Risk determinants of small and medium-sized manufacturing enterprises (SMEs) - an exploratory study in New Zealand

Subject Areas : Mathematical Optimization

Ariful Islam ¹ , Des Tedford ²

1 - Department of Industrial and Production Engineering, Shahjalal University of Science and Technology, Sylhet 3114, Bangladesh
2 - Department of Mechanical Engineering, The University of Auckland, Auckland, 1142, New Zealand

Received: 2020-10-01 Accepted : 2020-10-01 Published : 2012-01-01

Keywords: Risk, Disturbance, SMEs, Strategic risk management, Risk determinants,

Abstract :

The smooth running of small and medium-sized manufacturing enterprises (SMEs) presents a significant challenge irrespective of the technological and human resources they may have at their disposal. SMEs continuously encounter daily internal and external undesirable events and unwanted setbacks to their operations that detract from their business performance. These are referred to as ‘disturbances’ in our research study. Among the disturbances, some are likely to create risks to the enterprises in terms of loss of production, manufacturing capability, human resource, market share, and, of course, economic losses. These are finally referred to as ‘risk determinant’ on the basis of their correlation with some risk indicators, which are linked to operational, occupational, and economic risks. To deal with these risk determinants effectively, SMEs need a systematic method of approach to identify and treat their potential effects along with an appropriate set of tools. However, initially, a strategic approach is required to identify typical risk determinants and their linkage with potential business risks. In this connection, we conducted this study to explore the answer to the research question: what are the typical risk determinants encountered by SMEs? We carried out an empirical investigation with a multi-method research approach (a combination of a questionnaire-based mail survey involving 212 SMEs and five in-depth case studies) in New Zealand. This paper presents a set of typical internal and external risk determinants, which need special attention to be dealt with to minimize operational risks of an SME