Enterprise risk management and organizational performance: the empirical study of listed companies in Thailand
| dc.contributor.advisor | Pairote Pathranarakul | th |
| dc.contributor.author | Patipan Sae-Lim | th |
| dc.date.accessioned | 2018-07-18T09:11:50Z | |
| dc.date.available | 2018-07-18T09:11:50Z | |
| dc.date.issued | 2017 | th |
| dc.date.issuedBE | 2560 | th |
| dc.description | Dissertation (Ph.D. (Development Administration))--National Institute of Development Administration, 2017 | th |
| dc.description.abstract | Enterprise Risk Management (ERM) nowadays is a tool for preventive loss for listed-companies due to the volatility of the external environment. Moreover, apart from being a preventive tool, ERM is more important and posits as a compulsory system for alignment to a regulatory base for listed-companies driven from the issues of a lack of corporate governance (CG), historically, from well-known organizations: World-com, Enron, Volkswagen and so on. Even though, ERM is a vital tool for preventing organizational loss as well as for the alignment of listed-companies with the regulator, ERM was not perceived as a top-down strategic tool for organizations. In Thai-listed companies, ERM is at a low maturity level. Leaders have less knowledge about it and there is a low level of cooperation, although the study of the strategic benefits on ERM has been initially conducted (Gates, Louis, & Walker 2012: 28-38). From this it is important to incline the ERM maturity in Thai listed companies, and the prime objective in this research was to challenge the previous studies with the question, “could it be possible that ERM can posit as a strategic tool for enhancing listed companies’ performance (financial, shareholder and managerial performance)?” Secondly, if ERM has its benefits, both top-down and bottom-line, in general, what are the determinants across industries? The unit of analysis in this research was the organizational level. The population approximately accounted for 701 Thailand-listed companies across eight industries. The research design adopted follow-up qualitative extensions to core quantitative research through an empirical survey. For the quantitative methods, with three concepts, five latent variables, 15 observed variables and 50 measurement items, multivariate analysis through structural equation modelling (SEM) was constructed; while, in the qualitative part, interviews with nine ERM experts were undertaken to illustrate and explore the research results. After conducting SEM to confirm previous theories, it displayed that the data fitted well with the theories. Based on the first objective, the empirical data showed that after embedding an ERM system, organizations performed significantly better, especially in managerial performance -non-financial performance-. Comparing non-financial and financial indicators, successfully implementing ERM could significantly improve organizational non-financial indicators. The convergence between quantitative and qualitative methods illustrated that ERM is a strategic tool for deducing organizations with good decision making. Furthermore, ERM supplies early warning system information to the organization to adapt themselves to new business arenas more quickly and in a proactive strategic manner. Some ERM experts stated that ERM is a tool for re-assessing an organization’s situation through ways of control mitigation. Surprisingly, one contribution in this research was about displaying a strength correlation between ERM and corporate governance (CG). A high level of ERM maturity could remedy serious situations from the past: World-com, Enron, Volkswagen and so on. Unfortunately, despite this research trying to determine the benefits of ERM as a strategic tool enhancing organizational performance, it showed only a low level of causality between ERM and financial indicators: ROA (return of asset), ROE (return of equity) and net profit. ERM in Thai listed-companies still could not sustain long-term growth, especially in the view of the shareholders. In terms of each industry, there are the distinctive ERM maturity levels based on ANOVA. The financial industry has the best ERM performance; while, consumer products has the worst. From the in-depth interviews, the experts stated that as the regulations in the financial sector increase, they have the highest ERM performance. The regulator has the aim to enact ERM policies, procedures and guidance to financial companies, which is why they do ERM as a systematic cycle. Nevertheless, for second research objective, when comparing internal to external factors, successful implementation of ERM was found to be significantly associated with internal factors; while, SEM showed that external factors were insignificant. The experts concluded that organizations could not all ignore external factors while implementing ERM, especially for the institutional environments with intense regulator scrutiny and imitate processes within industries given institutional theory (DigMaggio & Powell, 1983). In an open-system, under the contingency theory, there is no one best way of implementing a system in an organization. However, based on the convergence in the mixed-method, in general, all internal factors are interdependency, while the most vital factor is “leadership”. Apart from supportive leaders, organizational characteristic through ways of creating a risk awareness culture also posits as a determinant of ERM. A risk awareness culture could be quantified from the level of open-mindedness for risk issues. This research has two sides of contributions. To the theoretical contribution, the convergence between ERM and management theories could be illustrated from confirmatory factor analysis (CFA) results with an acceptable range of fit indices given SEM. This is beneficial for future research directions. Practically, this research also has its advantages to propose best practice models. Firstly, Thai-listed companies should do ERM as an end-to-end process, but today they embed ERM in a piece-meal way. Secondly, the author recommends listed companies to have a risk management program at an enterprise level rather than a project based level. Thirdly, the ERM department should communicate and display the tangible benefits to related parties to incline the level of cooperation as all critical success factors in ERM rest upon internal factors. The most important target group to posit the tangible benefits in a top-down level is the risk management committee (RMC) as they are the leaders in the companies. Leaders are the first tier for successful implementation of ERM. Fourthly, apart from leader’s role, as a policy recommendation, staff have a mind-set with risks as a burden. Nowadays, staff constantly believe that if they reveal key risks they will also be a fault; therefore, they try not to disclose the real-risks. The author recommends that to embed ERM, an open-minded environment for risk issues is also important. According to the theoretical path model, there is a significantly strong correlation between the precondition of ERM and its processes, as shown with the high power of explanatory that is confirmed with the ERM standards, as COSO, ISO. Hence, companies should intentionally build up ERM infrastructure: setting precision risk appetite and tolerance, determination of ERM policy, procedures as well as standards, readiness and autonomy of ERM, all before sophisticated ERM processes are employed. Finally, the role of the regulator is also indispensable due to its aim to share ERM standards and principles. | th |
| dc.format.extent | 199 leaves | th |
| dc.format.mimetype | application/pdf | th |
| dc.identifier.doi | 10.14457/NIDA.the.2017.52 | |
| dc.identifier.other | b199687 | th |
| dc.identifier.uri | http://repository.nida.ac.th/handle/662723737/3754 | th |
| dc.language.iso | eng | th |
| dc.publisher | National Institute of Development Administration | th |
| dc.rights | This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. | th |
| dc.subject | e-Thesis | th |
| dc.subject.other | Risk management. | th |
| dc.subject.other | Corporations -- Thailand. | th |
| dc.subject.other | Corporations -- Thailand. | th |
| dc.subject.other | Business Administration, Management | th |
| dc.title | Enterprise risk management and organizational performance: the empirical study of listed companies in Thailand | th |
| dc.title.alternative | ระบบบริหารความเสี่ยงองค์กรและสมรรถนะองค์กร การศึกษาเชิงประจักษ์ของกลุ่มบริษัทจดทะเบียนไทย | th |
| dc.type | text--thesis--doctoral thesis | th |
| mods.genre | Dissertation | th |
| mods.physicalLocation | National Institute of Development Administration. Library and Information Center | th |
| thesis.degree.department | School of Public Administration | th |
| thesis.degree.discipline | Development Administration | th |
| thesis.degree.grantor | National Institute of Development Administration | th |
| thesis.degree.level | Doctoral | th |
| thesis.degree.name | Doctor of Philosophy | th |