Business Ethics and Erm Influence on SME Company Performance Moderated by Business Strategy

Authors

  • Arnan Doman Universitas Esa Unggul, Jakarta, Indonesia
  • Riris Rotua Sitorus Universitas Esa Unggul, Jakarta, Indonesia

DOI:

https://doi.org/10.54783/influencejournal.v5i1.127

Abstract

Small and Medium Enterprises (SMEs) are one of the sectors not affected by several financial crises. However, Covid 19 pandemic has affected business performance due to restrictions on business activities. This Study aims to see Business Ethics, Enterprise Risk Management (ERM) influence company performance with moderation by SME Business Strategy in Indonesia. The research was conducted on Performing Loan borrowers at Bank Mandiri who came from seven provinces in Indonesia. According to Slovin Formula, the minimum sample size required is 362 companies from a population of 3,777. They have at least three years of business experience and annual sales of more than 5 billion rupiahs to a maximum of 50 billion rupiahs. The Structural Equation Model (SEM) method is used in quantitative research, and SmartPLS 3.0 and SPSS 26 software are used in data processing and analysis. Study results indicate that Business Ethics and Enterprise Risk Management positively and significantly influence company performance. In contrast, Business Strategy does not have a moderate relationship between Business Ethics and Enterprise Risk Management Company Performance. Based on the findings, in facing the economic crisis, SMEs must continue to apply Business Ethics, Business Risk Management, and other variables that affect their business performance appropriately.

References

Ali, S., Ahmadi, A., & Salamzadeh, Y. (2012). Relationship between Organizational Culture ‎ and Strategy Implementation : Typologies ‎ and Dimensions. Global Business & Management Reasearch : An International Journal, 4(3), 286–299.

Brustbauer, J. (2016). Enterprise risk management in SMEs: Towards a structural model. International Small Business Journal: Researching Entrepreneurship, 34(1), 70–85. https://doi.org/10.1177/0266242614542853

Callahan, C., & Soileau, J. (2017). Does Enterprise Risk Management Enhance Operating Performance ? Advances in Accounting, 37, 122–139. https://doi.org/10.1016/j.adiac.2017.01.001

Clampit, J., Hasija, D., Dugan, M., & Gamble, J. (2021). The Effect of Risk, R&D Intensity, Liquidity, and Inventory on Firm Performance during COVID-19: Evidence from US Manufacturing Industry. Journal of Risk and Financial Management, 14(10), 499. https://doi.org/10.3390/jrfm14100499

Fernández, L. M. V., & Pinuer, F. J. V. (2016). Influence of Customer Value Orientation, Brand Value, and Business Ethics Level on Organizational Performance. Revista Brasileira de Gestao de Negocios, 18(59), 5–23. https://doi.org/10.7819/rbgn.v18i59.1701

Ghozali, I., & Latan, H. (2015). Partial Least Squares Konsep, Teknik dan Aplikasi Menggunakan Program SmartPLS 3.0 untuk Penelitian Empiris. Semarang: Badan Penerbit UNDIP.

Gimbert, X., Bisbe, J., & Mendoza, X. (2010). The Role of Performance Measurement Systems in Strategy Formulation Processes. Long Range Planning, 43(4), 477–497. https://doi.org/10.1016/j.lrp.2010.01.001

Hair, J., Anderson, R., Babin, B., & Black, W. (2010). Multivariate Data Analysis.pdf (p. 758).

Hair Jr, J. F., Sarstedt, M., Ringle, C. M., & Gudergan, S. P. (2017). Advanced Issues in Partial Least Squares Structural Equation Modeling. saGe publications.

Hanggraeni, D., Šlusarczyk, B., Sulung, L. A. K., & Subroto, A. (2019). The Impact of Internal, External and Enterprise Risk Management on the Performance of Micro, Small and Medium Enterprises. Sustainability (Switzerland), 11(7). https://doi.org/10.3390/su10022172

Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The Use of Partial Least Squares Path Modeling in International Marketing. In New Challenges to International Marketing. Emerald Group Publishing Limited.

Hermina, N., & Marbun, A. D. (2020). Corporate Strategy Based on Business Environment Macro and Micro to Achieve Business Performance SME ( Small and Medium Enterprises) Business in West Java, Idonesia During The COVID-19 Pandemic. 17(10), 3718–3731.

Hu, L., & Bentler, P. M. (1998). Fit Indices in Covariance Structure Modeling: Sensitivity to Underparameterized Model Misspecification. Psychological Methods, 3(4), 424. https://doi.org/https:// doi.org/10.1037/1082-989X.3.4.424

Influência da orientação ao valor do cliente, do valor da marca e do nível de ética empresarial no desempenho organizacional. (n.d.).

