Collaborative Networks and Furniture Manufacturing SMEs Performance in Dar es Salaam, Tanzania: The Mediating Role of Customer Loyalty

This study examines the effect of collaborative network dimensions on furniture manufacturing SMEs performance in Dar es Salaam, focusing on customer loyalty as a mediator. Employing a quantitative, correlational design, data were collected through structured questionnaires from a stratified randomly selected sample of 350 furniture manufacturing SMEs owners or managers. The data were analysed using Covariance-Based Structural Equation modelling. The findings revealed that, in presence of customer loyalty as a mediator, collaborative relationships with suppliers and competitors had significant positive effects on furniture manufacturing SMEs performance. Although firm’s relationships with customers had a positive association with performance, its direct effect was not statistically significant. Hence, customer loyalty was found to fully mediate the effect of firm’s relationships with customers on furniture manufacturing SMEs performance and partially mediating the effects of collaborative relationships with suppliers and competitors. This study extends the traditional market orientation framework by incorporating collaborative networks as a substitute for inter-functional coordination in driving SMEs performance through customer loyalty as a mediator. Furniture manufacturing SMEs should form alliances for joint procurement, engage in knowledge exchange forums, and form joint marketing consortia to access quality inputs, reduce costs, drive innovation, and expand market reach. To translate relationship with customers into loyalty and improved performance, the enterprises should ensure consistent product quality, timely delivery, and responsive after-sales services. The Ministry of Industry and Trade, should support inter-firm networking via clustering programmes and supplier development initiatives.