Financial Risk, Managerial Capability, and MSME Business Resilience in an Era of Economic Uncertainty

Irwan Moridu; Nurcahya Hartaty Posumah; Fitriani Fitriani

doi:10.61255/jeemba.v4i4.1321

Authors

Irwan Moridu Universitas Muhammadiyah Luwuk, Indonesia
Nurcahya Hartaty Posumah Universitas Muhammadiyah Luwuk, Indonesia
Fitriani Universitas Muhammadiyah Luwuk, Indonesia

DOI:

https://doi.org/10.61255/jeemba.v4i4.1321

Keywords:

Business Resilience, Financial Risk, Managerial Capability

Abstract

Purpose – This study examines how perceived financial risk and managerial capability are associated with MSME business resilience under economic uncertainty. Business resilience is defined as the capacity to anticipate, absorb, adapt to, and recover from disruption.

Methodology – A quantitative nationwide online survey was conducted in Indonesia. Google Forms questionnaires were distributed through a third-party respondent panel platform to eligible MSME owners and managers. The final sample comprised 200 valid responses and was analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS).

Finding/Results – Perceived financial risk was negatively associated with business resilience, whereas managerial capability was positively associated with it. Managerial capability showed the stronger standardized association within the specified model, which explained 86.2% of the variance in business resilience. These results are interpreted cautiously because the data are cross-sectional and self-reported.

Originality/Value – Rather than claiming new direct relationships, this study offers an integrated dual-mechanism explanation of MSME resilience: financial vulnerability constrains the resources available for responding to disruption, while managerial capability supports the sensing, coordination, and reconfiguration of those resources. Its contribution is the joint assessment of these mechanisms and their relative statistical associations within one model.

Abstract views: 8 ,

PDF downloads: 6

Downloads

Download data is not yet available.

References

Ambulkar, S., Blackhurst, J., & Grawe, S. (2015). Firm’s resilience to supply chain disruptions: Scale development and empirical examination. Journal of Operations Management, 33–34, 111–122. https://doi.org/10.1016/j.jom.2014.11.002

Ates, A., & Bititci, U. S. (2011). Change process: A key enabler for building resilient SMEs. International Journal of Production Research, 49(18), 5601–5618. https://doi.org/10.1080/00207543.2011.563825

Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108

Battisti, M., Beynon, M., Pickernell, D., & Deakins, D. (2019). Surviving or thriving: The role of learning for the resilient performance of small firms. Journal of Business Research, 100, 38–50. https://doi.org/10.1016/j.jbusres.2019.03.006

Branicki, L. J., Sullivan-Taylor, B., & Livschitz, S. R. (2018). How entrepreneurial resilience generates resilient SMEs. International Journal of Entrepreneurial Behavior & Research, 24(7), 1244–1263. https://doi.org/10.1108/IJEBR-11-2016-0396

Buganová, K., Hudáková, M., Šimíčková, J., & Mošková, E. (2023). Disparities in the implementation of risk management in the SMEs. Systems, 11(2). https://doi.org/10.3390/systems11020071

Burnard, K., & Bhamra, R. (2011). Organisational resilience: Development of a conceptual framework for organisational responses. International Journal of Production Research, 49(18), 5581–5599. https://doi.org/10.1080/00207543.2011.563827

Conz, E., & Magnani, G. (2019). A dynamic perspective on the resilience of firms: A systematic literature review and a framework for future research. European Management Journal, 38(3), 400–412. https://doi.org/10.1016/j.emj.2019.12.004

Diamantopoulos, A., & Siguaw, J. A. (2006). Formative versus reflective indicators in organizational measure development: A comparison and empirical illustration. British Journal of Management, 17(4), 263–282. https://doi.org/10.1111/j.1467-8551.2006.00500.x

Duchek, S. (2020). Organizational resilience: A capability-based conceptualization. Business Research, 13(1), 215–246. https://doi.org/10.1007/s40685-019-0085-7

Eggers, F. (2020). Masters of disasters? Challenges and opportunities for SMEs in times of crisis. Journal of Business Research, 116, 199–208. https://doi.org/10.1016/j.jbusres.2020.05.025

Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1), 2–24. https://doi.org/10.1108/EBR-11-2018-0203

Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115–135. https://doi.org/10.1007/s11747-014-0403-8

