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TECHS
2,1 Speaking to the hearts of the
customers! The mediating effect of
customer loyalty on customer
44 orientation, technology orientation
Received 23 March 2022
Revised 18 April 2022
and business performance
13 May 2022
Accepted 14 May 2022 Ismail Juma Ismail
Department of Business Administration and Management,
The University of Dodoma, Dodoma, Tanzania

Abstract
Purpose – This paper examined mediating effect of customer loyalty on the influence of customer orientation
and technology orientation on the performance of small and medium-sized enterprises (SMEs).
Design/methodology/approach – This study adopted and modified items from previous studies. Also, data
were analyzed using structural equation modeling (SEM). Additionally, a PROCESS Macro mediation test
was used.
Findings – The study’s findings indicated that customer orientation and technology orientation positively and
significantly affect customer loyalty. Moreover, the findings indicated that customer loyalty has a positive and
significant effect on the performance of SMEs. Finally, customer loyalty was found to mediate the influence of
customer orientation and technology orientation on the performance of SMEs.
Practical implications – The study recommends on business performance improvement through enhancing
customer and technology orientations and customer loyalty. So, SMEs should make sure their internal
environment is conducive to accommodate customer and technology orientations, which will help them come
up with effective ways to get loyal customers and improve their business.
Originality/value – The study adds value to the existing literature by introducing customer loyalty as an
intervening variable between the effect of customer orientation and technology orientation on business
performance of SMEs.
Keywords Customer orientation, Technology orientation, Customer loyalty, Business performance, SMEs
Paper type Research paper

