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Enterprise Risk Management Practices and Organizational Performance. Does Intellectual Capital Make a Difference?

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  • Kakiya Grace GIRANGWA

    (Moi University, Kenya)

  • Jared MOSE

    (Moi University, Kenya)

  • Lucy RONO

    (Moi University, Kenya)

Abstract

Enterprise risks pose threats to the capability of an organization to accomplish business processes and create value. This research sought to add to studies done in the area of enterprise risk management (ERM) by focusing on the moderating effect of intellectual capital on the relationship between ERM governance practices and organizational performance of state corporations in Kenya. This study was guided by resource-based theory. The study used explanatory cross-sectional survey design. Primary data on ERM practices, intellectual capital and organizational performance was collected from structured questionnaires. A survey was carried out on 218 state corporations in Kenya. Data collected was analyzed by use of descriptive and inferential statistics. The research hypotheses were tested using multiple regression analysis. ERM governance practices were also found to significantly (β=0.412, p lower than 0.05) influence organizational performance. Furthermore, the study found that intellectual capital had an enhancing and significant moderation effect on the relationship between ERM governance practices (β=0.658, Ï lower than 0.05) and organizational performance. This study contributes to the body of knowledge by positioning intellectual capital on the empirical testing of resource-based theory as well as the impact of intellectual assets on the relationship between risk governance practices and organizational performance. Further, the study recommends that SCs need to define and document strategies for managing risks, in addition to ensuring that sufficient resources are availed towards the attainment of risk management.

Suggested Citation

  • Kakiya Grace GIRANGWA & Jared MOSE & Lucy RONO, 2019. "Enterprise Risk Management Practices and Organizational Performance. Does Intellectual Capital Make a Difference?," Expert Journal of Finance, Sprint Investify, vol. 7(1), pages 39-48.
    • Handle: RePEc:exp:finnce:v:7:y:2019:i:1:p:39-48
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    References listed on IDEAS

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    1. Battaglia, Francesca & Gallo, Angela, 2015. "Risk governance and Asian bank performance: An empirical investigation over the financial crisis," Emerging Markets Review, Elsevier, vol. 25(C), pages 53-68.
    2. Aebi, Vincent & Sabato, Gabriele & Schmid, Markus, 2012. "Risk management, corporate governance, and bank performance in the financial crisis," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3213-3226.
    3. Shamsun Nahar & Christine Jubb & Mohammad I Azim, 2016. "Risk governance and performance: a developing country perspective," Managerial Auditing Journal, Emerald Group Publishing, vol. 31(3), pages 250-268, March.
    4. Elisa Cavezzali & Gloria Gardenal, 2015. "Risk governance and performance of the Italian banks: an empirical analysis," Working Papers 8, Department of Management, Università Ca' Foscari Venezia.
    5. Beasley, Mark S. & Clune, Richard & Hermanson, Dana R., 2005. "Enterprise risk management: An empirical analysis of factors associated with the extent of implementation," Journal of Accounting and Public Policy, Elsevier, vol. 24(6), pages 521-531.
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    Cited by:

    1. Hesty Erviani Zulaecha & Yuswar Z. Basri & Yvonne Augustine & Susi Dwi Mulyani, 2021. "The effect of sustainability management practice, enterprise risk management, and business strategies on integrated sustainability performance with intellectual capital as a moderating variable," Technium Social Sciences Journal, Technium Science, vol. 23(1), pages 401-414, September.
    2. Ben Kajwang, 2022. "Theoretical review of enterprise risk management culture drivers for insurance firms in Kenya," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(5), pages 210-217, July.
    3. Dr. Ogechukwu Amina Ogu & Kingsley Abasili, 2023. "Managing Credit Risk in Lending Institutions: A Study of Access Bank PLC, Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(4), pages 922-929, April.
    4. repec:thr:techub:10023:y:2021:i:1:p:401-414 is not listed on IDEAS

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    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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