The Role of ERM and Corporate Governance in Managing COVID-19 Impacts: SMEs Perspective

Abstract

SMEs are perceived as more exposed to the consequences of external shocks. The purpose of our work is to examine whether the ERM sophistication or corporate governance mechanisms could be relevant in resistance to COVID-19 shock in the SMEs. In particular, we hypothesize that the SMEs with greater degree of ERM sophistication and stronger CG mechanisms will have a clearer understanding about the severity of the impacts from COVID-19. Our empirical evidence is based on the results of a survey conducted within a large sample of SMEs operating in Poland and in Germany within different experimental settings. We have found that the ERM and CG sophistication influence the perception of COVID-19 interruptions and will alert companies to adjust their business strategy and organizational structure to better cope with effects of the current crisis. The proposed framework can also be a valuable tool for consultants to use to enhance the ERM systems in SMEs.

Governance and Performance in Romanian Energy Companies

“…Corporate governance mechanisms have an impact on SME perceptions of COVID-19's influence, alerting companies to adjust their business strategy and organizational structure to better cope with the effects of the current crisis [14]. Various studies have examined the characteristics of corporate governance: the difference made by diversity on corporate board [15][16][17], independence and financial knowledge for the board and the audit committee [18][19][20][21], role of auditors [22][23][24], owner structure [25][26][27][28].…”