Elevating the profitability of small and medium enterprises: Systematic review on risk management principles

Ashish Gupta; S. Mahalakshmi; Mohan Garg; Shilpi Kulshrestha; Richa Goswami

doi:10.31893/multirev.2023ss098

Keywords:

Profitability

Systematic Review

Organization Management

Small and medium-sized enterprises (SMEs)

Risk Management

Abstract

Small and medium-sized enterprises (SMEs) have a significant position in the world's economies by encouraging innovation and employment. These enterprises have limited resources and address particular obstacles while providing potential for development. Effective risk management is critical for SMEs to achieve long-term profitability. By identifying and minimizing possible risks, such as market changes and operational uncertainty, SMEs may protect their financial health and establish the foundation for long-term success. Implementing effective risk management concepts enables these organizations to handle insecurity, capitalize on opportunities and improve overall operational efficiency, resulting in a robust and effective business environment. In this research, we provide an in-depth examination of risk management in SME profitability, depending on empirical data, conceptual frameworks and beneficial case studies. Our objective is to determine common trends, challenges and standards of excellence in the field of SME risk management by investigating a range of resources. Initially, we collected 28 publications that primarily focused on risk management strategies for organization management, 10 articles were eliminated the cause of without taking into consideration SMEs. The subsequent phases of this systematic review of the literature, as well as the research process were based on in-depth analysis of the remaining 18 research articles. This research provides a beneficial understanding for improving overall SMEs' operational efficiency and profitability.
References
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2. Bobriková, M. (2022). Weather risk management in agriculture using weather derivatives. Italian Review of Agricultural Economics, 77(2), 15-26.10.36253/rea-13416
3. Catanzaro, A., & Teyssier, C. (2021). Export promotion programs, export capabilities, and risk management practices of internationalized SMEs. Small Business Economics, 57(3), 1479-1503. 10.1007/s11187-020-00358-4
4. Çera, G., Belás, J., & Strnad, Z. (2019). Important factors which predict entrepreneur's perception in business risk. Problems and Perspectives in Management.
5. Cleary, P., Quinn, M., Rikhardsson, P., & Batt, C. (2022). Exploring the Links Between IT Tools, Management Accounting Practices and SME Performance: Perceptions of CFOs in Ireland. Accounting, Finance & Governance Review, 28.
6. Crovini, C., Santoro, G., & Ossola, G. (2021). Rethinking risk management in entrepreneurial SMEs: towards the integration with the decision-making process. Management Decision, 59(5), 1085-1113. 10.1108/MD-10-2019-1402
7. Dvorsky, J., Belas, J., Gavurova, B., & Brabenec, T. (2021). Business risk management in the context of small and medium-sized enterprises. Economic Research-Ekonomska Istraživanja, 34(1), 1690-1708. 10.1080/1331677X.2020.1844588
8. Dvorsky, J., Belas, J., Gavurova, B., & Brabenec, T. (2021). Business risk management in the context of small and medium-sized enterprises. Economic Research-Ekonomska Istraživanja, 34(1), 1690-1708. 10.1080/1331677X.2020.1844588
9. Dvorsky, J., Belas, J., Novotna, I., Fero, M., & Petrakova, Z. (2020). Quality of business environment of the SME: A sectoral view. Communications-Scientific Letters of the University of Zilina, 22(4), 163-172.
10. Ferreira de Araujo Lima, P. (2019). The Development of Project Risk Management in Small and Medium Enterprises.
11. Gamage, S. K. N., Prasanna, R. P. I. R., Jayasundara, J. M. S. B., Ekanayake, E. M. S., Rajapakshe, P. S. K., GAKNJ, A., ... & Nedelea, A. M. (2020). Social capital and SME: A systematic literature review and research directions. Ecoforum Journal, 9(3).
12. Islam, A., Mansoor, A., Rahman, M., & Abd Wahab, S. (2020). Adjusting a strategic Cash-Flow model for Bangladeshi small and medium enterprises: the art of surviving COVID-19 emergency. Business Excellence and Management, 10(5), 194-213.
13. Kotaskova, A., Belás, J., Bilan, Y., & Khan, K. A. (2020). Significant aspects of managing personnel risk in the SME sector. Management & Marketing. Challenges for the Knowledge Society, 15(2), 203-218. 10.2478/mmcks-2020-0013
14. Krüger, N. A., & Meyer, N. (2021). The development of a small and medium-sized business risk management intervention tool. Journal of Risk and Financial Management, 14(7), 310. 10.3390/jrfm14070310
15. Lepistö, K., Saunila, M., & Ukko, J. (2022). Facilitating SMEs' profitability through total quality management: the roles of risk management, digitalization, stakeholder management and system deployment. The TQM Journal, 34(6), 1572-1599. 10.1108/TQM-07-2021-0204
16. Mikami, K., & Bird, A. (2022). Opportunism and trust in cross-national lateral collaboration: the Renault-Nissan Alliance and a theory of equity-trust. Journal of World Business, 57(3), 101286. 10.1016/j.jwb.2021.101286
17. Ntare, P. C., Shau, I. R., & Ojwang, E. (2022). Effects of Enterprise Risk Management Practices on Performance of Small and Medium Scale Enterprises. A case of Dar es Salaam City, Tanzania. African Journal of Applied Research, 8(1), 182-199.
18. Richard, E., & Kabala, B. (2020). Account receivable management practices of SMEs in Tanzania: a qualitative approach. Business Management Review, 22(2), 51-66.
19. Roos, E., & Nyström, A. (2020). Managing Risks Posed on the Supply Chain of a Small Startup in Expansion.
20. Shihadeh, F., Naradda Gamage, S. K., &Hannoon, A. (2019). The causal relationship between SME sustainability and banks’ risk. Economic research-Ekonomskaistraživanja, 32(1), 2743-2760. 10.1080/1331677X.2019.1655465
21. Sniazhko, S. (2019). Uncertainty in decision-making: A review of the international business literature. Cogent Business & Management, 6(1), 1650692. 10.1080/23311975.2019.1650692
22. Virglerová, Z., Conte, F., Amoah, J., & Massaro, M. R. (2020). The perception of legal risk and its impact on the business of SMEs. International Journal of Entrepreneurial Knowledge, 8(2), 1-13. 10.37335/ijek.v8i2.115
23. Virglerova, Z., Khan, M. A., Martinkute-Kauliene, R., & Kovács, S. (2020). The internationalization of SMEs in Central Europe and its impact on their methods of risk management. Amfiteatru Economic.
24. Williams Jr, R. I., Clark, L. A., Clark, W. R., & Raffo, D. M. (2021). Re-examining systematic literature review in management research: Additional benefits and execution protocols. European Management Journal, 39(4), 521-533. 10.1016/j.emj.2020.09.007
25. Yakob, S., Syah BAM, H., Yakob, R., &Raziff, N. A. M. (2020). The effect of enterprise risk management practice on SME performance. The South East Asian Journal of Management, 13(2), 7. 10.21002/seam.v13i2.11785
26. Zadorozhnyy, Z. M., Zhukevych, S., Portovaras, T., Rozelyuk, V., Zhuk, N., & Nazarova, I. (2023). ANALYSIS OF RISKS IN THE FINANCIAL SECURITY MANAGEMENT SYSTEM OF BUSINESS ENTITIES. Financial & Credit Activity: Problems of Theory & Practice, 6(53). 10.5267/j.dsl.2023.4.007

