Maximizing the Sustainability of Firms Through Effective Risk Management: The Moderating Role of Risk Culture

Abstract

This paper aims to establish whether effective risk management results in increasing the sustainability of SMEs in Cameroon. Using the partial least square - structural equation modeling (PLS-SEM) approach based on a survey from 73 small and medium enterprises (SMEs), we find that governance compliance, risk perception, and leadership improve the firm's sustainability. While, innovation culture has no significant effect on a firm's sustainability, caused by the lack of an innovative leader. The outcome of this study also highlights that risk culture is a moderator of SMEs sustainability and companies that have a strong risk culture have better equipped to deal with risk and to remain sustainable. Overall, the paper casts new light on the contribution of risk perception, governance compliance, leadership engagement on a firm's sustainability, and the importance of creating within the companies a solid risk culture.

Keywords: Effective risk management, Risk culture, Sustainability, SMEs, PLS-SEM.

DOI: 10.7176/EJBM/13-4-10

Publication date: February 28^th 2021