Abstract
Keywords
Introduction
According to the World Health Organization (WHO) reports, from 2011 to 2018, 1,438 epidemics were detected (Hudecheck et al., 2020). In March 2020, a new epidemic titled COVID-19 came, which struck human life and the world’s economy (Ampon-Wireko et al., 2022; Zhou et al., 2022). Globally, every country has faced economic crises and challenges (Roggeveen & Sethuraman, 2020) and has tried to control the upheaval of the market and supply chain process (Goel et al., 2021). The famous magazine “Fortune” reported in its February 21, 2020 issue that 94% of firms experienced supply chain disruption due to the epidemic (Chowdhury et al., 2021).
Nigeria has the largest Gross Domestic Product (GDP) in terms of nominal values in Africa (Aladejebi, 2020; Nwankwo et al., 2024), and COVID-19 impacts its GDP and supply chain process (local and abroad), pushing many Nigerian businesses out of the market (Ozili, 2021). To compete with these unpleasant circumstances and other unforeseen, entrepreneurs should apply different business strategies to sustain their supply chain performance (Ashraf et al., 2024; Otache, 2020). Dellana et al. (2022) highlight that businesses can be protected against surprises and remain competitive in this dynamic global market by adopting new risk management capabilities, which help foresee challenges ahead of time and sustain supply chain protocols for performance enhancement (Shishehgarkhaneh et al., 2024). Pagach and Warr (2015) explored enterprise risk management integration (ERMI) as a risk management capability with enormous advantages (Spanò & Zagaria, 2022).
ERM represents a leading paradigm that supports organizations in identifying, evaluating, and managing risks at the enterprise level (Florio & Brotto, 2024). According to Salsabila and Hasnawati (2024), several factors motivate firms to engage in the ERM process, such as the probability of financial distress and associated costs, low earnings performance, growth opportunities, and independent decision boards (Monazzam & Crawford, 2024). Risk management strategies support a firm in terms of competitive advantages, growth, financial performance, and stability (Tajeddini et al., 2023). Therefore, the objectives of this paper include examining the impact of ERMI on supply chain performance among firms in Nigeria. Another objective includes examining firm resilience as a mediator between ERMI and supply chain performance.
ERM integration is a comprehensive strategy that improves firm values, mitigates potential risks (Lacković et al., 2022), minimizes stock return volatility, balances revenue, reduces the expected costs of external capital and regulatory inspection (Cumming & Hirtle, 2001), optimizes shareholder value, and increases the firm’s cash flow (Hall, 2024). ERM integration helps businesses to manage a wide range of risks holistically with traditional risk management, where specific risk categories are separately managed in risk silos (Husaini et al., 2019b). Despite ERM integration’s advantages, as suggested in previous studies, there is little evidence concerning its contributions to improving supply chain performance during the COVID-19 crisis (Dellana et al., 2022).
Many of the ERM integrations are linked with academics and consultants, who are relatively familiar with the firm’s activities and are often affected by supply chain disruptions (Hoyt & Liebenberg, 2011). The Committee of Sponsoring Organizations of the Treadway Commission (COSO) (Al-Khadash et al., 2017) raised concern that only a few businesses thoroughly understand ERM integration (Lundqvist, 2014) and their operations with firm resilience (McBride, 2012). The lack of business and market knowledge has rendered many businesses ineffective and can easily kick them out of the market (Curkovic et al., 2013b). In addition, this condition has compelled many businesses to adopt ad-hoc risk management methods (Hoyt & Liebenberg, 2011), resulting in resource duplication, uncoordinated planning, and less effective risk management processes (Abidi et al., 2024).
ERM integration can create a reliable interfirm network to build contingent capabilities (Olson & Wu, 2010). Firms with solid contingent capabilities can achieve higher supply chain performance than conventional firms (Singh & Singh, 2019b). Bogodistov and Wohlgemuth (2017) illustrate that ERM integration strategies may impact directly and through firm capabilities to support chain performance and firm resilience (Husaini et al., 2019b). The contingent capability in the relationship between ERM integration and supply chain performance could be vital as (Shad et al., 2019) examine the relationship between ERM and supply chain performance (Husaini et al., 2019b). Since firm resilience is a contingent capability required to cope with contingent events and improve performance (Zighan & Ruel, 2023), our study employs firm resilience as a contingent capability to mediate the relationship between ERM integration and supply chain performance.
