This study aims to identify the effect of Enterprise Risk Management (ERM) implementation on SMEs performance in Malaysia. SME performance is used as a dependent variable, whereas eight (8) elements of ERM are based on the Committee of Sponsoring Organisations of the Treadway Commission (COSO) framework as the independent variables. Primary data were administered through questionnaires among 312 respondents from the main contributing sectors of SMEs; agriculture, construction, mining and quarrying, services and manufacturing across all states in Malaysia. This study employed six (6) analyses, including descriptive statistics, normality, reliability, correlation, multiple regression analysis and hypothesis testing. Results from correlation analysis indicated that the independent variables represented eight (8) elements of ERM, illustrating a positive, strong correlation with the dependent variable. Multiple regression analysis showed that ERM has a positive effect on SME performance. However, only three (3) of the ERM elements, namely event identification, risk assessment, and risk response, significantly affect SME performance. The information was gathered from a questionnaire of 312 respondents and there are only 177 respondents think that their company implemented ERM, whereas the remaining 135 do not think their company implements ERM. An ERM implementation in SMEs is expected to be able to find solutions to minimise the risks that SMEs may or may not face. Effective risk management can enable SME owners, managers and employees to achieve business objectives. As a result, risk management enhances the value of the business, increases profitability, and improves the overall performance of SMEs.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.