4.3. Hypothesis 3
The results of testing the third hypothesis indicate a significant influence of social media richness
on business performance, with a t-statistic value of 11.360 (>1.96) and the p-value is 0.000
(p-value <0.05). The original sample value shows a positive value of 0.678, indicating that the
construct of social media richness has a positive influence on business performance. Therefore, it
can be concluded that social media richness significantly affects business performance. This
confirms the acceptance of the third hypothesis in this study.

4.4. Hypothesis 4
The results of testing the fourth hypothesis indicate that brand equity can mediate the relationship
between social media richness and business performance, with a t-statistic value of 8.699

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(t-statistical value > 1.96) and a p-value of 0.000 (p-value <0.05). The original sample value shows
a positive value of 0.487, indicating that brand equity positively mediates the influence of social
media richness on business performance. Thus, it can be said that brand equity can significantly
mediate social media richness on business performance. This shows that the fourth hypothesis in
this study is accepted.

5. Discussions
The discussion aims to present various solutions to the previously described problems.
Furthermore, it provides insights and answers to the identified issues, ultimately leading to mean­
ingful conclusions that can be drawn from this research.

5.1. Effect of social media richness on brand equity

Brands are composed of words, letters, and/or numbers that can be spoken (Etzel et al., 2004).
A brand can also be defined as a name, term, sign, symbol, design, or a combination of these
elements that is used to identify the goods or services of a group of sellers and differentiate them
from competitors (Buchory & Saladin, 2010). Brand equity refers to the value added to a product’s
brand (Etzel et al., 2004).

In the context of social media, marketing activities conducted on platforms like Instagram can
contribute to the increase in brand equity (Bruhn et al., 2012; A. Kim & Ko, 2012). Marketers must
focus on creating brand value in the minds of consumers, particularly through Instagram. MSME
actors should provide rich and engaging information about their products on their Instagram
accounts. Social media platforms are designed for browsing and information sharing (Marsden &
Chaney, 2013). The availability of diverse and engaging information on social media prompts
consumers to actively seek product or service information. This information-seeking behavior on
social media has a positive influence, as it increases the likelihood of consumers finding and
remembering the information they need (Ishii et al., 2019). Ultimately, this information becomes
ingrained in the minds of consumers.

The positive relationship between social media richness and brand equity is supported by
previous research (Bruhn et al., 2012; M. Hasim et al., 2020, ; A. Kim & Ko, 2012). When MSMEs
provide abundant and engaging information on social media, particularly on platforms like
Instagram, it prompts consumers to actively search for products or services and remember the
information they encounter. As a result, consumers may develop a preference for the brand,
leading to increased loyalty and brand equity. The positive relationship between social media
richness and brand equity is consistent with previous research (Bruhn et al., 2012; M. A. Hasim
et al., 2020, ; A. Kim & Ko, 2012). The more prosperous and more interesting the information
provided by MSMEs on their social media platforms, especially on Instagram, the more consumers
are likely to actively search for the products or services and remember the information.
Consequently, consumers may develop a preference for the brand, leading to increase loyalty
and brand equity. The results of this study are in line with the findings M. Hasim et al. (2020) that
brand equity can be influenced by social media richness, particularly on platforms like Instagram.
When consumers are effectively influenced by the abundance of information available on social
media, they are more likely to refrain from searching for products or services on other social media
applications, even if the offerings are similar (Pham & Gammoh, 2015).

5.2. The effect of social media richness on business performance

Internet technology has become a common practice in the workplace, including for SMEs. The
Internet provides various benefits such as facilitating communication and enabling SMEs to con­
duct business anytime and anywhere (J. V. Chen et al., 2008J. V. Chen et al., 2008). Therefore,
many MSME actors utilize social media to support various processes, including marketing activities
(J. V. Chen et al., 2008; Harris & Rae, 2009), customer relationship management (Harris & Rae,
2009; Hawn, 2009; W. Kim et al., 2010), expanding business networks within and outside the
company (W. Kim et al., 2010; Leader-Chivee et al., 2008; Misner et al., 2009).

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The decision of MSMEs to engage on social media platforms, particularly Instagram, is a strategic
choice (Dutot & Bergeron, 2016). This is supported by research conducted by Ahmad et al. (2018),
which successfully recognized and measured the impact of social media on their business perfor­
mance. Social media can increase information-seeking activities (Ahmad et al., 2018), so this can
create a social media that is rich in information. Therefore, using social media platforms that
provide rich information can facilitate consumers’ access to relevant information. As a result, it can
be inferred that effectively utilizing information-rich social media can contribute to improving
business performance (Ahmad et al., 2018). The results of this study are follow the hypothesis.
They are also strengthened by the results of research conducted by Ainin et al. (2015), where the
research also shows that the use of social media can improve business performance.

