Moderating role of enterprise risk management in the relationship between sustainability performance and a firm’s competitive advantage
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Received January 31, 2024;Accepted April 16, 2024;Published May 8, 2024
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Author(s)Link to ORCID Index: https://orcid.org/0000-0002-1299-3922Link to ORCID Index: https://orcid.org/0000-0002-8936-2045Link to ORCID Index: https://orcid.org/0000-0001-6767-5334Link to ORCID Index: https://orcid.org/0000-0002-8194-477X
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DOIhttp://dx.doi.org/10.21511/ppm.22(2).2024.18
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Article InfoVolume 22 2024, Issue #2, pp. 226-239
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Cited by1 articlesJournal title: Economics & SociologyArticle title: The role of sustainable finance in the context of the European green courseDOI: 10.14254/2071-789X.2024/17-2/3Volume: 17 / Issue: 2 / First page: 54 / Year: 2024Contributors: Dalia Streimikiene, Ignas Mikalauskas, Vilma Lėckienė, Tomasz Pisula, Asta Mikalauskiene
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The emergence of sustainable business practices has garnered interest among stakeholders. However, the question of whether sustainability performance provides companies with a competitive advantage is still being debated in the literature. This paper aims to examine the influence of sustainability performance – namely economic sustainability performance and environmental, social, governance (ESG) – on competitive advantage, with the effectiveness of enterprise risk management (ERM) as the moderating variable. This paper used 202 firm-year observations during 2015–2022 from non-financial sector companies listed on the Indonesia Stock Exchange. To test the hypotheses, panel data regression with a one-year time-lag analysis is conducted. The findings show that economic sustainability performance has no relationship with competitive advantage, while ESG has a positive effect. Furthermore, ERM effectiveness strengthens the effect of economic sustainability and ESG on competitive advantage. Further investigation used a two-year time-lag analysis for a long-term perspective. The analysis shows that economic sustainability performance and ESG have a positive impact on competitive advantage. In contrast, ERM effectiveness has no effect on the relationship between economic sustainability performance and competitive advantage. Moreover, additional analysis incorporates the effect of COVID-19 into the main model and shows that the pandemic did not affect competitive advantage; this is consistent with the main results. The findings encourage companies to improve their risk management and sustainability initiatives. The government may also take it into account when developing rules that promote the implementation of sustainable development.
Acknowledgment
This research was supported by the Ministry of Education, Culture, Research, and Technology of the Republic of Indonesia through the Center for Higher Education Fund (BPPT) and Indonesia Endowment Funds for Education (LPDP) for providing the Indonesian Education Scholarship (BPI-Beasiswa Pendidikan Indonesia).
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JEL Classification (Paper profile tab)G32, M21, M41, Q56
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References63
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Tables3
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Figures0
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- Table 1. Descriptive statistics analysis and correlation matrix
- Table 2. Hypothesis testing results with a time lag of one (1) year
- Table 3. Competitive advantage model test results with a time lag of two (2) years
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Conceptualization
Ayu Aryista Dewi, Erwin Saraswati, Aulia Fuad Rahman, Sari Atmini
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Data curation
Ayu Aryista Dewi, Erwin Saraswati, Aulia Fuad Rahman, Sari Atmini
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Formal Analysis
Ayu Aryista Dewi, Erwin Saraswati, Aulia Fuad Rahman, Sari Atmini
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Funding acquisition
Ayu Aryista Dewi
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Investigation
Ayu Aryista Dewi, Erwin Saraswati, Aulia Fuad Rahman, Sari Atmini
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Methodology
Ayu Aryista Dewi, Erwin Saraswati, Aulia Fuad Rahman, Sari Atmini
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Project administration
Ayu Aryista Dewi
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Resources
Ayu Aryista Dewi, Erwin Saraswati, Aulia Fuad Rahman, Sari Atmini
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Software
Ayu Aryista Dewi
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Supervision
Ayu Aryista Dewi, Erwin Saraswati, Aulia Fuad Rahman, Sari Atmini
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Validation
Ayu Aryista Dewi, Erwin Saraswati
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Visualization
Ayu Aryista Dewi
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Writing – original draft
Ayu Aryista Dewi
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Writing – review & editing
Ayu Aryista Dewi, Erwin Saraswati, Aulia Fuad Rahman, Sari Atmini
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Conceptualization
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The resource-based view: a tool of key competency for competitive advantage
