Enterprise risk management and business strategy on firm performance: The role of mediating competitive advantage

Abstract

This research aims to know and analyze the contribution of enterprise risk management and business strategy to the competitive advantage and company performance of shipping companies listed on the Indonesia Stock Exchange. The company performance and competitive advantage of shipping companies listed on the Indonesia Stock Exchange fluctuate and are decreasing. The enterprise risk which is not well-managed can result in a decrease in competitive advantage and company performance. The shipping companies having no competitive advantage will have poor performance and lose in the competition with similar companies. This research uses Path Analysis with the analysis tool of Partial Least Square SmartPLS3 and its path coefficient significance test using a t-test. The total number of samples is 65 consisting of 13 companies with five years of observation taken using the purposive sampling technique. The result of this research states that shipping companies in Indonesia can increase their company performance through enterprise risk management. So, the companies must practice enterprise risk management properly where the aspect of risk management is integrated into the company strategy. Shipping companies in Indonesia can also increase their company performance through competitive advantage so that they can increase their revenue. Shipping companies can increase their company performance through business strategy, so they must implement a business strategy.