Journal of Risk and Financial Management

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18 pages, 806 KiB

Open AccessArticle

Opportunities or Threats? The Role of Entrepreneurial Risk Perception in Shaping the Entrepreneurial Motivation

by Liping Yin and Yenchun Jim Wu

J. Risk Financial Manag. 2023, 16(1), 48; https://doi.org/10.3390/jrfm16010048 - 12 Jan 2023

Cited by 5 | Viewed by 3710

Abstract

Entrepreneurial risk is an important factor that individuals must consider when starting their own business. The COVID-19 continues to rage, bringing great challenges to China’s economy and entrepreneurial activities. In this study, college students encounter greater entrepreneurial risks. There are two opposing views [...] Read more.

Entrepreneurial risk is an important factor that individuals must consider when starting their own business. The COVID-19 continues to rage, bringing great challenges to China’s economy and entrepreneurial activities. In this study, college students encounter greater entrepreneurial risks. There are two opposing views on the role of entrepreneurial risk in shaping individual entrepreneurial motivation: one view that risk is a threat, and the other view that entrepreneurial risk contains opportunity. Existing studies have discussed the issues from individual factors and environment factors, respectively, ignoring the combined effects of individual and environment factors. Person–situation transactions theory points out that individuals usually make their final behavior choices based on their comprehensive evaluation of environmental factors and themselves. Therefore, individual and environment factors should be integrated to investigate the effect of entrepreneurial risk on entrepreneurial motivation. Based on the person–situation transactions theory, this study establishes a theoretical model that entrepreneurial risk perception influences necessity and opportunity entrepreneurial motivation through entrepreneurial self-efficacy and discusses the moderating effect of entrepreneurship policy. A questionnaire survey was conducted on 595 fresh graduates from eight universities in China to obtain relevant data and the Structural Equation modelling was established to test the hypothesis. The results confirm that without the influence of external factors, college students regard entrepreneurial risk as a great threat, which not only weakens their entrepreneurial self-efficacy, but also reduces their necessity and opportunity entrepreneurial motivation. However, with the support of good entrepreneurial policies, entrepreneurial risk can be transformed into an opportunity to improve the entrepreneurs motivation driven by necessity of college students, but the impact on the opportunity motivation is not significant. This study deeply analyzes the dual characteristics of entrepreneurial risk perception in the process of shaping individual entrepreneurial motivation, expands the related research on entrepreneurial risk perception and entrepreneurial motivation, and has important implications for the government and universities to formulate entrepreneurial policies for college students. Full article

(This article belongs to the Special Issue Enterprise Risk Management)

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15 pages, 765 KiB

Open AccessArticle

Supply Chain Risk Management in Young and Mature SMEs

by Samuel Foli, Susanne Durst, Lidia Davies and Serdal Temel

J. Risk Financial Manag. 2022, 15(8), 328; https://doi.org/10.3390/jrfm15080328 - 24 Jul 2022

Cited by 11 | Viewed by 4112

Abstract

In this article, we examine how external factors such as demand, security regulation, cyber risks, and relative performance influence supply chain risk management (SCRM) in young and mature small and medium-sized enterprises (SMEs) in Turkey. For this, we utilised fuzzy set qualitative comparative [...] Read more.

In this article, we examine how external factors such as demand, security regulation, cyber risks, and relative performance influence supply chain risk management (SCRM) in young and mature small and medium-sized enterprises (SMEs) in Turkey. For this, we utilised fuzzy set qualitative comparative analysis (fsQCA) using data from 137 Turkish SMEs. Our results suggest a single significant path for explaining SCRM in young SMEs, while we found three significant paths for explaining SCRM in mature SMEs. Furthermore, the results indicate that demand risk is the only external factor for young SMEs to realise SCRM success. For mature SMEs, demand risk and/or relative performance are essential to explain SCRM performance. Based on our findings, we theoretically contribute by unravelling the pathways through which external factors influence SCRM performance. Moreover, practitioners could align their strategies towards these pathways when constructing a strategy for achieving SCRM performance. Full article

(This article belongs to the Special Issue Enterprise Risk Management)

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22 pages, 3896 KiB

Open AccessArticle

A 3-Dimensional Frame of Reference for Prevention of Risk in Supply Chain

by Han-Khanh Nguyen

J. Risk Financial Manag. 2022, 15(3), 142; https://doi.org/10.3390/jrfm15030142 - 16 Mar 2022

Cited by 1 | Viewed by 2972

Abstract

Businesses have to deal with many potential risks in the supply chain, especially during the COVID-19 pandemic. The retail market in Vietnam has great potential for long-term development with the birth and rapid development of domestic supermarkets. However, market opening policies have resulted [...] Read more.