Introduction
Past studies have long acknowledged that small and medium-sized enterprises (SMEs) are
the most important growth strategy for the economy and that governments have
strategically mainstreamed various policies to improve their sustainability. As a result,
there has been some progress in private employment and wealth creation in developing
countries (Bengesi and Roux, 2014; Kiwia et al., 2019). SMEs are also associated with the
endorsement of innovations, the development of indigenous entrepreneurship, resource
diversification, and integration with large firms. However, as the competition among SMEs
intensifies and the strong trend toward globalization continues, it has become increasingly
important to explore the factors that influence business performance among SMEs.
According to Ndiaye et al. (2018), there are a lot of academic papers that have been written
about SMEs’ performance in different places, using different methods. However, there has
been no consensus on the factors that impact business performance. Currently, there has been
Technological Sustainability a shift in the focus of research from the supply side to the demand side. Those who believe in
Vol. 2 No. 1, 2023
pp. 44-66
the supply side think that policies that assist SMEs in gaining access to factors of production
© Emerald Publishing Limited
2754-1312
can result in increased performance, while those who believe in the demand side assume that
DOI 10.1108/TECHS-03-2022-0016 performance strategies should incorporate customer psychology, which is critical for SMEs’
success (Amani, 2022). According to consumer psychology research, certain customers are The mediating
variety-seekers. Thus, they tend to switch product brands regardless of whether they are effect of
satisfied with the product or service in question (Amani, 2022; Jung and Yoon, 2012; Sang
et al., 2018). Furthermore, most top-performing SMEs have placed a greater emphasis on
customer
customer retention than acquiring new customers, because customer retention is less loyalty
expensive than searching for new customers in the long run.
Therefore, marketing strategies within organizations are designed to retain existing
customers (Hanaysha, 2018; Ricadonna et al., 2021). Accordingly, the indisputable truth is 45
that SMEs will not be able to attain performance unless they create barriers to customer
switching while simultaneously improving customer retention mechanisms. According to the
literature, developing customer loyalty is the first factor associated with customer retention
(Hanaysha, 2018; Ricadonna et al., 2021). So, the more an organization invests in developing
customer loyalty, the greater the likelihood that it will be able to retain customers (Omoregie
et al., 2019; Ricadonna et al., 2021). Researchers have associated customer loyalty with several
benefits for the organization’s performance.
According to Kashif et al. (2015), Lakshman and Faiz (2021) and Ricadonna et al. (2021),
customer loyalty is associated with positive, optimistic word-of-mouth recommendations of
products to friends, family, and relatives. Furthermore, it is strongly connected to customer
commitment to repurchase products consistently, increasing the organization’s chances of
attaining business performance. Apart from that, Bruneau et al. (2018) posted that customer
loyalty provides monetary, interactive, and social benefits that are regarded as key factors for
any organization’s performance.
Also, a study by Lakshman and Faiz (2021) suggested that customer loyalty resulted in
trust and a willingness to pay more because loyal customers are less sensitive to price
changes. Therefore, customer loyalty can be defined as the tendency of a customer to feel
emotionally connected with an organization, as evidenced by the development of repeat
purchasing behaviors. Furthermore, it is a pattern of behaviour that causes customers to
remain committed to a specific product or service provider despite changing market
conditions (Thakur, 2016). Thus, if SMEs implement effective market orientations to build
customer loyalty, it is clear that customer loyalty can be a reliable antecedent of high
performance among SMEs (Martey, 2014). To underscore the critical role of marketing
strategies in fostering customer loyalty, empirical findings from Alrubaiee and Al-Nazer
(2010) and Eisingerich and Bell (2006) indicate that organizations should invest in developing
effective strategies that create customer loyalty by developing a long-term relationship as a
critical success factor for surviving in mature markets (Alrubaiee and Al-Nazer, 2010).
Furthermore, according to Lubis et al. (2020) and Sayani (2015), if organizations
strengthen their customer relationships, they will ultimately increase customer loyalty,
resulting in organizations’ achieving higher performance than competitors. Based on these
facts, it is reasonable to conclude that a thorough understanding of customers’ needs and
desires and the development of an effective marketing strategy are critical factors for
organizations (Aburayya et al., 2020). This is supported by Donavan et al. (2004) and Hennig-
Thurau (2004) who posted that customer-oriented organizations outperform those that are
not. Therefore, customer orientation is one of the most well-documented marketing strategies,
and it is associated with both customer loyalty and organizational performance (Aburayya
et al., 2020; Gazzoli et al., 2013). Previous studies described the impact of customer orientation
in two ways (Riva et al., 2019). Customer orientation as the value-based strategy Wang and
Feng (2012) and customer orientation as the action-based strategy (He et al., 2011).
It is a value-based approach since it seeks to meet the wants and desires of consumers. To
do so, organizations must be well-versed in customer-based knowledge to deliver the
promised service value that will foster confidence and trust among customers and, as a result,
increase customer loyalty and attain business performance. There are several interactive
TECHS ways to explain customer knowledge. The first is knowledge for customers, which is
2,1 concerned with providing knowledge to customers to meet their needs, and the second is
organizations’ knowledge about customers, which is concerned with providing knowledge to
customers on the premises that if organizations are aware of their customers’ behaviours,
they will be in a better position to provide services that will meet their needs and wants, and
so on. Additionally, knowledge from consumers highlights the concept that knowledgeable
customers can contribute information that can assist organizations in improving their
46 customer-oriented services. This is primarily obtained through interactions between
customers and organizations (Khodakarami and Chan, 2014; Lubis et al., 2020).
An analogous approach is an action-based strategy founded on the notion that
organizations’ decisions must be oriented toward strategies that meet their customers’
expectations. That is to say, all marketing efforts must be oriented toward efficiently and
precisely responding to the issues that consumers are experiencing, as well as providing
appropriate feedback to the customers. In a comparable situation, the expectation-
confirmation theory suggests that fulfilling service expectations is critical in developing a
strong, loyal relationship between a consumer and an organization (Oliver, 1980). Customer
satisfaction and customer loyalty will be established if the organization considers its values
and implements the necessary actions to provide services that exceed customers’
expectations.
Apart from recognizing that traditional customer orientation dimensions are critical for
building customer loyalty, modern business environments are evolving into digital
ecosystems in which the interdependence of organizations is increasingly influenced by
technological connectivity. Thus, incorporating new technology orientations into business
models will increase customer value creation for products and the organization, particularly
through the adoption of new opportunities and innovation (Kopalle et al., 2020). Furthermore,
according to Jeong et al. (2006), the current rapid change in new technologies has increased
competition. Therefore, increasing customer loyalty and improving performance in the
marketplace are two goals organizations attempt to achieve through customer-related
technologies. Previous empirical findings have shown that customer-oriented technologies
improve business performance by improving customer behaviours such as customer loyalty
(Woo et al., 2021). This means that if the organization invests in technologies that benefit
customers, the likelihood of creating customer loyalty is very high.
Besides that, an organization that uses advanced technology has a better chance of
providing new value to its customers, such as perceived ease of use and product accessibility
(Parviainen et al., 2017; Sattari et al., 2020; Woo et al., 2021). This demonstrates that
simplifying service offerings, particularly when technology is involved, can increase
customer loyalty. It also shows that technologically oriented organizations are committed to
investing in technological resources that improve strategic decision-making. This allows
organizations to investigate new opportunities in competitive environments (Chaudhary and
Batra, 2018).
Additionally, Ali et al. (2016) established a link between technology orientation and
customer satisfaction as drivers of customer loyalty, as well as between technology
orientation and competitive advantage, by stating that technology-oriented organizations
can assist organizations in not only offering new products that meet customer needs, but also
in achieving a competitive advantage over their competitors in terms of technology
leadership and product differentiation. Despite a minimal use of technology by SMEs in
developing countries, currently the rate of technology adoption among them is increasing.
According to Salavou (2005), technology orientation enables SMEs to innovate by
designing products with some novel ideas and developing new products that are unique at
their competitive level. Additionally, technology orientation for SMEs includes the use of
environmentally friendly packaging materials, connecting with customers via social media,
developing new features during product development, and enriching their content to The mediating
differentiate themselves from competitors. This means that the distinction between large and effect of
small businesses is in the breadth and depth of technology orientation demonstrated through
product reprocessing, reengineering, rebranding, and repackaging. Schumpeter (1934) in the
customer
theory of innovation suggested that businesses can innovate by introducing new products or loyalty
significantly improving existing products. Businesses can also innovate by introducing new
methods of processing and expanding into new markets. Additionally, they can focus on
developing new relationships with suppliers and distributors to establish new competitive 47
businesses. While different companies have different approaches to technology acquisition, it
is one way for businesses to experience growth (Mallinguh et al., 2020).
Moreover, Maldonado-Guzm
an et al. (2019) noted that production, marketing, and
management innovations can all have a positive impact on the performance of small
businesses. This means that, regardless of the size and scale of a company’s operations, it
must cultivate a technology-oriented culture to be more adaptable to environmental changes
and, as a result, be in a better position to compete (Aminu and Shariff, 2014). This is supported
by Gao et al. (2007) who posted that, a number of studies on firm performance have
demonstrated that a technology-oriented approach helps firms achieve a competitive edge.
Given that the body of literature agrees that businesses’ technological orientations are critical
for customer loyalty, it is possible that small enterprises’ adopted technological orientations
and capabilities can also be used to create a competitive advantage (de Massis et al., 2012).
To this end, this study has several contributions. In the first place, it contributes from both
a theoretical and practical standpoint. Concerning theoretical contributions, this study is
intended to develop a model that strengthens the theoretical relationship between customer
and technology orientations and customer loyalty as proper antecedents of an SME’s
business performance. In particular, the importance of taking customer loyalty into account
as a mediating variable in the relationship between customer and technology orientations
and business performance has been highlighted. Policymakers and business owners will be
able to see this study from a practical point of view, and they will be able to see that when
customer and technology orientations are considered, businesses do better.

