THE PERCEPTIONS OF ZIMBABWEAN SMEs ON THE RELEVANCE OF RISK MANAGEMENT IN THEIR BUSINESSES
Abstract
SMEs are faced with different types of risks while running their businesses and RM could play a vital role in dealing with these risks. Therefore, it is crucial to examine the SMEs perceptions on the relevance of risk management in the success of their businesses as it might influence SMEs owner-manager to adopt or ignore RM practice. This study was conducted to establish the perception of SMEs on the relevance of risk management in the success of their businesses. The study was conducted among SMEs who reside in two provinces of Zimbabwe namely Harare Province and Mashonaland Central province. In order to achieve the main purpose of the study, a mixed method research design was used. The target population of the study include Small to Medium Enterprises from all sectors in Zimbabwe’s ten provinces. The study’s target population was around 780 684 and the sample was 278 respondents. The study used a combination of cluster sampling and simple random sampling methods to select the sample. Data was collected using structured-questionnaire and semi-structured interviews to SMEs in Harare and Mashonaland Central provinces. The findings of the study show that the SMEs have a negative perception on the relevance of risk management in the success of their businesses. Thus, risk management is not relevant for SMEs due to their size and is viewed as more relevant to big businesses who have the resources and have much at stake. The researcher concluded that the perception on the relevance of risk management is negative in Small to Medium enterprises in Zimbabwe and recommended SMEs capacity building on risk management, transformation of SMEs business norms, review of SMEs policy framework and SMEs networking in order for them to obtain risk management skills and knowledge.References
Abeyrathna, G. M. and Kalainathan, K. 2016. Financial Risk , Financial Risk Management Practices and Performance of Sri Lankan SMEs : Special Reference to Anuradhapura District. Research Journal of Finance and Accounting. 15(7), 16-22.
Abotsi, A. K., Dake, G. Y. and Agyepong, R.A. 2014. Factors Influencing Risk Management Decision of Small and Medium Scale Enterprises in Ghana. Contemporary Economics. 8(4), 397–414.
Aon Risk Solutions. (2017). Global Risk Management Survey 2017. [Online] Available at: http://aon.ro/portals/0/2015%20Global%20Risk%20Management%20Report%20ExecutiveSummary.pdf (Accessed 10 October 2018)
Bayaga, A. and Flowerday, S. 2010. A conceptual operational risk model for SMEs: Impact on organisational information technology. [Online] Available at: https://doi.org/10.1109/ISSA.2010.5588329 (Accessed 27 January 2020).
Brustbauer, J. 2016. Enterprise risk management in SMEs: Towards a structural model. International Small Business Journal. 34(1), 70–85.
Chavali, K., and Mohanraj, M. P. 2016. Impact of Demographic Variables and Risk Tolerance on Investment Decisions : An Empirical Analysis. International Journal of Economcs and Financial Issue. 6(1),169–175.
CGMA Global Management Accountant - Global State of Enterprise Risk Oversight 2nd edition 2017. [Online]. Available at: http://erm.ncsu.edu/library/ research-report/cgmareport-on-the-global-state-of-enterprise-risk-oversight.
Chiwara, O. M. 2016. An Evaluation of the Factors Affecting Growth of Small and Medium Enterprises (SMEs) in Zimbabwe: A Case Study of SMEs in Harare. Doctoral Thesis, University of Zimbabwe.
Cienfuegos, I. 2013. Risk Management theory: the integrated perspective and its application in the public sector. Estado, Gobierno, Gestión Pública. 21, 89–126.
Cudjoe, G.A., Omusu-Ansah, W. and Poku, K. 2017. The Effect of Non-Financial Support Services on Small and Medium Enterprises (SMEs) Development in a Developing Economy. International Journal of Business, Humanities and Technology. 7(1), 20-30.
Dib, L. A., Rocha, A. and Silva, J. F. 2010. The internationalization process of Brazilian software firms and the born global phenomenon: Examining firm, network, and entrepreneur variables. Journal of International Entrepreneurship. 8(3), 233-253.
Dimitratos, P., Johnson, J. E., Plakoyiannaki, E. and Young, S. 2016. SME internationalization: How does the opportunity-based international entrepreneurial culture matter? International Business Review. 25(6), 1211-1222.
Dorresteijn, F.V., 2017. Which socio-demographic factors determine risk taking of Investors? http://theses.ubn.ru.nl/handle/123456789/4908
Duong, L. 2013. Effective Risk Management Strategies for Small-Medium Enterprises and Micro Companies: A case study for Viope Solutions Ltd. [Online] Available at: https://www.theseus.fi/bitstream/handle/10024/63227/Duong_Lap.pdf
Ekwere, N. 2016. Framework of Effective Risk Management in Small and Medium Enterprises (SMEs): A Literature Review. Bina Ekonomi. 20(1),23–46.
Enterprise risk management initiative, North Carolina State University’s ERM Initiative. 2017. Report on the Current State of Enterprise Risk Oversight: Update on Trends and Opportunities. [Online]. Available at: http://erm.ncsu.edu/library/ article/current-stateerm-2015
Falkner, E.M. and Hiebl, M.R.W. 2015. Risk management in SMEs: a systematic review of available evidence. The Journal of Risk Finance. 16(2), 122-144.