Therefore, our study contributes to the existing survey of ERM and supply chain performance. It will explore ERM integration in businesses and establish the degree to which it influences supply chain performance. Numerous studies have examined the concept of enterprise risk management integration individually with the supply chain process by applying a quantitative approach (Emrouznejad et al., 2023), and prior studies have focused less on quantitative studies. Therefore, based on a theoretical framework, our research contributed to the prior literature on enterprise risk management integration toward a firm’s supply chain performance to fill this gap. Secondly, the study explored the significant relationship of ERMI with firm resilience for Nigerian manufacturing firms. Thirdly, the mediating role of firm resilience between enterprise risk management integration and manufacturing supply chain performance endeavors. This research aimed to support future research and firm policymakers. Our study explored the individual-level ERMI incidents gap in knowledge on SCP.
The study has further sections that contain an introduction, theoretical foundation, and development of hypotheses. The next sections present the methodology, results, study conclusion, discussion, future direction for the researcher, and all the implications for practitioners.
Theory Building and Hypotheses Development
Resource-Based View Theory (RBV-T)
RBV theory recognizes the firm’s capabilities and resources for competitive advantages in a common market with similar resources (Nandi et al., 2021b; Ulrich & Barney, 1984), which may support building more connections to compete with the competitors. According to RBV, a firm with a more significant competitive advantage over a rival firm offers more consumer-added value and performance (Chotimah et al., 2024; Nandi et al., 2021b). RBV theory is used to recognize the enterprise risk management practices and firm performance that may emphasize the significance of a firm’s resources in achieving and sustaining competitive advantage and superior performance (Yakob, Syah Bam, Yakob, et al., 2020). The RBV theory suggests that a firm’s tangible and intangible resources are crucial in determining its performance outcomes (Kamasak, 2017).
RBV is considered a strategic asset for a firm with enterprise risk management practices and firm performance with better supply chain management (Yang et al., 2018). The practical implementation of ERM allows firms to protect their valuable resources, exploit opportunities, enhance resource utilization, and build stakeholder confidence. In addition, the resource-based theory emphasizes that using unique ERM practices supports firm performance with competitive advantages, achieving their activities, objectives, and set goals (Razzaque et al., 2023). These practices differentiate the firm in the market, explore potential resources, and gain maximum profit with stability. RBV helps to strengthen customer relationships, recognize potential opportunities, increase resource utilization with ERM practices, and leads to competitive advantages and performance (Chao & Wu, 2024).
In addition, utilizing firms’ available resources gives optimum benefits that sustain and remain potent in numerous market risk disruptions (Pang & Liu, 2024). ERM integration supports risk management’s core competence, which develops a supply chain ecosystem that helps utilize firm resources to enhance firm resilience capabilities. The propensity to enhance firm resilience can significantly increase supply chain performance (Mubarik et al., 2022). RBV emphasizes inter-firm activities that protect resources and minimize uncertainty regarding the environment since it assumes that a firm’s success depends on its environment (Tashman, 2021). This capability may utilize firm resources effectively and efficiently to enhance firm resilience leads to high job performance like supply chain performance.
Enterprise Risk Management Integration and Supply Chain Performance
Many firms hold managers accountable because of their capabilities, which support better firm performance, supply chain process, and customer satisfaction, which is the key to success for a firm in this situation (Salam & Bajaba, 2023). Therefore, managers’ positive behavior increases the firm performance level and creates long-term, strategic alliances with partners in the supply chain (Zelbst et al., 2009). Enterprise risk management integration includes the risk management process (RMP) to manage and mitigate (RM) the risk that leads to successful performance that optimizes value to customer satisfaction with quality goods and services (Zelbst et al., 2009).
Prior studies also consisted of a currently proposed hypothesis and showed the positive relationship between ERM with supply chain performance (Waqas et al., 2023). RMP is adopted to facilitate the delivery of quality goods at low cost to customers through supply chain performance. The management process with less risk significantly impacts the supply chain performance (Olson & Wu, 2010), and Dellana’s study also proposed that all three dimensions, RMP, RM, and internal risk management (IRM), have a positive relation while implementing ERM integration within the firms. RMP describes a standard method of managing risks discovered in firms (Dellana et al., 2022) to implement high levels of adequacy, and management must assign the roles as per their duties (Thaler & Levin-Keitel, 2016). Zelbst et al. (2009) illustrate that firms that assert a risk management process can enhance supply chain performance by supplying zero-defect items to customers (Inman et al., 2024).