Theoretical review
Four major constructs govern this study. These are customer orientations, technology
orientations, customer loyalty, and SMEs’ business performance. Generally, there is no single
theory that combines all these constructs. Thus, this study has used three different theories to
explain all of these constructs’ connections. The main theory used is the resource-based
theory. This theory contends that an organization with strategic resources has a golden
opportunity to create a competitive advantage over competitors (Barney, 1991).
The theory stresses that strategic resources can develop organizational capabilities,
resulting in superior business performance over time. These resources can either be tangible
strategic assets such as properties, physical assets, cash, and equipment, or strategic
intangible resources such as knowledge, skills, and organizational culture. However, in recent
years, the intangibility of resources has become more important because people think that
having tangible resources alone is not enough.
These tangible strategic assets require intangible assets such as capabilities to be
exploited successfully for long-term performance. For example, customer orientations are the
most critical strategic intangible resources for an SME’s success. This is because it is
considered that understanding consumer needs and desires is a critical step toward avoiding
customer switching intentions and enhancing customer retention intentions. On the other
hand, given the new changes in the market brought about by technology innovation, a
TECHS technology-oriented approach can assist SMEs in developing a new set of creative goods and
2,1 processes for business performance (Al-Ansari et al., 2013).
However, the resource-based theory’s strategies do not adequately address customer-
related issues such as loyalty. As a result, it is reasonable to examine how intangible
resources such as customer and technology orientations might well be managed to foster
customer loyalty. Customer satisfaction, a significant predictor of customer loyalty, can be
explained using the expectation-confirmation theory. The theory is frequently used to
48 explain customers’ post–purchase satisfaction due to perceived performance in relation to
customer expectations for a product or service (Oliver, 1977, 1980). Customers are satisfied
when perceived performance meets expectations and dissatisfied when perceived
performance falls short of expectations. This indicates that if an organization improves
service delivery by taking customer demands into account through technology and customer
orientation, there is a high probability that customers will acquire a strong affinity and
loyalty for the organization’s product. This is supported by the reciprocity theory, which
explains how human behaviour and actions affect other people (Aziidah Zulkifli and Faizun
Mohamad Yazid, 2020; Shamsudin and Razali, 2015). The notion is mostly explicated by two
types of reciprocity: emotional reciprocity and material reciprocity. Emotional reciprocity
describes the feelings that people express gratitude for when they have pleasant feelings
about a particular behavior. This study theorizes that when customers have favourable
attitudes toward SME’s technology and customer orientations, they will create emotional
sentiments referred to as customer loyalty.
Also, some customers connect these orientations with financial and material things. Thus,
when SMEs incorporate material considerations such as reimbursements, discounts, or offers
into their orientations, the customer is induced to believe that their requirements are being
met, and so develops an emotional bond with the SMEs, which is described as customer
loyalty. This implies that consumer loyalty depends on effective marketing methods,
including technology and customer orientation. Proper development of these strategies can
result in trust, profound emotions, and a strong and long-lasting affection between customers
and SMEs, all contributing to loyalty and performance (Aziidah Zulkifli and Faizun
Mohamad Yazid, 2020).

Literature review and hypothesis development

Business performance and sustainability
According to Hult (2011) and Lee et al. (2021), a key strategic resource associated with SME
competitive advantage and superior SME performance is considered to be sustainability. A
triple bottom line concept, which considers social, economic, and environmental
sustainability as important aspects of understanding and managing sustainability, has
been applied to a large number of past sustainability studies in this regard. However,
previous studies have demonstrated that when sustainability strategies are combined, the
results are inconclusive (Lee et al., 2021). This means that more research should be done to
separate sustainability approaches in order to get better evidence of how many factors affect
sustainability in the long run.
Apart from that, the shift away from traditional business strategies toward sustainability-
based strategies has highlighted the importance of business management placing a greater
emphasis on several dimensions of social, economic, and environmental sustainability
practices in SMEs (Frempong et al., 2021; Karkoulian et al., 2016; Maignan et al., 2002). The
concept is that developing environmentally friendly products is a critical step toward cost
reduction, environmental conservation, and profit growth for a business. One of the
challenges facing SMEs, particularly in developing countries, is their lack of customer
orientation, which means they do not produce products that are tailored to the customer’s
needs. They are frequently only concerned with short-term profits and do not consider long- The mediating
term customer needs and expectations, which can be balanced through effective management effect of
and the application of appropriate improvements in innovation (Stanciu et al., 2014).
Customer requirements must be taken into consideration in order to ensure the long-term
customer
viability of SMEs in connection with the implementation of customer loyalty strategies, such loyalty
as those based on customer and technology orientations. SMEs that are concerned with
sustainability are almost always technologically oriented. This enables them to put more
emphasis on the use of technology in every step of the production process, thereby reducing 49
environmental problems while simultaneously increasing the performance of the business.
Technology is always helping businesses come up with ways to be more environmentally
friendly, like designing environmentally friendly packaging and making products that can be
recycled.