Businesses have to deal with many potential risks in the supply chain, especially during the COVID-19 pandemic. The retail market in Vietnam has great potential for long-term development with the birth and rapid development of domestic supermarkets. However, market opening policies have resulted in fierce competition from a large number of foreign supermarkets. At the same time, customers have become more professional in their approach to shopping and carefully consider any decisions about shopping and the use of services at supermarkets. In this study, the authors use three models (i.e., the SERVQUAL model, the binary logistic model, and the Grey model) corresponding to a three-dimensional frame of reference (i.e., past, present, and future) to provide supermarket managers with a multi-dimensional view of the supermarket business situation. The results identify four factors−namely, quality of goods, personnel, safety, and facilities and equipment−that significantly impact customer satisfaction. The second frame of reference shows that factors such as age, academic level, and income affect the decision to reuse any service at the supermarket. The third frame of reference provides supermarket managers with forecast data about the supermarket business situation for 2021 to 2024. These results provide a solid foundation for supermarket managers seeking to develop strategies and take measures to adjust business activities to achieve the best business efficiency and avoid potential risks in the company’s supply chain. In addition, the results of this study are valuable references for researchers in the fields of customer service, supply chain management, and customer behavior. In particular, the factors obtained in this study will greatly strengthen the scientific value of the service sector and the model of retail supermarkets in Vietnam and other countries around the world. In fact, the business strategy of supermarkets still depends on the spread of COVID-19. Therefore, in the future, it is necessary to combine the results of this study with the experience of managers to develop the right business strategies and achieve further results and sustainable development. Full article

(This article belongs to the Special Issue Enterprise Risk Management)

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13 pages, 750 KiB

Open AccessCommunication

The History of Enterprise Risk Management at Hydro One Inc.

by John Fraser, Rob Quail and Betty Simkins

J. Risk Financial Manag. 2021, 14(8), 373; https://doi.org/10.3390/jrfm14080373 - 13 Aug 2021

Cited by 3 | Viewed by 5106

Abstract

Hydro One Inc. is widely regarded as having had one of the most successful implementations of enterprise risk management (ERM). The purpose of this article is to record the history of this successful implementation so that it will benefit other companies and organizations [...] Read more.

Hydro One Inc. is widely regarded as having had one of the most successful implementations of enterprise risk management (ERM). The purpose of this article is to record the history of this successful implementation so that it will benefit other companies and organizations who are at the beginning or in the early part of their ERM journey. In this article, we delve deeper into the dynamics at work and the steps involved in the implementation of ERM. This article is an interview by Betty Simkins with John Fraser and Rob Quail so as to record the challenges, successes, and methods used at Hydro One. This article covers the period from 1999 to when John Fraser left the ERM function in 2014 but many of the processes they implemented have continued to the date of writing (2021). This article should also be of interest to academic researchers who seek to understand why some ERM implementations succeed while other flounder or fail to achieve their objectives. Full article

(This article belongs to the Special Issue Enterprise Risk Management)

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24 pages, 334 KiB

Open AccessArticle

Risk and the Market’s Reaction to M&A Announcements

by Ye Cai and Hersh Shefrin

J. Risk Financial Manag. 2021, 14(7), 334; https://doi.org/10.3390/jrfm14070334 - 19 Jul 2021

Cited by 2 | Viewed by 3345

Abstract

We estimate how an acquiring firm’s risk changes depending on whether the market initially judges the acquisition to be neutral, strongly negative, or strongly positive for the shareholders of the acquiring firm. We found that for an average neutral acquisition, the annualized standard [...] Read more.

We estimate how an acquiring firm’s risk changes depending on whether the market initially judges the acquisition to be neutral, strongly negative, or strongly positive for the shareholders of the acquiring firm. We found that for an average neutral acquisition, the annualized standard deviation of an acquiring firm’s total return declines by 5%. In contrast, acquisitions judged negatively by the market result in a 5% increase in total risk, while acquisitions judged positively by the market feature a 30-basis-point increase in total risk. We found the median acquisition to be value creating, not value destructive. Value destruction tends to be concentrated among large firms and to be associated with extreme negative outliers. Acquiring firms with longholder CEOs are more prone to undertake acquisitions and more prone to take on risk, but are less prone to engage in value-destructive acquisitions than acquiring firms with non-longholder CEOs. In this respect, acquiring firms with non-longholder CEOs are more apt to undertake risky bad acquisitions, especially when their prior returns lie above the industry average. In addition, acquiring firms with non-longholder CEOs are less prone to take on good acquisitions that are high in risk. As a general matter, firms with longholder CEOs are less risk sensitive to changes in prior returns than firms with non-longholder CEOs. Full article

(This article belongs to the Special Issue Enterprise Risk Management)

20 pages, 1375 KiB

Open AccessArticle

Risk Management Practices and Firm Performance with a Mediating Role of Business Model Innovation. Observations from Jordan

by Munther Al-Nimer, Sinan S. Abbadi, Ahmad Al-Omush and Habib Ahmad

J. Risk Financial Manag. 2021, 14(3), 113; https://doi.org/10.3390/jrfm14030113 - 9 Mar 2021

Cited by 22 | Viewed by 8353

Abstract

This study focused on scrutinizing the influence of Enterprises Risk Management (ERM) on firm performance with a mediating role of Business Model Innovation (BMI). For the purpose, data from 228 Jordanian firms was collected and analyzed. The results indicated that the ERM practices [...] Read more.