Problems and Perspectives in Management Volume 17, 2019 Issue #3 pp. 143-152 Views: 4678 Downloads: 1069 TO CITE АНОТАЦІЯThe increasing turmoil in the external organizational setting or business environment has focused attention on capabilities and resources as the primary source of competitive advantage. Obviously, this statement points to the application of the resource-based view (RBV) of organizational management. Nevertheless, what constitutes RBV remains an illusion in many quarters of organizational management, as scholars have managed to put up their personal ideas, and managed to converge on phenomenon-driven theories, in addition to RBV. This paper reviews the concepts of RBV in light of knowledge management to highlight some critical pitfalls that might have eluded the research community on the subject matter of RBV. To this end, this paper’s educational value lies in the fact that it simplifies the concept of RBV to the new researcher in a fashion that is capable of appealing to his or her level. A cross-sectional qualitative research approach was employed in an effort aimed at understanding the role of RBV in creating a sustainable competitive advantage and key competencies. A total of 20 relevant articles were searched from different databases and search engines, including Scopus, EBSCO, ABI Inform, IEEE, PubMed, Science Direct, SABINET, IEEE, Bing, Science Direct, and Google Scholar. The findings indicate that RBV plays an important role and assists organizations not only create, nurture, and maintain competitive advantage, but also understand the collective resources needed to compete favorably in a globalized and highly competitive market. With expert knowledge workers at its core to provide support for knowledge creation, sharing, and utilization, the RBV principles discussed in this paper promise to guarantee a methodological step geared towards the achievement of competitive advantage. It, therefore, makes an incremental contribution to the RBV to attain modest improvement in organizational settings.
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Financial sustainability management of the insurance company: case of Ukraine
Ruslana Pikus , Nataliia Prykaziuk , Mariia Balytska doi: http://dx.doi.org/10.21511/imfi.15(4).2018.18Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 219-228 Views: 3535 Downloads: 299 TO CITE АНОТАЦІЯIn the current conditions of the Ukrainian economy, which is characterized by crisis phenomena and frequent changes in legislation, the insurance organizations are facing a number of difficulties in maintaining their financial sustainability. Moreover, these processes take place under the increased requirements for solvency of insurers. However, a significant part of domestic insurance companies is financially unstable, which is conditioned not only by the lack of funds, but also by the low level of management. This situation hinders the further development of the insurance market in Ukraine and has a negative impact on all areas of the domestic financial system and prevents it from successful integration into the European financial field. In order to address this problem, it is necessary to distinguish the key groups of risks that affect the financial sustainability of insurance organizations, among which there are the following: insurance, strategic, market risk, risk of inefficient capital structure, risk of limiting the insurance company’s liquidity, tax risk, investment risk, operational risk, the risk of ineffective organizational structure of the enterprise, and information risk. It should be noted that under conditions of changing environment, the impact of these risks only increases, and therefore the task of minimizing the impact of these risks on the activities of insurance companies is highly important. Accordingly, the authors of the article proposed a four-stage strategy to manage the financial sustainability of the insurance company, the purpose of which is to identify the risks of limiting the insurer’s financial sustainability, their qualitative and quantitative assessment, as well as the development and implementation of appropriate measures to minimize and eliminate unacceptable consequences.
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The risk management practices in the manufacturing SMEs in Cape Town
Clinton Mbuyiselo Sifumba , Kevin Boitshoko Mothibi , Anthony Ezeonwuka , Siphesande Qeke , Mamorena Lucia Matsoso doi: http://dx.doi.org/10.21511/ppm.15(2-2).2017.08Problems and Perspectives in Management Volume 15, 2017 Issue #2 (cont. 2) pp. 386-403 Views: 3390 Downloads: 536 TO CITE АНОТАЦІЯRisk management is one of the prominent issues which are pivotal to the success of a business and may adversely affect profitability if not properly practised. Therefore, the main objective of this paper was to determine risk management practices in manufacturing SMEs in Cape Town. The research conducted was quantitative in nature and constituted the collection of data from 74 SME leaders, all of whom had to adhere to a list of strict delineation criteria. All data collected were thoroughly analyzed through means of descriptive statistics. From the findings made, it is clear that SMEs in the manufacturing sector do in fact understand risk management initiatives applicable to ‘manage’ their respective businesses towards sustainability, but not to a large extent. It was found that respondents are unaware of the elements which make risk management effective, which ultimately aids to the development of problems for SMEs. All employees, managers and owners must coordinate their efforts together to identify and manage organizational risks within their ambit to obtain total risk coverage, as well as provide assurance that these risks are effectively managed from a coordinated approach. Further studies may be carried out to identify measures that can be taken to improve the effectiveness of risk management practices in SMEs.