Customer orientations and customer loyalty

Customer loyalty confers numerous benefits for businesses. Firstly, because loyal customers
make repeat purchases more frequently than new customers, customer loyalty can be
connected with business performance. Second, customer loyalty implies that retaining
existing customers is less expensive than acquiring new ones, making it simple and easy for
an organization to develop efficient marketing plans. As a result, it is undoubtedly true that
creating customer loyalty is the most critical customer behavioral outcome for which each
organization strives. However, previous research has raised an important question about
how organizations can foster customer loyalty.
Numerous previous studies have emphasized the importance of providing outstanding
service quality to foster an emotional bond with customers as the most critical factor in
achieving customer loyalty (El-Adly, 2019; Kesari and Atulkar, 2016). Customer orientations,
for example, can provide the best way of creating customer loyalty. Customer orientation has
been linked to functional and relational customer orientation as the most successful means of
generating customer loyalty. Functional customer orientation is based on task-related
behaviors and is meant to help customers make good buying decisions. Relational customer
orientation, on the other hand, is meant to help build close personal relationships with
customers (Donavan et al., 2004). Similarly, Mohammad et al. (2013) noted that customer-
oriented organizations are in a position to know everything about their customers, whether as
a group or as individuals. Hence, they can provide the best methods for prioritizing customer
demands by aligning organizational goals with those of the consumers. A study by
Aburayya et al. (2020) highlighted a positive association between customer orientation and
customer loyalty, indicating that organizations that understand and correctly manage
customer information in their best interests are well-positioned to foster customer loyalty.
Apart from that, customer orientation is related to customer loyalty because establishing a
favorable attitude toward services encourages customers to prefer the particular service in
the future and develop a strong and deep commitment to consistently repurchase a product
(Jarideh, 2016). Customer orientation is primarily concerned with understanding customers’
demands and needs for organizations to deliver higher value to those customers
continuously. It can be characterized as a system of beliefs that prioritizes customers’
interests over all other considerations to build a prosperous organization over the long term.
Therefore, it can be hypothesized that
H1. Customer orientations significantly influence customer loyalty

Technology orientations and customer loyalty

Technology orientations indicate an organization’s commitment to research and
development, acquiring and applying the latest technologies to meet customers’ needs.
TECHS Organizations that invest in technology orientation have a greater chance of developing new
2,1 products and processes to meet market demand (Lei et al., 2019). This means that
organizations cannot continuously satisfy their customers’ needs unless they properly
integrate technological knowledge into new product development (Gotteland et al., 2020). In
addition, technology orientation has been thought of as a managerial principle because it
allows an organization to use technology in all of its operations and procedures when it comes
to product design and marketing, and it also helps the company stay alive in a competitive
50 business environment.
Technology-orientated organizations are proactive in acquiring and using new
sophisticated technologies in product development (Kasim and Altinay, 2016). Also, Kasim
and Altinay (2016) and Reinartz et al. (2005) noted that innovations driven by technology
orientations have the potential to create appropriate markets, shape consumer preferences,
and switch consumer behaviors from negative to positive emotions, thereby increasing
customer loyalty. As a result, customers who are highly committed due to their satisfaction
with innovations may be willing to invest time, money, effort, and other resources in their
preferred product (Montgomery et al., 2018). These customers can increase the likelihood of
developing an affinity for specific products. Apart from that Masa’deh et al. (2018) and Tsou
et al. (2014) suggested that technology orientation is associated with the acquisition and
integration of new technologies into product development processes, fostering an openness to
new ideas and accelerating the adoption of new technologies. On the other hand, technology
orientation is regarded as the foundation for technological competency because it is
associated with coordinating organizational systems and resources that can assist the
organization in meeting customer needs (Obeidat and Maqableh, 2015).
It is widely accepted that a technology orientation motivates loyal customers to
strengthen their marketing relationship with an organization based on the values created by
technology. Previous research has established that technologically oriented organizations
can manifest themselves through proactive technological strategies that aid in the fulfilment
of customer needs by developing superior products to those developed by potential
competitors (Gotteland et al., 2020; Srinivasan et al., 2002). In general, the effectiveness of
technology orientation is based on an organization’s desire to create products that meet the
needs and requirements of its customers. As previously stated, customer loyalty is based on
the fulfilment of customer needs and value; consequently, a committed organization will
adopt modern technologies that aid in producing products that meet the customers’ desires.
This means that embracing technology enables organizations to introduce new services and
products that increase customer satisfaction (Azaj et al., 2020). As a result, it can be
hypothesized that
H2. Technology orientations significantly influence customer loyalty

