THE INFLUENCE OF RISK PERCEPTION AND PROACTIVE BEHAVIOR ON PERFORMANCE OF FIRMS IN THE STOCK EXCHANGE OF THAILAND: THE MODERATING ROLES OF ORGANIZATIONAL UNITS AND TYPES OF FIRMS

Abstract

Research on the role of risk perception and proactive behavior on firm performance has gained importance, but little is known about how the types of firm and different roles of managers might influence the outcomes of firm performance when they perceive risk and take proactive actions. This study aimed to investigate the effects of firms’ perceived risk on managers and their proactive behaviors and the effects of firm managers’ proactive actions on firm performance in terms of financial performance and risk management concepts. Using a questionnaire survey and financial database, data from 488 respondents representing 231 firms listed on the SET (The Stock Exchange of Thailand) was collected. Results from ordinary least squares regressions found a significant associations among risk perception, proactive behavior, and firm performance. The roles of the type of firm and organizational units significantly moderated the relationships among risk perception, proactive behavior, and firm performance. These findings suggest that 1- perceived risk tends to increase proactive behavior in managers who work at below average target firms and work in line function units and 2- that the proactive behavior of firm managers who work in firms with a formal risk management department and work in line function units tends to enhance firm performance and mitigate risk. In terms of organizational implications, our findings would suggest that establishing risk management systems will enhance firm performance in terms of financial performance and risk management concepts.

Keywords: risk perception, proactive behavior, firm performance, type of firm, organizational units