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Risk management practices in German SMEs: an empirical investigation

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  • Thomas Henschel

Abstract

This paper reports the current risk management practices in German Small to Medium-sized Enterprises (SMEs) (so-called German 'Mittelstand'). In particular, it studies possible relationships between risk management and business planning activities. Additionally, it determines to what extent the Balanced Scorecard (BSC) is used, for the general purpose of performance measurement and especially for the purpose of risk management. The enquiry was carried out by means of a postal questionnaire. The results show that in German SMEs the handling of risks is strongly concentrated on owner–managers. Risk management is carried out in a rather rudimentary way. Only a few SMEs have established a comprehensive business planning system, and the link between their risk management and their business planning in most SMEs is not well developed. But a sound risk management requires an elaborate business planning, together with a direct mapping of risk figures into the planning system. In general, the BSC was met open-minded, but its use for risk management is mentioned by only a few enterprises. This investigation is a first step of a larger empirical approach to risk management practices in German SMEs.

Suggested Citation

  • Thomas Henschel, 2006. "Risk management practices in German SMEs: an empirical investigation," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 3(5), pages 554-571.
    • Handle: RePEc:ids:ijesbu:v:3:y:2006:i:5:p:554-571
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    Citations

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    Cited by:

    1. Crovini, Chiara & Ossola, Giovanni & Britzelmaier, Bernd, 2021. "How to reconsider risk management in SMEs? An Advanced, Reasoned and Organised Literature Review," European Management Journal, Elsevier, vol. 39(1), pages 118-134.
    2. Ferreira de Araújo Lima, Priscila & Crema, Maria & Verbano, Chiara, 2020. "Risk management in SMEs: A systematic literature review and future directions," European Management Journal, Elsevier, vol. 38(1), pages 78-94.
    3. Mai, Nhat Chi, 2021. "Determinants of successful adoption of the Balanced Scorecard in Vietnamese small and medium-sized enterprises," OSF Preprints 5hx2r, Center for Open Science.
    4. Alexis Catanzaro & Christine Teyssier, 2021. "Export promotion programs, export capabilities, and risk management practices of internationalized SMEs," Small Business Economics, Springer, vol. 57(3), pages 1479-1503, October.
    5. Elisabetta Mafrolla & Felice Matozza, 2014. "Risk management and firm size: a survey of Italian private companies," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2014(3), pages 87-108.
    6. Mohamed A. K. Basuony, 2014. "The Balanced Scorecard in Large Firms and SMEs: A Critique of the Nature, Value and Application," Accounting and Finance Research, Sciedu Press, vol. 3(2), pages 1-14, May.
    7. Lutz Hahnenstein & Gerrit Köchling & Peter N. Posch, 2021. "Do firms hedge in order to avoid financial distress costs? New empirical evidence using bank data," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(3-4), pages 718-741, March.
    8. Blessward JENYA* & Maxwell SANDADA*, 2017. "Enhancing Success of SMES Through Risk Enterprise Management: Evidence From A Developing Country," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 27(2), pages 173-188.
    9. R. P. M. (René-Pascal) van den Boom, 2022. "Do Dutch SMEs Manage Financial Risk Rationally? Implications from an Empirical Study," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(7), pages 1-44, July.

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