Customer loyalty and business performance

Customer loyalty has been defined differently in various studies. For instance, in a study by
Dam and Dam (2021), customer loyalty was defined as an individual’s behaviour over time in
relation to a product. According to Wantara and Tambrin (2019), customer loyalty refers to
the customer’s commitment to support or purchase a product regardless of the prevailing
circumstances that force customers to switch. Kim et al. (2004) also connected customer
loyalty to customer attitudes toward repeat purchasing behavior in such a way that it is
related to the business’s long-term survival. This implies that it is hard for loyal customers to
switch products easily. This is emphasized by Thakur (2016), who said that customer loyalty
is shown by the customer’s desire to buy the same thing again if the value of the product is
higher than the value of other products. A study by Yap et al. (2012) considered customer
loyalty a critical factor in a business’s success.
 Customer loyalty is defined in these definitions as a “lifetime” relationship between The mediating
customers and businesses. This means that by cultivating a loyal customer base, an effect of
organization ensures long-term success, as loyal customers will continue to purchase the
organization’s products. However, it is widely believed that retaining existing customers
customer
through the development of customer loyalty is the most viable marketing strategy for loyalty
performance (Bahri-Ammari and Bilgihan, 2019). According to Larsson and Brostr€om (2020),
ability of an enterprise to retain customers and increase customer loyalty has a greater impact
on the enterprise’s profitability. This is supported by Ogbechi et al. (2018) who supported that 51
high rates of retaining customers increase profits because most of the customer retention
strategies result in customer loyalty. Also, a study by Ahmad et al. (2021) noted that
promoting consumer loyalty improves an organization’s chances of achieving a competitive
edge and profitability. This is because customer loyalty is related to customer retention.
Acquiring new customers is considered a more expensive endeavor than retaining existing
ones. Additionally, a study by Amoako et al. (2012) noted that there is a significant distinction
between retaining existing customers and acquiring new ones. This is because the cost of
acquiring new customers is typically five to twenty-five times greater than the cost of
retaining existing ones.
Due to the fact that business performance is directly related to cost reduction, businesses
that reduce these costs stand a good chance of improving their performance. Furthermore, as
stated previously in the definitions, customer loyalty is linked to repeat purchasing. As a
result, SMEs can improve their performance by implementing effective marketing strategies
that foster customer loyalty. Also, according to Rauyruen and Miller (2007), attitudinal and
behavioral loyalty must be demonstrated. This is because, while attitudinal loyalty leads to
an emotional connection to the products, behavioral loyalty leads to a desire to buy the
products again because of customer-business interactions. Apart from that, Han and Hyun
(2018) underscore that customer loyalty enables an organization to cut promotion and
marketing costs while continuing to benefit from the profit streams generated by the
customers. As a result, it is plausible to conclude that organizations that invest in customer
loyalty through marketing activities have a greater likelihood of building a durable
competitive advantage (Wantara and Tambrin, 2019). Therefore, it can be hypothesized that
H3. Customer loyalty significantly influences business performance

Mediating effect of customer loyalty

The first and second hypotheses (H1 and H2) suggest that customer and technology
orientations significantly influence customer loyalty. Also, the third hypothesis, H3, suggests
that customer loyalty significantly influences business performance. This means customer
loyalty can mediate the relationship between customer orientation and business performance
(customer orientation→ customer loyalty→ business performance) and the relationship
between technology orientation and business performance (technology orientation→
customer loyalty→ business performance). Therefore, it can be hypothesized that
H4. Customer loyalty mediates the relationship between customer orientation and
business performance
H5. Customer loyalty mediates the relationship between technology orientation and
business performance

Methodology
This study was done in Dodoma, Tanzania. This research area was selected because it has
a relatively high concentration of small businesses (Mashenene and Kumburu, 2020).
TECHS Owner-managers of cosmetics businesses, woodworking, food and beverages, office supplies,
2,1 and cleaning products were selected through purposive sampling during the actual survey
done between December 2021 and January 2022. This time was selected because it defines the
end and beginning of the year in which most businesses realize profits as well as establish
their business plans. Nevertheless, the population remained unknown due to the diverse
nature of small businesses. Thus, only 408 owner-managers of businesses were initially
invited to fill out the structured questionnaire. Nevertheless, only 392 were retrieved. After
52 excluding the incomplete responses, the analysis included only 383 owner-managers who
responded with clean responses. This accounted for a 93.87% response rate. The Swahili
version’s structured questionnaire was distributed via Google Form via a shared link that
allowed respondents to access the survey.
According to Djenno et al. (2015), the Google Form is an effective tool for collecting data.
Since the selected businesses promote their businesses through digital platforms, it was
simple for the researcher to use the Internet to collect data. Additionally, utilizing Google
Forms provided a room for achieving a high response rate since it is convenient to evaluate
personal feelings and subjective concepts. However, as noted earlier, before the submission of
Google Forms to respondents, the purposive sampling was carried out during the actual
survey, for which the inclusion criteria were potential usage of the Internet. Finally, structural
equation modelling (SEM) was used to analyze the multivariate relationships for latent
variables. SEM is the most effective tool for estimating latent variables (Hair et al., 2013).
Thus, data can be efficiently analyzed using this tool by simultaneously considering causal
relationships across multiple latent variables.

Common bias method

The one-factor test developed by Harman was utilized in this study to determine whether the
data used was influenced by common method bias. The results showed that approximately
34.25% of the variance was explained by a single factor. This demonstrates that the common
method bias was not a subject to be concerned with (Podsakoff et al., 2003).

Measurement scales, reliability and validity

The multi-items used in this investigation were derived from prior research. To ensure that they
were applicable to the Tanzanian context and were consistent with the research approach and
level of technology usage, they were modified slightly. To measure customer orientation, the
study adopted and modified items from Cross et al. (2007) and Narver and Slater (1990). Apart
from that, this study adopted and modified measurement scales developed by Jeong et al. (2006)
to assess technology orientation. In addition, customer loyalty measurement scales from Le
(2022) and Servera-Franc
es and Piqueras-Tom
as (2019) were adopted and modified. To
measure business performance, this study adopted and modified items from Fernandes
Sampaio et al. (2020). Finally, business performance was measured over the past three years to
obtain an accurate picture of business performance (Table 1). All of these items were evaluated
using a five-point Likert scale, which ranged from “strongly disagree” to “strongly agree.”

