Endogenous determinants and impacts of active risk management on the overall performance of manufacturing SMEs
For several years now, the business environment has been undergoing major changes that amplify uncertainty. This implies that strategic decisions are made without any assurance that the expected results will be achieved. This uncertainty gives rise to many risks, including the risk of making bad decisions that could disrupt the company’s activities and compromise its survival. To reduce these consequences, risk management is increasingly becoming a strategic capability to be deployed. However, we note that few SMEs are actively engaged in this process, even though it can have beneficial effects on their performance. Our study aims to shed light on this observation by examining the factors that encourage active risk management in SMEs and the consequences for their overall performance. The results of a survey conducted among 500 Quebec manufacturing SMEs show that the mobilization of active risk management practices strengthens their overall performance. This mobilization is influenced by organizational capabilities and entrepreneurial orientation. So, to maintain their performance in the long term, SME managers are called upon to strengthen risk management practices by relying on their organizational capabilities and by being proactive, innovative and risk-takers.