EXPLORING THE ROLE OF ORGANIZATIONAL CULTURE IN RISK MANAGEMENT PRACTICES: A QUALITATIVE STUDY OF SMALL AND MEDIUM ENTERPRISES (SMEs) IN EMERGING ECONOMIES

Author: Afrah J. Alabdulhadi

ABSTRACT

This paper aims to investigate the effects of organisational culture on risk management in emerging market SMEs, which are often exposed to external risks, including political risk, economic risk, and supply chain risk. Employing a qualitative research method, the study is underpinned by case studies and semi-structured interviews with SME leaders to establish the link between organizational culture and risk management. The study also revealed that leadership style, communication openness and organizational flexibility are the most important factors that influence the perception, assessment, management and response of SMEs to risks. Autonomous, innovative and proactive, entrepreneurial leadership is more effective than a hierarchical one because the latter is more risk-averse and reactive in decision-making. The study also shows that risk communication and cooperation are essential for improving risk perception across the organization and that flexibility is critical for SMEs to act quickly to external forces. This research is relevant to the existing knowledge by providing a view of the general problems of SMEs in emerging economies. Based on the findings, the following recommendations can be made to SME managers: First, managers should engage in proactive leadership; second, communication should be made more open; and third, adaptability should be integrated into the organisational culture. Despite the restriction of the study to specific geographical location and small sample size the study provides the basis for further research on culture and risk management in varied contexts.

Keywords: Small and Medium Enterprises (SMEs), Risk Management, Emerging Economies, Supply Chain.

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