Research findings
Goodness of fit for the initial model and final model
In order for the model to pass the CFA, reliability, and validity analyses, various tests have to be
taken into consideration. First, discriminant validity is achieved when maximum shared
variance (MSV) is less than the average variance explained (AVE), while the square root of AVE
should be greater than the values of the inter-construct correlations (Fornell and Larcker, 1981).
Secondly, the composite reliability (CR) and AVE must be ≥0.70 and ≥0.50 respectively.
 Cronbach
Constructs/Items Loadings AVE MSV alpha CR

Customer orientation (CUO)

• My company strives to develop customer commitment (cuo1) 0.903 0.651 0.436 0.909 0.917
• My company strives to create customer value (cuo2) 0.783
• My company strives to understand customer needs (cuo3) 0.712
• My company strives to meet customer satisfaction objectives (cuo4) 0.767
• My company strives to provide service after the sale (cuo5) 0.943
• My company strives to measure customer satisfaction (cuo6) 0.701
Technology orientation (TEO)
• Our SME emphasizes technological superiority to differentiate our new products from other small business (tec1) 0.825 0.619 0.490 0.864 0.866
• Our SME builds upon proven technological breakthroughs made by other small business (tec2) 0.791
• Our SME strives to achieve technological leadership in the market to compete with other small business (tec3) 0.801
• Our business aggressively adopts new technologies in their early phases of introduction (tec4) 0.726
Customer loyalty (CUL)
• Customers repeatedly purchase with increasing frequency (cul1) 0.819 0.658 0.490 0.896 0.905
• Customers recommend our products and services to their acquaintances and relatives (cul2) 0.942
• Customers talk positively about our company, our products and our services (cul3) 0.806
• Customers continue to support our new product even if a competitor has similar products (cul4) 0.736
• Customers are always interacting and sharing their valuable contributions with us, behaving as members of our company (cul5) 0.734
Business performance (BP)
• Over the last 3 years, our net income has been increasing (bp1) 0.887 0.759 0.372 0.935 0.940
• Over the last 3 years, our net income has outstood our competitors (bp2) 0.794
• Over the last 3 years, our sales growth has been increasing (bp3) 0.736
• Over the last 3 years, our sales growth has outstood our competitors (bp4) 0.971
• Our occupancy rate has been outstanding (bp5) 0.944
customer
loyalty

53
effect of
The mediating

Measurement scale,
reliability and validity
Table 1.

for the final model

TECHS As summarized in Table 2, the initial model did not pass the test since the square root of the
2,1 AVE for TEO was less than the absolute value of the correlations with other factors. Also, the
value of AVE for TEO was less than the MSV. Hence, the discriminant validity concern was
observed. Further, the AVE for TEO was less than 0.50, so the convergent validity concern
was observed. On the other hand, the root mean square error of approximation (RMSEA)
should be 0 ≤ RMSEA ≤ 0.1 and x2/df should be 1 ≤ x2/df ≤ 3 as well as GFI, IFI, CFI and
TLI should be ≥ 0.90. As indicated in Table 3, these tests were not achieved in the initial model.
54 Additionally, based on the CFA for the initial model (Figure 1), it reveals that factor loadings for
cuo7, teo5 and teo6 were less than the recommended values of >0.5. Therefore, they were
eliminated from the model. After eliminating 3 items, all the retained items were further
subjected to (revised) final CFA and the results revealed that, all the conditions of goodness of
fit were achieved and hence accepted for path analysis as indicated in Table 3, Table 2 and
Figure 2. In addition, Table 1 shows that the Cronbach’s alpha values were above 0.7,
demonstrating that there is an internal reliability (Bagozzi and Yi, 1988).
Hypothesis testing
After the revised CFA was conducted, all items loaded above 0.5. This means all retained
items were used in path analysis. Figure 3 shows all items involved in the proposed path
model, while Figure 4 shows the final path model after eliminating cuo7, teo5, and teo6. The
study involves five relationships. The first relationship is explained by CUO → CUL; the
second is TEO → CUL, the third is CUL → BP, the fourth is CUO → CUL → BP, and the fifth is
TEO → CUL → BP. The first three relationships were analyzed using SEM. The first
relationship’s findings revealed a positive and significant relationship between CUO and CUL
(ß 5 0.423, t > 1.96, p < 0.001), which supports H1. When CUO is improved by 1 unit, CUL will
increase by 42.3%. Although all six items of CUO were found to contribute to the CUL, cuo5
and cuo6 were found to have great impact with 0.77 and 0.70 factor loading, respectively.

Initial CFA model CR AVE MSV CUL CUO TEO BP

CUL 0.870 0.574 0.490 0.758

CUO 0.873 0.505 0.436 0.530 0.711
TEO 0.798 0.416 0.490 0.700 0.660 0.645
BP 0.893 0.626 0.372 0.610 0.350 0.460 0.791

Final CFA model CR AVE MSV CUL CUO TEO BP

CUL 0.905 0.658 0.490 0.811

Table 2. CUO 0.917 0.651 0.436 0.530 0.807
Discriminant validity TEO 0.866 0.619 0.490 0.700 0.660 0.787
for initial and BP 0.940 0.759 0.372 0.610 0.350 0.460 0.871
final model Note(s): Italics values denote square roots of AVE

Goodness of fit index Cutoff value Initial model results Final model results Conclusion

RMSEA 0 ≤ RMSEA ≤ 0.1 1.092 0.039 Fit

x2/df 1 ≤ x2/df ≤ 3 3.193 2.099 Fit
GFI ≥0.90 0.856 0.975 Fit
Table 3. IFI ≥0.90 0.798 0.972 Fit
Goodness of fit for CFI ≥0.90 0.833 0.961 Fit
initial and final model TLI ≥0.90 0.892 0.957 Fit
The mediating
effect of
customer
loyalty

55

Figure 1.
CFA for initial model
TECHS
2,1

56

Figure 2.
CFA for the final model

Also, the findings show that TEO positively and significantly influences CUL (ß 5 0.331,
t > 1.96, p 5 0.008), which supports H2. Thus, there will be a 33.1% increase in CUL for every
unit increase in TEO. In comparison, items teo1 (0.72) and teo2 (0.71) were found to have a
large impact on CUL as compared to the other two items. Furthermore, the results suggested
The mediating
effect of
customer
loyalty