FinMark Trust, (2013). Zimbabwe - FinScope MSME survey 2012. Washington DC: World Bank Group. Available at: http://documents.worldbank.org/curated/en/2012/01/24048081/zimbabwe-finscope-msme-survey-2012
Fjose, S., Grünfeld, L.A. and SQW, C.G., 2010. SMEs and growth in Sub-Saharan Africa: Identifying SME roles and obstacles to SME growth. Available at: http://www.academia.edu/download/48195777/SME_and_growth_MENON__FINAL_.pdf
Gordon, L.A., Loeb, M.P. and Tseng, C.Y. 2009. Enterprise risk management and firm performance: A contingency perspective. Journal of Accounting and Public Policy. 28(4), 301-327.
Goriwondo, W. M. 2012. Small to Medium Enterprises ( SMEs )’ s critical role in the economy. [Online] Available at: https://www.academia.edu/download/31916304/Small_to_Medium_Enterprises_(SMEs)s_critical_role_in_the_economy..pdf
Gorzeń-Mitka, I. 2015. Risk management in small and medium-sized enterprises: A gender-sensitive approach. Problems of Management in the 21st Century. 10(2), 77-87.
Gwangwava, E., Manuere, F., Kudakwashe, G., Tough, C., and Rangarirai, F. 2014. An Assessment of Risk Management Practices in SMEs in Zimbabwe : A Review and Synthesis. Journal Of Humanities And Social Science. 19(8), 6–14. Available at: https://doi.org/10.9790/0837-19860614
Harvett, C. M. 2013. A Study of Uncertainty and Risk Management Practice Related to Perceived Project Complexity. Unpublished Doctoral Dissertation.
Henschel, T. 2008. Typology of SME’s risk management practices. International Council for Small Business World Conference. [Online]. Available at: http://sbaer.uca.edu/research/sbi/2008/creak29s.html. [Accessed 19/07/2009]. .
Henschel, T. and Gao, S. 2010. Risk Management Practices of Scottish, Chinese and German Small and Medium-Sized Enterprises (SMEs): A Cross-Country Study. ICSB World Conference Proceedings. International Council for Small Business (ICSB). 1.
Howard, J. and Jawahar. I. 2002. Risk management for small businesses. The Entrepreneurial Executive. 7, 95.
Hoyt, R. and Liebenberg, A. 2011. The value of enterprise risk management. Journal of Risk and Insurance. 78(4), 795-822.
Hudáková, M. and Lusková, M. 2016. Global environment impacts on enterprise risk management. Globalization and its socio-economic consequences. 16th international scientific conference, Slovakia: University of Zilina.
Hudáková, M., Dvorský, J., Lusková, M. and Schönfeld, J. 2017. The Market Risk Analysis and Methodology of Its More Effective Management in SMEs in the Slovak Republic. Montenegrin Journal of Economics. 13 (2), 151–161.
Hudakova, M., Masar, M., Luskova, M. and Patak M.R. 2018. The Dependence of Perceived Business Risks on the Size of SMEs. Journal of Competitiveness. 10(4), 54–69.
ICAEW, 2002. Audit quality: Shareholder involvement-Questions to the auditor. Institute of Chartered Accountants, England and Wales.
Islam, A. and Tedford, D. 2012. Risk determinants of small and medium sized manufacturing enterprises (SMEs) - an exploratory study in New Zealand. Journal of Industrial Engineering International. 8(12), 1-13. Available at: https://doi.org/10.1186/2251-712X-8-12
Jadi, D.M., Manab, N.A. and Ahmad, S. 2014. INSURANCE AS A RISK TRANSFER MECHANISM IN SMALL AND MEDIUM ENTERPRISES (SMEs). [Online] Available at: http://www.academia.edu/download/59173282/RISK_MNMGT_PROJECT20190508-120876-112c8c.pdf
Kubíčková, L., Votoupalová, M. and Toulová, M. 2014. Key motives for internationalization process of small and medium–sized enterprises. Procedia Economics and Finance. 12, 319-328.
Mamman, A., Kanu, A.M., Alharbi, A. and Baydoun, N. 2015. Small and Medium-sized Enterprises (SMEs) and Poverty Reduction in Africa: Strategic Management Perspective. Cambridge Scholars Publishing.
Marcelino-Sadaba, S. Pérez-Ezcurdia, A. Lazcano, E.A.M. and Villanueva, P. 2014. Project risk management methodology for small firms. International Journal of Project Management. 32(2), 327–340. Available at: https://doi.org/10.1016/j.ijproman.2013.05.009
Mugozhi, F. and Hlabiso, G. 2017. Determinants of Small to Medium Enterprises ’ Success or Failure : An Ex-post Appraisal of Start up Business by Young Entrepreneurs in Zimbabwe. The International Journal Of Humanities & Social Studies. 5(3), 39–46.
