Our study investigates the relationships between risk management systems (RMS), strategy and organizational performance. The existing research has extensively studied the effect of strategy on organizational performance. There is also a growing body of literature suggesting that RMS positively influence the achievement of organizational objectives. However, there are only a few conceptual papers (and no empirical evidence) on the relationship between strategy and RMS. We investigate whether different strategy types (defender, analyzer, prospector, and reactor) induce different levels of RMS development and, hence, affect performance indirectly, as well as directly. We use regression analysis and survey data to test the proposed relationships. Our results confirm the direct effects of strategy type and RMS development on performance. We confirm that prospectors perform better than defenders, analyzers, and reactors across five measures of performance (profitability, sales growth, market share, new product development, and customer satisfaction). We also find that companies with more developed RMS perform better in terms of non-financial performance (measured by new product development). Contrary to the prevailing evidence, we do not find significant results for financial performance. Moreover, our findings show that there is no mediating effect of RMS development in the relationship between strategy type and performance. This implies that RMS and strategy act as independent variables, each individually affecting organizational performance.
We gratefully acknowledge the comments and guidance we got from an anonymous reviewer. We thank conference participants at the 9th Conference on Performance Measurement and Management Control, especially Paula van Veen-Dirks, who was discussing our chapter.
Peljhan, D., Miloš Sprčić, D. and Marc, M. (2018), "Strategy and Organizational Performance: The Role of Risk Management System Development", Epstein, M., Verbeeten, F. and Widener, S. (Ed.) Performance Measurement and Management Control: The Relevance of Performance Measurement and Management Control Research (Studies in Managerial and Financial Accounting, Vol. 33), Emerald Publishing Limited, pp. 65-91. https://doi.org/10.1108/S1479-351220180000033004Download as .RIS
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