57

Figure 3.
Path analysis for the
proposed model

Figure 4.
Path analysis for the
final model
TECHS that CUL has a positive and significant relationship with BP (ß 5 0.284, t > 1.96, p 5 0.017),
2,1 which supports H3. Therefore, increasing CUL by 1 unit increases BP by 28.4%. In the path
diagram (Figure 4), it is indicated that cul1 (0.79) and cul3 (0.80) are the main items of CUL
contributing to BP, although all items were found to load above 0.5. All findings are indicated
in Table 4. Apart from that, the fourth and fifth relationships were analyzed using PROCESS
Macro mediation.
58
Mediation effect of customer loyalty (CUL)
This study used the Preacher and Hayes (2004) procedures to test the mediating effect of CUL
on the relationship between CUO, TEO, and BP. The PROCESS Macro output revealed that
CUL has BootLLCI 5 0.0415 and BootULCI 5 0.0637 with CUO and BootLLCI 5 0.0574 and
BootULCI 5 0.0983 with TEO indicating that no zero values are observed within the 95% CI.
This confirms that CUL mediates the relationship. Hence, it supports H4 and H5 (Table 5).

Discussion
The primary objective of this study was to determine whether customer loyalty acts as a
mediator in the relationship between customer orientation, technology orientation, and
business performance. The motivation for this objective stems from the fact that most SMEs
struggle to perform well due to low customer loyalty. Furthermore, at the moment, SMEs face
a high customer switching rate, partly influenced by the poor quality of their products. As a
result, this study theorizes that small businesses could do better if they had a consistent set of
customer and technology orientations. The first hypothesis was set to analyze the influence of
customer orientation on customer loyalty. Customers who are customer-oriented are more
likely to be loyal to their company.
Out of 6 items included in the final model, cuo5 “My company strives to provide service
after the sale” and cuo6 “My company strives to measure customer satisfaction” were found
to have more impact on customer loyalty. This means that small businesses understand the
importance of customer satisfaction and invest more in providing better customer service
that is in line with the needs of the customers. This further explains that SMEs have proper
practices to develop customer commitment. Since customer commitment is mostly connected
with customer loyalty, SMEs striving to create customer value have higher chances of
converting indifferent customers into loyal ones.

Standardized Unstandardized
Path models estimates estimates t-statistics p-value Decisions

H1 CUO → CUL 0.423 0.301 7.452 *** Accepted

Table 4. H2 TEO → CUL 0.331 0.263 5.034 0.008 Accepted
Path analysis of the H3 CUL → BP 0.284 0.213 3.236 0.017 Accepted
final model Note(s): *** p-value < 0.001

Mediation effect Coeff BootLLCI BootULCI

Table 5.
Process Mediation for CUO→ CUL → BP 0.2849 0.0415 0.0637
customer loyalty TEO → CUL → BP 0.3779 0.0574 0.0983
 Also, SMEs have good plans for satisfying customer needs through producing products The mediating
and offering services that match the needs of their customers. These findings are in line with effect of
Mohammad et al. (2013), who noted that customer-oriented organizations are in a position to
know everything about their customers. Hence, they can engage in the best methods which
customer
prioritize customer demands by aligning organizational goals with those of the consumers. loyalty
The second hypothesis involved the positive and significant relationship between
technology orientation and customer loyalty. These results suggest that SMEs that
emphasize technological superiority to differentiate new products have higher chances of 59
creating customer loyalty since loyal customers will opt to continue purchasing products
from the same SMEs regardless of the marketing forces of competitors. However, teo1 “Our
SME emphasizes technological superiority to differentiate our new products from other small
businesses” and teo2 “Our SME builds upon proven technological breakthroughs made by
other small businesses” were found to have more impact on customer loyalty. This is due to
the fact that small businesses apply simple technologies, which have helped them to increase
customer-organization relationships and hence create loyalty among customers.
Generally, the findings suggest that adopting new technology can assist small businesses
in leveraging their limited capital more intelligently and effectively. This is because, whether
at a small scale or large, technology adoption can help increase efficiency and versatility,
particularly in the production of competitive products, as well as market connections and
employee performance. In other words, digitalization of all business activities can assist small
businesses in reducing costs, allowing them to achieve profits more quickly than those that
do not use digital technologies. For instance, the use of social media platforms such as
Twitter, WhatsApp, Instagram, YouTube, and Facebook has been demonstrated to be a
reliable technology that enables small businesses to promote their businesses, products, and
communicate quickly and directly with their customers and employees, thereby increasing
customer bases and enabling small businesses to achieve competitive advantages over
competitors.
In addition, simple technologies brought about by globalization, such as the use of mobile
phones in financial transactions, have increased business practices’ convenience, which is
also associated with high performance. Almost every business today has jumped into money
transactions in order to streamline the process. On the other hand, there has been a rise in the
quality of products, their packaging, marketing, and distribution. Each small business is
trying to use technology to speak directly to the hearts of their customers.
Apart from that, SMEs that strive to achieve technological leadership and aggressively
look for new ways to adopt new technologies have high chances of meeting customers’
desires. Any customer who talks positively about the products or SME services has had a
positive and favourable experience with service delivery. These customers can continue to
support the product even if competitors have similar products or services.
The importance of technology orientation has also been strongly emphasized by
Gotteland et al. (2020), who noted that organizations could not continuously satisfy their
customers’ needs unless they properly integrated technological knowledge into new product
development. The third hypothesis looked at the influence of customer loyalty on business
performance. The findings indicated a positive and significant relationship between
customer loyalty and business performance. In this study, items cul1 “Customers repeatedly
purchase with increasing frequency” and cul3 “Customers talk positively about our company,
our products, and our services” as indicators of customer loyalty were found to have a large
impact on business performance. The most plausible explanation is that most small
businesses spend a lot of money on promotions and developing positive word of mouth
among customers. This suggests that loyal customers tend to increase the frequency of
repeat purchases, which directly relates to profit generation among SMEs. Furthermore, a
loyal customer is committed to the product of SMEs. This indicates that loyal customers can
TECHS purchase products regardless of the prevailing circumstances that force them to switch. By so
2,1 doing, loyal customers can increase the business performance of SMEs. This is in line with
(Wantara and Tambrin, 2019).
Similarly, the findings concur with Thakur (2016) who noted that loyalty among customers
is demonstrated by the customer’s intention to purchase the same product again if the product’s
value is greater than the value of alternative products. Therefore, increasing customer loyalty
means increasing a business’s success. Generally, the findings further show that the connection
60 between customer loyalty and business performance is built on the benefits provided by the
loyal customer; these benefits include creating close bonds between customers and SMEs and
increasing sales. This is in line with (Ricadonna et al., 2021).
The findings of the fourth hypothesis show that customer loyalty mediates the
relationship between customer orientation and business performance. This means that
improving customer orientation through creating activities that reflect customer needs and
desires can enhance the development of customer loyalty, thus increasing the possibility of
enhancing business performance. Similarly, the fifth hypothesis suggests customer loyalty
mediates the relationship between technology orientation and business performance since
aligning an SME’s activities with technology increases the chances of developing customer
loyalty, further increasing business performance. The takeaway from hypotheses four and
five is that customer and technology orientations require customer loyalty to become
effective strategies for business performance. Hence, SMEs should see customer and
technology orientations as means of developing customer loyalty while considering customer
loyalty as the antecedent of business performance.