Lee, F. H., Lee, T. Z., & Wu, W. Y. (2010). The Relationship between Human Resource Management Practices, Business Strategy and Firm Performance: Evidence from Steel Industry in Taiwan. International Journal of Human Resource Management, 21(9), 1351–1372. https://doi.org/10.1080/09585192.2010.488428

Leonidou, L. C. D., Kvasova, O. D., Leonidou, C. N. D., & Chari, S. D. (2013). Business Unethicality as an Impediment to Consumer Trust : The Moderating Role of Demographic and Cultural Characteristics. Journal of Business Ethics.

March, J. G., & Shapira, Z. (1987). Managerial Perspectives on Risk and Risk Taking. Management Science, 33(August 2015).

Nkuda, M. O. (2021). Strategic Management Practices and Business Ethics of Mobile Satellite Communication Companies in Nigeria. International Journal of Innovative Finance and Economics Research, 9(4), 134–152.

Oltra, M. J., & Floor, M. L. (2010). The Moderating Effect of Business Strategy on the Relationship between Operations Strategy and Firms’ Results. International Journal of Operations & Production Management, 30(1), 1–5.

Peraturan Pemerintah RI. (2021). Peraturan Pemerintah Republik Indonesia Nomor 07 Tahun 2021 tentang Kemudahan, Pelindungan, dan Pemberdayaan Koperasi dan Usaha Mikro, Kecil, dan Menengah. 086507, 25–26.

Prieto, I. M., & Revilla, E. (2009). Learning Capability and Business Performance : A Non-Financial and Financial Assessment. Emerald Insight, 13, 166–185. https://doi.org/10.1108/09696470610645494

Rehman, A. U., & Anwar, M. (2019). Mediating Role of Enterprise Risk Management Practices between Business Strategy and SME Performance. Small Enterprise Research, 26(2), 207–227. https://doi.org/10.1080/13215906.2019.1624385

Richard, P. J., Devinney, T. M., Yip, G. S., & Johnson, G. (2009). Measuring Organizational Performance : Towards Methodological Best Practice †. Journal of Management, 35(3), 718–804. https://doi.org/10.1177/0149206308330560

Román, S., & Ruiz, S. (2005). Relationship Outcomes of Perceived Ethical Sales Behavior: The Customer’s Perspective. Journal of Business Research, 58(4), 439–445. https://doi.org/10.1016/j.jbusres.2003.07.002

Senzu, E. T., & Ndebugri, H. (2018). Examining business Performance of Micro, Small and Medium Scale Enterprise through Accounting Records Keeping; Case Study in Ghana. Researchgate.Net, 84022.

Soltanizadeh, S., Zaleha, S., Rasid, A., & Mottaghi, N. (2016). Business Strategy, Enterprise Risk Management and Organizational Performance. Emerald Insight, 38(2). https://doi.org/10.1108/MRR-08-2013-0185

Southiseng, N., & Walsh, J. (2010). Competition and Management Issues of SME Entrepreneurs in Laos : Evidence from Empirical Studies in Vientiane Municipality , Savannakhet and Luang Prabang. Asian Journal of Business Management, 2(3), 57–72.

Stanković, M., Mrdak, G., Stojanović, S., & Stanisavljević, B. (2021). Integrating Business Ethics and Business Strategy. Knowledge – International Journal, 45, 177–183.

Taouab, O., & Issor, Z. (2019). Firm Performance: Definition and Measurement Models. European Scientific Journal ESJ, 15(1). https://doi.org/10.19044/esj.2019.v15n1p93

Tonello, M. (2011). Emerging Governance Practices in Enterprise Risk Management. In SSRN Electronic Journal. https://doi.org/10.2139/ssrn.963221

Turyakira, P. K. (2018). Ethical Practices of Small and Medium-Sized Enterprises in developing countries: Literature Analysis. South African Journal of Economic and Management Sciences, 21(1), 1–8. https://doi.org/10.4102/sajems.v21i1.1756

Wardhanie, A. P., Kartikasari, P., & Wulandari, S. H. E. (2018). Pertumbuhan Bisnis Melalui Metode O2O pada Usaha Mikro, Kecil dan Menengah (UMKM) di Indonesia. Jurnal Ilmiah Bisnis dan Ekonomi Asia, 12(2), 76–83. https://doi.org/10.32812/jibeka.v12i2.10

Downloads

Published

17-03-2023

How to Cite

Doman, A. ., & Sitorus, R. R. . (2023). Business Ethics and Erm Influence on SME Company Performance Moderated by Business Strategy. INFLUENCE: INTERNATIONAL JOURNAL OF SCIENCE REVIEW, 5(1), 314–325. https://doi.org/10.54783/influencejournal.v5i1.127