A one-step procedure addresses risks connected to lead time uncertainty and risk mitigation (Dellana et al., 2022). While applying risk mitigation strategy in a firm, develop a decision model embedded in the management strategies to reduce uncertainty level also support the internal risk management that reflects the firm’s internal risk protocols, such as policies, procedures, and integration for better performance (Dellana et al., 2022). Firms with internal risk management have strategic risk insight, which promotes flexibility, ownership, and rational decision to improve supply chain performance (Hanggraeni et al., 2019).
From the RBV theory perspective, ERM integration converges the firm’s capabilities into strategic assets, especially in a volatile and competitive business environment (Saeidi et al., 2019). Internal risk management enables firms to build infrastructure that is equipped with current risk trends in the business environment and practices that have been found to improve firm performance. Florio and Leoni (2017) found that ERM implementation improved firm performance beyond the projected performance of different sectors. In Italy, firms immediately addressed customer problems when there were uncertainties in the European market (Rapaccini et al., 2020). Altanashat et al. (2019a) concluded that ERM is a panacea for handling risks that could affect supply chain performance. Firms implementing ERM can enhance their supply chain performance by eliminating lateness, damages, and incomplete orders to final customers (Altanashat et al., 2019a; Quon et al., 2012). The significance of ERM and its dimensions may not be limited to improving only general firm performance and can be extended to a specific aspect of firm performance (Poretti et al., 2024). Previous research focused limited on the ERM integration relationship with supply chain performance (Altanashat et al., 2019b). Based on the existing literature, we posit this hypothesis;
Enterprise Risk Management Integration and Firm Resilience
The firm ability to predict, adapt, and respond to problems with available limited resources is known as firm resilience (Ponomarov & Holcomb, 2009; Yu et al., 2019). Resilient firms have more significant competitive advantages over their counterparts in terms of supply chain performance (Pettit et al., 2019; Ponomarov & Holcomb, 2009). However, resilience requires the support of a firm’s strategic asset to give that competitive edge and ensure a high level of supply chain performance (Yeongbok & Kwon, 2021). Based on RBV theory, Saeidi et al. (2019) demonstrated that enterprise risk management integration is a strategic asset that relies on creating an ecosystem and supporting businesses’ competitive advantages (Olaniyi et al., 2023). ERM integration ensures firms create risk-free registers by dismantling barriers within each business unit and these strategies help the firm to foresee unexpected risks and develop a coping mechanism like resilience to handle the risk (Nair et al., 2024).
However, the traditional risk management approach treats different types of risk categories independently in risk silos (Conz et al., 2023). In the advanced technological era, firms should pay more attention to modern approaches like ERM integration (Dellana et al., 2022). Therefore, ERM integration assists the firm in managing various risks in an integrated and holistic manner (Dellana et al., 2022; Shad et al., 2019). Moreover, it is also essential to consider how components of ERM integration- risk management process, risk mitigation, and internal risk management may simultaneously impact other outcome variables such as resilience (Monazzam & Crawford, 2024). Therefore, based on previous literature, we attempt to contribute by empirically examining how ERM integration and its components, RMP, RM, and IRM, may affect firm resilience. Hence, we state the following hypotheses.
Mediating Role of Firm Resilience
Previous literature suggested that ERM integration significantly relates to firm resilience (Saglam et al., 2021; Shi et al., 2023) and supply chain performance (Lin et al., 2012; Spanò & Zagaria, 2022). There is limited literature on the mediating role of firm resilience in the relationship between ERM integration and supply chain performance. However, Abeysekara et al. (2019) and Altay et al. (2018) demonstrated that firm resilience could improve supply chain performance directly and as a mediating role for enterprise risk management integration. Hence, the theoretically correct proposal that firm resilience may mediate the relationship between ERM integration and supply chain performance will be correct. Drawing on RBV theory (Barney, 2001; Jamil & Soares, 2021) helps to explain how firm resilience may catalyze the impact of ERM integration on supply chain performance (Bogodistov & Wohlgemuth, 2017). B. K. Mishra et al. (2019) have illustrated ERM integration as a strategic asset that firms can rely on to achieve higher performance (Yakob et al., 2019).