Conclusions
The sustainability of business performance is important for the development of any country.
However, most of the businesses in developing countries are not sustainable. Thus,
increasing scientific knowledge about how businesses can progress by focusing on customer-
related strategies is an important step toward improving business performance. Thus, this
study involved customer and technology orientations as the main determinants of customer
loyalty and business performance. The main conclusion is that customer loyalty mediates the
relationship between customer orientation, technology orientation, and business
performance. Hence, if businesses wish to increase their performance, they have to speak
to the hearts of the customers by focusing all their efforts toward developing customer
loyalty. This means that customer and technology orientations should be made to favor
customer loyalty, which will improve business performance.

Theoretical contributions
This study used resource-based theory, expectation-confirmation theory, and reciprocity
theory. First, it explains how three theories can be used to explain different constructs and
provide proper connections. Secondly, it expands the body of knowledge on how customer
loyalty can be a key determinant of business performance when customer and technology
orientation are combined. Finally, the mediation role of customer loyalty indicates that
creating loyal customers is the first step to having a desirable performance outcome among
SMEs. Because previous studies have agreed that customer satisfaction is no longer a good
way to get a good job, making customers happy could be the best way for small businesses to
keep their jobs.

Practical implications
This study has practical implications that arise from the findings of the study. From customer
orientation and customer loyalty, owner-managers must struggle to create proper customer
values and understand customer needs. This is significant because, in today’s competitive The mediating
business environments, businesses are transitioning to a customer-oriented approach that effect of
focuses on fulfilling customer needs through product design and development as well as
marketing strategy development. Generally, the takeaway is that owner-managers must
customer
understand that businesses that embrace this idea must completely change all operations to loyalty
match customer needs and requirements. Based on the findings from the technology
orientations and customer loyalty, owner-managers must understand that the more they
improve their technological culture, the more they can produce high-quality products, and 61
hence the more they can speak to the hearts of customers.
Although it is true that adoption of technology is a challenging factor for small business
operators due to their level of operating capital and skills, they can still start by adopting simple
technologies and therefore advance slowly to the high technologies. Growing from a small
business to a large business is a process that requires commitments to the adoption of resources
such as technology. Apart from that, owner-managers must understand that the performance
of their business depends on the customers. Customers are everything. Fulfilling their needs
means increasing chances of repeat purchasing and reducing rates of switching to other
products. This means improving customer and technology orientation behaviors is very crucial
for business performance since both are connected with customer loyalty. Finally,
governments, policymakers, and other private organizations must recognize that large
enterprises are the results of small businesses’ development policies; thus, small businesses
must be technologically empowered as they grow in size to compete with large enterprises.

Limitations and areas for future studies

This study has a few limitations. First, the study used only customer and technology
orientations. Some of the orientations were not included in this study. Therefore, future
studies can use other orientations, such as entrepreneurial and competitors’ orientations, to
develop a full set of orientations for customer loyalty development. Second, the study opted to
use owner-managers as the unit of analysis. Future studies can use customers and employees
to understand the management of strategic orientations from different perspectives. Lastly,
this study used Google Forms to collect data; perhaps a face-to-face style of data collection
may increase the chances of managing information from the respondents. Also, it might be
true that the purposive sampling could be limited to those who use the Internet in their
operations. Therefore, future studies can use a face-to-face interview method so as to get a
general picture of technological adoption among small businesses. Although this study
contributes to the mediation effects of customer loyalty, future studies can look at the
moderating effects of various variables such as sex, education level, culture, and
technological absorptive capacity on the relationship between businesses orientations and
business performance.

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Corresponding author
Ismail Juma Ismail can be contacted at: ismailjismail1977@gmail.com

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