Herbane, B. (2018). Rethinking organizational resilience and strategic renewal in SMEs. Entrepreneurship & Regional Development, 31(5–6), 476–495. https://doi.org/10.1080/08985626.2018.1541594

Kock, N. (2015). Common method bias in PLS-SEM: A full collinearity assessment approach. International Journal of E-Collaboration, 11(4), 1–10. https://doi.org/10.4018/ijec.2015100101

Korber, S., & McNaughton, R. B. (2018). Resilience and entrepreneurship: A systematic literature review. International Journal of Entrepreneurial Behavior & Research, 24(7), 1129–1154. https://doi.org/10.1108/IJEBR-10-2016-0356

Kotsios, P. (2023). Business resilience skills for SMEs. Journal of Innovation and Entrepreneurship, 12(1). https://doi.org/10.1186/s13731-023-00304-0

Linnenluecke, M. K. (2017). Resilience in business and management research: A review of influential publications and a research agenda. International Journal of Management Reviews, 19(1), 4–30. https://doi.org/10.1111/ijmr.12076

Marchese, D., Reynolds, E., Bates, M. E., Morgan, H., Clark, S. S., & Linkov, I. (2018). Resilience and sustainability: Similarities and differences in environmental management applications. Science of the Total Environment, 613–614, 1275–1283. https://doi.org/10.1016/j.scitotenv.2017.09.086

Martinelli, E., Tagliazucchi, G., & Marchi, G. (2018). The resilient retail entrepreneur: Dynamic capabilities for facing natural disasters. International Journal of Entrepreneurial Behavior & Research, 24(7), 1222–1243. https://doi.org/10.1108/IJEBR-11-2016-0386

Matarazzo, M., Penco, L., Profumo, G., & Quaglia, R. (2021). Digital transformation and customer value creation in Made in Italy SMEs: A dynamic capabilities perspective. Journal of Business Research, 123, 642–656. https://doi.org/10.1016/j.jbusres.2020.10.033

Ortiz-de-Mandojana, N., & Bansal, P. (2016). The long-term benefits of organizational resilience through sustainable business practices. Strategic Management Journal, 37(8), 1615–1631. https://doi.org/10.1002/smj.2410

Ozanne, L. K., Chowdhury, M., Prayag, G., & Mollenkopf, D. A. (2022). SMEs navigating COVID-19: The influence of social capital and dynamic capabilities on organizational resilience. Industrial Marketing Management, 104, 116–135. https://doi.org/10.1016/j.indmarman.2022.04.009

Pal, R., Torstensson, H., & Mattila, H. (2014). Antecedents of organizational resilience in economic crises: An empirical study of Swedish textile and clothing SMEs. International Journal of Production Economics, 147(Part B), 410–428. https://doi.org/10.1016/j.ijpe.2013.02.031

Papadopoulos, T., Baltas, K. N., & Balta, M. E. (2020). The use of digital technologies by small and medium enterprises during COVID-19: Implications for theory and practice. International Journal of Information Management, 55, 102192. https://doi.org/10.1016/j.ijinfomgt.2020.102192

Priyono, A., Moin, A., & Putri, V. N. A. O. (2020). Identifying digital transformation paths in the business model of SMEs during the COVID-19 pandemic. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), 104. https://doi.org/10.3390/joitmc6040104

Saad, M. H., Hagelaar, G., Velde, G., & Omta, S. W. F. (2021). Conceptualization of SMEs’ business resilience: A systematic literature review. Cogent Business & Management, 8(1), 1938347. https://doi.org/10.1080/23311975.2021.1938347

Shmueli, G., Sarstedt, M., Hair, J. F., Cheah, J.-H., Ting, H., Vaithilingam, S., & Ringle, C. M. (2019). Predictive model assessment in PLS-SEM: Guidelines for using PLSpredict. European Journal of Marketing, 53(11), 2322–2347. https://doi.org/10.1108/EJM-02-2019-0189

Sullivan-Taylor, B., & Branicki, L. (2011). Creating resilient SMEs: Why one size might not fit all. International Journal of Production Research, 49(18), 5565–5579. https://doi.org/10.1080/00207543.2011.563837

Teece, D. J. (2007). Explicating dynamic capabilities: The nature and microfoundations of sustainable enterprise performance. Strategic Management Journal, 28(13), 1319–1350. https://doi.org/10.1002/smj.640

Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533. https://doi.org/10.1002/(SICI)1097-0266(199708)18:7