INTERACTIVITY OF STRATEGIC ORIENTATIONS AND ENTERPRISE RISK MANAGEMENT IN ADVANCING FINANCIAL PROSPERITY OF MSMEs IN GHANA

Abstract

Business leaders and academics in the business management space continue to find ways to enhance the financial prosperity of MSMEs in the wake of continual threatening business environmental risks. Many continue to view business strategy as a key tool for business advancement. This research aims to study the mediating effect of ERM on the impact of prospector and defender strategies on financial prosperity of Ghanaian MSMEs. Quantitative data was collected with aid of questionnaire. The study employed the partial least square structural equation modelling (PLS-SEM) via SmartPLS in testing the hypotheses of the study. The results indicated that ERM significantly mediates the relationship between prospector and defender strategies and the financial prosperity of MSMEs serving as mechanism through which strategic orientations translate into financial outcomes. The findings of the research proved advantageous for managers of MSMEs in that it aids them to push for knowledge regarding the influence of diverse business strategies on financial performance and be able to identify risks that militate against firms’ financial prosperity. The results of the study can be utilised by policymakers in formulating policies and devising supportive programmes on efficient adoption of business strategies and the effective implementation of enterprise risk management practices.