PARG research discussion session

Does risk management build organizational resilience? The case of Canadian manufacturing SMEs

This is a hybrid event. Online participants can join via Zoom. In person attendees should reach out to Merridee Bujaki (merridee.bujaki@carleton.ca) to discuss lunch options before 5 PM on February 16, 2024.

Presenter

Ouafa Sakka is an Associate Professor of Accounting at the Sprott School of Business. Her research focusses on internal controls in different settings such as projects, Small and Medium Enterprises, and public sector organizations.

Abstract

Drawing on the dynamic capabilities literature, this research investigates the association
between risk management practices and organizational resilience in Small and Medium
Enterprises (SMEs). Both formal risk management (formal risk analysis of new projects
and activities) and informal risk management practices (adoption of a risk-open culture)
are considered. A survey was conducted to collect data on the research constructs from
500 Canadian manufacturing SMEs. The results show that 30% of the sampled SMEs
did not have any formal risk management of their activities. Partial Least Squares (PLS)
analyses of the data show that informal risk management is positively and significantly
related to the resilience of the sampled SMEs, however formal risk management
practices do not have a significant association with resilience. These results remain the
same regardless of the level of environmental turbulence and product complexity. When
focusing only on the sampled SMEs that have some level of formal risk management of
their activities, PLS results show that both formal and informal risk management
practices enhance resilience in these firms. In addition, these results are found to be
sensitive to the level of environmental turbulence and of product complexity.