Association Between Firm Size and Enterprise Risk Management Level

Abstract

The paper aims to investigate if firm size plays a role as a driver for the ERM method and as an ERM de-terminant. A comprehensive literature review (conducted 2010–2021) and primary data (SMEs in Czech Republic, research conducted in 2021) were applied. Latent class analysis and contingency tables were employed. The results show that firm size predicts the adequate ERM method and has positive effects on the ERM level. The contribution is in identifying significant differences between micro- and medium-sized enterprises with respect to the ERM level. At the conclusion, the author discusses other possible ERM drivers and ERM determinants.

Enterprise Risk Management Practices and Financial Performance of Apparel Industry in Sri Lanka

“…& Muthuveloo, R. (2015), who showed that firm size is positively related to enterprises' risk management adoption. (Syrová, 2022) (Rujiin & Sukirman, 2019) (Iswajuni, Arina, and Soegeng, 2018) (Gatzert & Martin,2015) (Li, et al, 2014) (Shaleh &Kurniasih, 2021) (Hafizuddin-Syah,2015) (Muslih,2019) (Yegon, Mouni & Wanjau, 2014) (Naseem, et al, 2019) Sithipolvanichgul, (2016 has confirmed, that firm size, market uncertainty, and gross domestic product Sectoral products seem to determine the degree of success of ERM implementations. The success rate of ERM implementation increases as the company gets bigger and its GDP increases.…”

“…The positive effect may be that as the business size increases, it becomes necessary to manage the business through formal procedures and internal guidelines. Small businesses lack reliable resources and mechanisms to support their risk management activities (Syrová, 2022) (Rujiin & Sukirman, 2019). Large firms may diversify their operations to mitigate unsystematic risks.…”