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

How to cite

Gupta, A., Mahalakshmi, S., Garg, M., Kulshrestha, S., & Goswami, R. (2024). Elevating the profitability of small and medium enterprises: Systematic review on risk management principles. Multidisciplinary Reviews, 6, 2023ss098. https://doi.org/10.31893/multirev.2023ss098

[1] Akbar, A., Gruben, F., & Juliarto, A. (2023). THE IMPACT OF RISK MANAGEMENT STRATEGY IN BUSINESS RESILIENCE: A CASE IN COFFEE BEDA. Diponegoro Journal of Accounting, 12(4).

[2] Bobriková, M. (2022). Weather risk management in agriculture using weather derivatives. Italian Review of Agricultural Economics, 77(2), 15-26.10.36253/rea-13416

[3] Catanzaro, A., & Teyssier, C. (2021). Export promotion programs, export capabilities, and risk management practices of internationalized SMEs. Small Business Economics, 57(3), 1479-1503. 10.1007/s11187-020-00358-4

[4] Çera, G., Belás, J., & Strnad, Z. (2019). Important factors which predict entrepreneur's perception in business risk. Problems and Perspectives in Management.

[5] Cleary, P., Quinn, M., Rikhardsson, P., & Batt, C. (2022). Exploring the Links Between IT Tools, Management Accounting Practices and SME Performance: Perceptions of CFOs in Ireland. Accounting, Finance & Governance Review, 28.

[6] Crovini, C., Santoro, G., & Ossola, G. (2021). Rethinking risk management in entrepreneurial SMEs: towards the integration with the decision-making process. Management Decision, 59(5), 1085-1113. 10.1108/MD-10-2019-1402

[7] Dvorsky, J., Belas, J., Gavurova, B., & Brabenec, T. (2021). Business risk management in the context of small and medium-sized enterprises. Economic Research-Ekonomska Istraživanja, 34(1), 1690-1708. 10.1080/1331677X.2020.1844588

[8] Dvorsky, J., Belas, J., Gavurova, B., & Brabenec, T. (2021). Business risk management in the context of small and medium-sized enterprises. Economic Research-Ekonomska Istraživanja, 34(1), 1690-1708. 10.1080/1331677X.2020.1844588

[9] Dvorsky, J., Belas, J., Novotna, I., Fero, M., & Petrakova, Z. (2020). Quality of business environment of the SME: A sectoral view. Communications-Scientific Letters of the University of Zilina, 22(4), 163-172.