5.3. The effect of brand equity on business performances

Business performance is typically assessed using various indicators, including profitability, sales
growth, and return on investment (Mairesse & Mohnen, 2010). Moreover, Begonja et al. (2016)
suggest that market share, revenue, profit, cash flow, and cost reduction over a three-year period
can be used as measures of business performance. It can be argued that a business should strive
to develop and generate profits in order to enhance its performance (Sumarwan et al., 2011).

The hypothesis Anabila (2020) shows that brand equity can significantly influence and be
a driver of business performance. Brand equity can convey a good impression of a brand. This
will increase the likelihood that consumers will try (Etzel et al., 2004) and buy it, thereby increasing
income. This increase in revenue can cause business performance to increase as well.

5.4. Brand equity mediating social media richness on business performance

Brand equity plays a significant mediating role in the relationship between social media richness
and business performance. These findings highlight the importance of brand equity in under­
standing the link between social media richness and business performance. This aligns with prior
research that demonstrated the substantial positive impact of brand equity on business perfor­
mance (Anabila, 2020; Sumarwan et al., 2011).Brand equity significantly mediates the relationship
between social media richness and business performance. These findings suggest that brand
equity is a crucial factor crucial in explaining the relationship between social media richness and
business performance. This is consistent with previous research that showed the significant
positive eEffect of brand equity on business performance (Anabila, 2020; Sumarwan et al., 2011).

Brands play a crucial role in providing value to customers by helping them make informed choices
among various products and services (Sumarwan et al., 2011). Particularly with new products, there
is often uncertainty and risk associated with their value and quality (Sumarwan et al., 2011). The
value attributed to a product or service is known as brand equity (Kotler & Keller, 2014).

The essence of brand equity lies in how customers perceive, learn, think, and feel about a brand
over time (Kotler & Keller, 2014). Consequently, MSMEs need to utilize appropriate social media
platforms to effectively communicate precise information that resonates with customers. To
minimize uncertainty and ambiguity in conveying information, it is important for MSMEs to lever­
age social media platforms that offer rich information (R. L. Daft & Lengel, 1986). Social media
richness enables the transmission of more information and fosters better relationships with
various stakeholders, including customers (Sheer & Chen, 2004), thus influencing brand-
customer relationships.

The exchange of diverse information through marketing activities on social media can have
a significant impact on brand equity, ultimately leading to improved business performance in
MSMEs. Rich media content on social media platforms enhances brand awareness and fosters
trust among customers (Laroche et al., 2012), thereby instilling confidence in their purchase
decisions. Ultimately, increased profitability is attained through these purchases, thus positively
impacting the business performance of MSMEs. Consequently, it can be concluded that brand

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equity established through social media richness can enhance profitability and overall business
performance (Baldauf et al., 2003).

6. Conclusions
This study employed a quantitative approach using PLS-SEM to investigate the impact of social
media richness on business performance, with brand equity as a mediating factor. The research
focused on food and beverage SMEs and specifically utilized Instagram as the social media plat­
form for data collection in the Java and Sumatra regions. The results of the study demonstrate the
significant effects of social media richness on brand equity, brand equity on business performance,
and social media richness on business performance. Moreover, the study reveals that brand equity
acts as a mediator between social media richness and business performance. This research
contributes to the existing literature on the relationship among social media richness, brand
equity, and business performance, particularly by highlighting the mediating role of brand equity.
It is worth noting that there is limited literature available on the mediating effect of brand equity in
the context of social media richness and business performance, making this study a valuable
addition to the existing body of knowledge.

The results of this study have significant implications for small and medium-sized enterprises
(SMEs) in the food and beverage industry. Firstly, SMEs can improve their brand equity and business
performance by utilizing social media platforms such as Instagram and taking advantage of the
richness of social media to engage with their customers. Secondly, the mediating eEffect of brand
equity found in this study suggests that SMEs can use their brand equity to leverage the iImpact of
their social media presence on business performance. This highlights the importance of building
a stronghold brand for SMEs, especially in the context of social media. Policy-makers can also use
these findings to develop policies that support the adoption of social media in the food and
beverage industry, which can lead to better business performance for SMEs in this sector.

Further research is expected to be able to conduct similar studies with different subjects and
participants to enhance the validity of the research and explore additional variables or delve deeper
into the business performance of food and beverage SMEs. Future researchers are encouraged to
incorporate more relevant literature, expand the sample size, and consider the use of moderating
variables or modifications with other variables to create more robust studies in the future.

Author details Free Press. https://ideas.repec.org/a/eee/jbrese/

Venny Mellandhia Shandy1 v29y1994i3p247-248.html
Asep Mulyana2 Aaker, D. (1996). Building strong brands. The Free Press.
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E-mail: budi.harsanto@unpad.ac.id ducts and markets. California Management Review,
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Master in Management Science Program, Universitas Ahmad, S., Ahmad, N., & Bakar, A. R. A. (2018). Reflections
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and business performance: An empirical analysis of food Industrial Management and Data Systems, 115(3),
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