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Modelling the Risk and Reward Trade-off for SMEs: A Case Study

In: Risk Management

Author

Listed:
  • Madhu Acharyya

    (Glasgow Caledonian University)

  • John Houston

    (Stirling Management School, University of Stirling)

Abstract

While there is a well-developed literature that investigates risk-reward trade-offs in large corporations, there is less so for smaller, ‘independent’ firms. Neither is there an abundance of studies into the ‘agency problem’ in such smaller firms, and what impact it may have on attitudes to risks and rewards at different levels of such organisations. In this chapter, the data from a survey conducted on the owners and staff of a family-owned company headquartered in Singapore are used to ascertain the extent of significant differences in attitudes to specific risks and rewards, between the two groups. Respondents were asked to judge the importance to them of 150 different risk/reward factors and an ordered logit model was used to ascertain the significance of their role in the company in scoring their significance. We find that, in general, the owners and managers and staff exhibited the same attitudes, though there are some interesting differences between them, though there are no obvious patterns where they exist.

Suggested Citation

  • Madhu Acharyya & John Houston, 2022. "Modelling the Risk and Reward Trade-off for SMEs: A Case Study," Risk, Governance and Society, in: Cristina Florio & Monika Wieczorek-Kosmala & Philip Mark Linsley & Philip Shrives (ed.), Risk Management, pages 61-94, Springer.
    • Handle: RePEc:spr:rischp:978-3-030-88374-4_4
    DOI: 10.1007/978-3-030-88374-4_4
    as

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