Business risk management in the context of small and medium-sized enterprises

Abstract

The aim of this paper is to review the impact of entrepreneurs' attitudes toward the defined business risks on the perception of the future of small and medium-sized enterprises (SMEs). 454 SMEs from the Czech Republic (CR) participated in the research and completed an online questionnaire. Structural equation modelling and factor analysis were used to identify the causal relationships between the examined variables. Entrepreneurs' attitudes toward business failure also have a positive effect on the future of the SME. The perception of financial risk in positive indicators of financial performance and the perception of financial risk as part of the company's everyday life have the most significant impact on future business. Operational risk is reflected in the utilisation of corporate resources, reducing customer complaints about the quality of the company's products and the company's independence of a limited number of suppliers. The company's sales volume adequacy provides a source of market risk. It has the third strongest positive impact on the future business in the SME segment. The research results provide a valuable platform for the authors of national and regional development strategic plans looking for SME support and development as well as the authors of the relevant policies.

Disparities in the Perception of Business Risks in Connection With the Achieved Education of the Owner/Manager and Doing Business

“…Another significant factor with a positive effect on the business future is market risk (Dvorsky, Belas, Gavurova, & Brabenec, 2020). Market risk refers to product-market acceptance, competitors' potential actions, and general market conditions and evolution (Kim & Vonortas, 2014).…”

“…Legal risk is defined as the result of losses suffered to a particular business due to its disregard for business laws (Virglerova, Conte, Amoah, & Massaro, 2020). Even though the legal environment resulted not being a significant factor in predicting business risk (Çera et al, 2019), it is considered an equally positive factor that influences future business perception (Dvorsky et al, 2020). Furthermore, Virglerova et al (2020) concluded that entrepreneurs have a positive attitude when the legal environment is not overregulated, does not harm the future of the business.…”

“…In this study, we are more focused on managers' or owners' attitudes towards business risk and the possible linkage of these attitudes with owner-manager education level. As responsible for making strategic decisions, owners-managers play a key role in ensuring SMEs' financial prosperity and sustainability (Dvorsky et al, 2020). The entrepreneurs' attitude is essential in running a business because it can lead the business to failure if it is poorly managed (Çera, Belás, & Strnad, 2019).…”

Factors Inhibiting Effective Risk Management in Emerging Market SMEs

“…Some of these risk reduction actions could include bankruptcy and earnings management as a phenomenon (Kliestik et al 2018). Additionally, Dvorsky et al (2020) pursued research on the concept of business risk for small and medium-sized enterprises in the context of the Czech Republic. They found that identified market, financial activities, and personnel and operational risk have a positive effect on future business exposures of SMEs.…”

Innovations and Marketing Management of Family Businesses: Results of Empirical Study

“…As these business units are mostly small and micro businesses, they are significantly sensitive to external changes, which can result in fall of the company. Family businesses employ family members, and therefore the business risk is higher (Dvorsky et al, 2020). Several attributes will be important for future development of family businesses.…”