Despite the anecdotal evidence that suggests that SMEs adopt inadequate and ineffective risk management practices, only a few studies have been conducted on the topic in the emerging market context. Besides, the existing studies on factors inhibiting effective risk management in emerging market SMEs are devoid of any theoretical grounding. This situation implies that there is still a knowledge gap on this area, and this gap is what the current paper seeks to close. In closing out the gap, this paper used the Resource Based View theory to interpret the results obtained, in order to help clarify the factors inhibiting effective risk management in emerging market SMEs, with a case of South Africa being used. In a first step, questionnaires were distributed to a sample of 320 FMCG SMEs in the Cape Metropolitan area. The results revealed the significance of both intangible and tangible resources in positively impacting the effectiveness of risk management within SMEs. This led to the conclusion that owner-managers must pay particular attention to their intangible and tangible resource structure, which will impact the positive response towards superior performance and competitive advantage by focusing more on coalescing resources that lead to effective risk management.
Research has shown that small, micro and medium enterprises (hereafter referred to as SMMEs) are crucial in promoting international economic growth and development; along with the overall reduction in current unemployment levels. In South Africa, this phenomenon is no exception as the concept of SMMEs was introduced to alleviate poverty and improve overall living conditions through job creation in the country. For SMMEs to be successful they have to survive all forms of risk, especially in their start-up phase. The aim of this study was to determine to what extent SMMEs engage in enterprise risk management (ERM) activities. In order to achieve the above empirical research was conducted on nonfranchised retail SMMEs, operating in the Cape Town City Bowl. A questionnaire was used to glean data that was further quantitatively analysed using descriptive statistics. From the findings, relevant recommendations and conclusions were made.
Microfinance providers play a significant role in emerging economies by providing banking-related financial services to the low income market. However, lending to the low income market is associated with high credit risk. This paper investigates the use of certain risk management practices by small and medium-sized micro finance providers in the Cape Metropolitan Area. The big difference of micro-finance is that collaterals are absent and instead, a close connection between microfinance providers and their clients come into place. And while micro-finance providers use follow up calls and penalties to avoid losses from loan overdue, the classical way to the court is not really an option. Instead, community leaders function as middlemen between the provider and the customer. Although most respondents agree that policies are in place, written risk policies exist in only half of our respondent’s enterprises. We further showed that the views on risk management depend on whether the respondent is an owner or a manager of the venture.
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