Enterprise Risk Management and Business Performance: Mediating Role of Business Model Innovation

Articles in Press

Document Type : Research Paper

Author

Kwadaso Estate, NO. Y2, Arthur Street

Abstract

Despite policymakers' efforts to enhance small business performance through innovative business models and reduce failure rates, their risk management strategies remain underdeveloped. This study therefore investigated the mediating role of business model innovation (BMI) in the effect of enterprise risk management (ERM) practices on the performance of small, and medium-sized enterprises (SMEs) in the Kumasi Metropolis. Using explanatory design, the sample of 206 was surveyed through structured questionnaire and the data analyzed using SPSS 25 and LISREL 8.50. The hypotheses were tested using structural equation model (SEM). The findings show that ERM did not have a direct effect on operational performance. However, ERM positively and significantly affected BMI, which also positively and significantly influence operational performance. Thus, BMI fully mediated the relationship between ERM and operational performance. However, ERM positively and significantly affected financial performance. Additionally, ERM positively and significantly affected BMI, which also positively and significantly affected financial performance. This suggests that BMI partially mediated the relationship between ERM and financial performance. Evidently, BMI plays a critical mediating role in translating ERM practices into improved SME performance, fully mediating their impact on operational performance and partially mediating their effect on financial performance. Thus, SMEs should integrate ERM with BMI to enhance performance, ensure financial stability, and leverage policy support for resilience and innovation growth. ERM and BMI foster SME growth, creating jobs, enhancing resilience, and improving product quality, boosting customer satisfaction and economic development.

Keywords

References

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Available Online from 13 July 2025

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