[10] Ferreira de Araujo Lima, P. (2019). The Development of Project Risk Management in Small and Medium Enterprises.

[11] Gamage, S. K. N., Prasanna, R. P. I. R., Jayasundara, J. M. S. B., Ekanayake, E. M. S., Rajapakshe, P. S. K., GAKNJ, A., ... & Nedelea, A. M. (2020). Social capital and SME: A systematic literature review and research directions. Ecoforum Journal, 9(3).

[12] Islam, A., Mansoor, A., Rahman, M., & Abd Wahab, S. (2020). Adjusting a strategic Cash-Flow model for Bangladeshi small and medium enterprises: the art of surviving COVID-19 emergency. Business Excellence and Management, 10(5), 194-213.

[13] Kotaskova, A., Belás, J., Bilan, Y., & Khan, K. A. (2020). Significant aspects of managing personnel risk in the SME sector. Management & Marketing. Challenges for the Knowledge Society, 15(2), 203-218. 10.2478/mmcks-2020-0013

[14] Krüger, N. A., & Meyer, N. (2021). The development of a small and medium-sized business risk management intervention tool. Journal of Risk and Financial Management, 14(7), 310. 10.3390/jrfm14070310

[15] Lepistö, K., Saunila, M., & Ukko, J. (2022). Facilitating SMEs' profitability through total quality management: the roles of risk management, digitalization, stakeholder management and system deployment. The TQM Journal, 34(6), 1572-1599. 10.1108/TQM-07-2021-0204

[16] Mikami, K., & Bird, A. (2022). Opportunism and trust in cross-national lateral collaboration: the Renault-Nissan Alliance and a theory of equity-trust. Journal of World Business, 57(3), 101286. 10.1016/j.jwb.2021.101286

[17] Ntare, P. C., Shau, I. R., & Ojwang, E. (2022). Effects of Enterprise Risk Management Practices on Performance of Small and Medium Scale Enterprises. A case of Dar es Salaam City, Tanzania. African Journal of Applied Research, 8(1), 182-199.

[18] Richard, E., & Kabala, B. (2020). Account receivable management practices of SMEs in Tanzania: a qualitative approach. Business Management Review, 22(2), 51-66.

[19] Roos, E., & Nyström, A. (2020). Managing Risks Posed on the Supply Chain of a Small Startup in Expansion.

[20] Shihadeh, F., Naradda Gamage, S. K., &Hannoon, A. (2019). The causal relationship between SME sustainability and banks’ risk. Economic research-Ekonomskaistraživanja, 32(1), 2743-2760. 10.1080/1331677X.2019.1655465

[21] Sniazhko, S. (2019). Uncertainty in decision-making: A review of the international business literature. Cogent Business & Management, 6(1), 1650692. 10.1080/23311975.2019.1650692

[22] Virglerová, Z., Conte, F., Amoah, J., & Massaro, M. R. (2020). The perception of legal risk and its impact on the business of SMEs. International Journal of Entrepreneurial Knowledge, 8(2), 1-13. 10.37335/ijek.v8i2.115

[23] Virglerova, Z., Khan, M. A., Martinkute-Kauliene, R., & Kovács, S. (2020). The internationalization of SMEs in Central Europe and its impact on their methods of risk management. Amfiteatru Economic.

[24] Williams Jr, R. I., Clark, L. A., Clark, W. R., & Raffo, D. M. (2021). Re-examining systematic literature review in management research: Additional benefits and execution protocols. European Management Journal, 39(4), 521-533. 10.1016/j.emj.2020.09.007

[25] Yakob, S., Syah BAM, H., Yakob, R., &Raziff, N. A. M. (2020). The effect of enterprise risk management practice on SME performance. The South East Asian Journal of Management, 13(2), 7. 10.21002/seam.v13i2.11785

[26] Zadorozhnyy, Z. M., Zhukevych, S., Portovaras, T., Rozelyuk, V., Zhuk, N., & Nazarova, I. (2023). ANALYSIS OF RISKS IN THE FINANCIAL SECURITY MANAGEMENT SYSTEM OF BUSINESS ENTITIES. Financial & Credit Activity: Problems of Theory & Practice, 6(53). 10.5267/j.dsl.2023.4.007

Abstract

References

How to cite