This study focused on scrutinizing the influence of Enterprises Risk Management (ERM) on firm performance with a mediating role of Business Model Innovation (BMI). For the purpose, data from 228 Jordanian firms was collected and analyzed. The results indicated that the ERM practices have a significant influence on BMI and financial firm’s performance. The BMI significantly contributed to the financial and nonfinancial performance, whereas it displayed insignificant effects regarding environmental performance. The BMI fully mediated the relationship between ERM practices and financial performance, where a partial mediating effect was observed for the path between ERM practices and nonfinancial performance, while showed no mediating role between the ERM practices and environmental performance. Economies of countries like Jordan are hereby urged to implement the formal ERM practices and to financially educate their top management teams to apply the BMI to gain first-rate performance. This study also encourages the researchers from other countries to extend this model to their economies to unleash useful insights. Full article

(This article belongs to the Special Issue Enterprise Risk Management)

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21 pages, 286 KiB

Open AccessArticle

Firm Ownership and Enterprise Risk Management Implementation: Evidence from the Nordic Region

by Naciye Sekerci and Don Pagach

J. Risk Financial Manag. 2020, 13(9), 210; https://doi.org/10.3390/jrfm13090210 - 15 Sep 2020

Cited by 4 | Viewed by 3318

Abstract

The purpose of this paper is to investigate whether firm ownership characteristics can explain demand for Enterprise Risk Management (ERM) implementation. Specifically, we examine the relationship between the presence of large shareholders, multiple blockholders and a dual-class share structure, and ERM implementation. To [...] Read more.

The purpose of this paper is to investigate whether firm ownership characteristics can explain demand for Enterprise Risk Management (ERM) implementation. Specifically, we examine the relationship between the presence of large shareholders, multiple blockholders and a dual-class share structure, and ERM implementation. To our knowledge we provide the first evidence on the effect of multiple blockholders and dual-class share structures on the implementation of ERM. ERM best practices can be considered as governance tools, used to monitor managerial discretion in risk management, ultimately reducing the agency cost of risk management. Accordingly, we analyze the demand for ERM in certain governance (e.g., ownership) settings. We use quantitative methods in our study: survey and regressions (tobit and logit models). Ownership data is hand-collected while ERM data comes from a survey conducted in the Nordic region. We find that ERM is implemented less frequently in firms where there are multiple blockholders, and where large controlling owners hold dual-class shares. These findings indicate that there is less demand for ERM’s monitoring role in firms that are associated with high agency costs. Given the increasing use of dual-class share structures, we believe further examination of ownership characteristics and corporate risk management is warranted. Full article

(This article belongs to the Special Issue Enterprise Risk Management)

Review

Jump to: Research

22 pages, 693 KiB

Open AccessReview

Enterprise Risk Management: A Literature Review and Agenda for Future Research

by Sorin Gabriel Anton and Anca Elena Afloarei Nucu

J. Risk Financial Manag. 2020, 13(11), 281; https://doi.org/10.3390/jrfm13110281 - 14 Nov 2020

Cited by 52 | Viewed by 32407

Abstract

The Enterprise Risk Management (ERM) process has heterogeneously developed across the world, although it represents a leading paradigm, supporting organizations to identify, evaluate, and manage risks at the enterprise level. Academics have studied the process, but there is no complete picture of the [...] Read more.

The Enterprise Risk Management (ERM) process has heterogeneously developed across the world, although it represents a leading paradigm, supporting organizations to identify, evaluate, and manage risks at the enterprise level. Academics have studied the process, but there is no complete picture of the determinants and implications of such an integrated risk management process. Therefore, we present a systematic empirical literature review on ERM, based on a research protocol. The review highlights that the ERM literature can be divided into four general lines of research: the ERM adoption, the determinants of the ERM implementation, the effects of ERM adoption, and other aspects. In contrast to the richness of studies devoted to ERM engagement in small and medium-sized enterprises (SMEs), studies exploring ERM adoption in banks or insurance are relatively few. The literature review has revealed that the most frequently investigated effect of ERM is on firm performance. Little effort has been dedicated to the analysis of the effectiveness of ERM by its components and to institutional, individual, and organizational factors that affect ERM adoption. The study can serve as a starting point for scholars to explore research gaps related to ERM, while the practitioners can rely on the presented findings to identify the effects of the ERM implementation. Full article

(This article belongs to the Special Issue Enterprise Risk Management)

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