Napp, A.K. 2011. Financial Risk Management in SME: The Use of Financial Analysis for Identifying, Analysing and Monitoring Internal Financial Risks. Journal of Risk Management. 2(1), 30–35.
Ng ’ang ’a, S. I. Muthusi, B. M. and Nassiuma, B. 2015. Comparative Study of Enterprise Risks and Management Practices Between Micro and Small Industries (MSIS) and Medium and Large Industries (MLIS) in Nakuru Municipality, Kenya. European Journal of Business and Social Sciences. 3(11), 121–144.
Ntlhane, K.E. 1995. The application of risk management principles to smaller enterprises. Master’s Thesis, University of the Witwatersrand, South Africa.
Nyakang’o, E.O. and Kalio, A.M. 2013. Effect of Financial Risks on Performance of Small and Medium Enterprises in the Hotel Industry in Nakuru Municipality, Kenya. International Journal of Innovative Research & Development. 2(11), 257-263
Nyamwanza, T., Carter, S. and Chu, Y. 2014. Strategy Implementation for Survival and Growth among Small to Medium-sized Enterprises (SMES) in Zimbabwe. [Online]. Available at: http://ir.msu.ac.zw:8080/jspui/bitstream/11408/767/1/nyamwanza_final.pdf
Otieno, J.J.A. 2016. Credit risk management practices on loan portfolio of Barclays bank of Kenya. Master's Thesis, University of Nairobi.
Panigrahi, A. K. 2012. Risk Management in Micro, Small and Medium Enterprises (MSMEs) in India: A Critical Appraisal. Asia Pacific Journal of Marketing & Management Review. 1(4), 2836.
Pashkova, O. 2016. Credit Risk Management of SMEs through Financial Ratio Analysis. Bachelor's Thesis, JAMK University of Applied Sciences. Available at: https://www.theseus.fi/handle/10024/114502
Perusahaan, T. K., Konsolidasian, L. K. and Perusahaan, D. 2013. Risk Management Framework. 241–245. [Online]
Shoki, M., Zakuan, N., Tajudin, M. N. M., Ahmad, A., Ishak, N. and Ismail, K. 2014. A Framework for Risk Management Practices and Organizational Performance in Higher Education. Review of Integrative Business and Economics Research. 3(2), 422–432.
Sifumba, C.M., Mothibi, K.B. and Ezeonwuka, A., Qeke, S. and Matsoso, M.L. 2017. The risk management practices in the manufacturing SMEs in Cape Town. Problems and Perspectives in Management. 15(2), 386-403.
Smit, Y. and Watkins, J.A. 2012. A literature review of small and medium enterprises (SME) risk management practices in South Africa. African Journal of Business Management. 6(21), 6324–6330. Available at: https://doi.org/10.5897/AJBM11.2709
Sunjka, B.P. and Emwanu, B. 2015. Risk management in manufacturing SMEs in South Africa. International Association for Management of Technology. 1-18. Available at: http://iamot2015.com/2015proceedings/documents/P193.pdf
The American Institute of CPAs (Certified Public Accountants). 2017. [Online]. Available at: http://www.aicpa.org/Pages/default.aspx.
Turpin, M. 2002. Risk management in Europe: An investigation of medium sized enterprises. McLennan Company, New York.
Verbano, C. and Venturini, K. 2013. Managing Risks in SMEs : A Literature Review and Research Agenda. Journal of Technology Management & Innovation. 8(3), 186–197. Available at: https://doi.org/10.4067/s0718-27242013000400017
Waweru N. and Kisaka E. 2012. The Effect of Enterprise Risk Management implementation on the value of companies listed in the NSE. [Online]. Available at: http://ssrn.com/abstarct=1907248
Wijekoon, W. M. M. G. D., Amaratunge, S. P. P., and Sisira Kumara, M. H. A. 2016. Effects of Demographic Factors on Risk Management in Community Driven Development Projects in Sri Lanka: A Preliminary Study Based on “Gemidiriya” Project. SSRN Electronic Journal. 306–324. Available at: https://doi.org/10.2139/ssrn.2910326
Woods, M. 2007. A contingency theory perspective on the risk management control system within Birmingham City Council. Management Accounting Research. 20(1), 69–81. Available at: https://doi.org/10.1016/j.mar.2008.10.003
Yaacob, Z. 2016. Risk management amongst small and medium enterprises in Malaysia. Australian Journal of Sustainable Business and Societ. 2(2), 496-500.
Yakob, S. Hafizuddin-Syah, B.A.M. and Yakob, R. and Raziff, N. A. M. 2019. The Effect of Enterprise Risk Management Practice on SME Performance. The South East Asian Journal of Management. 13(2), 151-169.
Yusuf, T.O. and Dansu, F.S. 2013. SMEs, business risks and sustainability in Nigeria. European Journal of Business and Social Sciences. 2(9), 76-94.
Zhao, S. and Zeng, M. 2014. Theory of SMEs financial risk prevention and control. In 2014 International Conference on Education, Management and Computing Technology (ICEMCT-14). Atlantis Press. Available at: https://www.atlantis-press.com/proceedings/icemct-14/13144
Copyright (c) 2021 Transylvanian Review
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
