Managing risk inside China: Insights from in-depth empirical analyses in manufacturing industry
Document Type
Article
Publication Date
1-1-2018
Abstract
This article provides key insights into the valuation of enterprise risk management (ERM) inside China. According to data gathered from manufacturing industry in China, the article examined the implication of risk management within firms through the effect of ERM on the relationship between individual risks and risk portfolio, on the relationships among categorical risks and risk structure, and on the relationship between categorical risk and firm performance. In order to evaluate the benefits of ERM in a comprehensive manner, a covariance-based structural equation modeling (CBSEM) was adopted as the major method. The results revealed that ERM mitigated the association between individual risks and risk portfolio in China. In addition, the relationships among categorical risks in the risk structure were weakened as well. Since the relationship between categorical risks and firm performance became significantly weak when firms embraced with ERM, therefore, it implied that ERM can optimize the risk structure and add value to firm performance by managing risk in China.
Keywords
China, Firm performance, Manufacturing industry, Risk management, Structural equation modeling
Divisions
Faculty_of_Business_and_Accountancy
Publication Title
International Journal of China Studies
Volume
9
Issue
1
Publisher
Institute of China Studies