However, ERM integration requires the optimum utilization of the firm’s available resources to convert into greater performance (Hanggraeni et al., 2019), and its efficient utilization significantly impacts the development of resilient capabilities (Jiang et al., 2019), which influences the supply chain performance (Um & Han, 2021a). However, all the ERM components (risk management process, risk mitigation, and internal risk management) may enhance the firm resilience and make the firm more capable of achieving a competitive advantage (Florio & Brotto, 2024). ERM components also help train and develop employees for any future business issues and natural disasters (Das et al., 2023).
ERM integration and supply chain performance are important considerations for the firm growth (Ngo et al., 2024). The existing literature explores the relationship between these two factors and the mediating role of a firm’s resilience capability (Salam & Bajaba, 2023). This research examines how effectively ERM integrates with supply chain practices and impacts supply chain performance. Additionally, it investigates how a firm’s resilience capability mediates this relationship, acting as a mechanism to enhance supply chain performance.
While facing current and future issues that create hurdles for the firm growth, training, and development programs enhance the resilient capacity of the employees to innovate and build more resilient supply chain processes for performance (Mubarik et al., 2022; Piprani et al., 2023). The risk mitigation technique examines the market condition and risk occurrences that secure the firm and supply chain process (Ngo et al., 2024). However, RM helps the firm create resilient supply chain processes with business strategies, risk-taking behavior, and multidisciplinary thinking with decision-making power, ultimately improving supply chain performance (Natale et al., 2022; Saglam et al., 2021). Additionally, the internal risk management aspect of the ERM integration compels businesses to communicate risk-specific information across departments routinely (Ali et al., 2023).
Firm resilience encourages the stakeholders and customers to be a firm’s partners, making it easier for the firm to have a competitive advantage (Liu & Yin, 2020). According to Cheng and Lu (2017), firms with a competitive advantage in the supply chain ecosystem can increase performance higher than their competitors (Sharabati et al., 2023). Therefore, based on the literature, ERM integration may develop a collective risk mindset that enhances firm resilience, which can contribute to higher supply chain performance in times of market disruptions. As such, the study proposes the following hypotheses:
Firm Resilience and Supply Chain Performance
Supply chain performance is important for growth and requires firms to adopt mechanisms to counter disruptions with the likelihood of dampening performance (Huo et al., 2024). Firm resilience has been widely investigated as an outcome of supply chain management decisions (e.g., Nam & Seulki, 2022). From the resource-based view theory perspective, firm resilience facilitates using firm capabilities to handle internal and external issues that could affect the supply chain process (Brandon-Jones et al., 2014). Also, it supports recognizing risk disruption elements to mitigate and improve the firm’s supply chain performance. FR supports the firm’s capabilities in facing new challenges, recognizing and innovating opportunities, and ensuring business continuity in the market (Shahmehr et al., 2024).
According to X. Zhu and Wu (2022); X. Q. Zhu and Wu (2022) after COVID-19, all businesses were threatened globally; firms that showed resilience in their supply chain operations remained stable and delivered quality products to their customers with higher supply chain performance. Altay et al. (2018) discussed the effect of resilience on pre-disaster and post-disaster firm performance. They concluded that firm resilience considerably raises the effectiveness of the humanitarian supply chain both before and after a crisis (Nandi et al., 2021b). Drawing on the resource-based view theory support (Brusset & Teller, 2017; Eryarsoy et al., 2022) and prior literature related to resilience and performance (Chowdhury et al., 2021) states to propose the hypothesis below:
Table 1 illustrates the comprehensive studies regarding enterprise risk management from the prior studies, showing the study objectives and their contribution to the previous gap. This study identified the gap based on the existing work; previously, researchers focused on the relationship of risk management with supply chain resilience, business performance, and enterprise risk management, but fewer studies were found that focused on the complete framework of enterprise risk management integration with supply chain management including the mediating role of firm resilience.
Empirical Studies for the Enterprises Risk Management.
This paper’s contribution lies in its examination of the integration of enterprise risk management (ERM) practices in Nigerian firms and its impact on resilience capability and supply chain performance. By employing structural equation modeling (SEM) and utilizing data from Nigerian firms, this study sheds light on the relationship between ERM integration, resilience capability, and supply chain performance within the Nigerian context.
Compared to other similar empirical studies, this paper offers several distinct contributions. Firstly, it focuses on the Nigerian context, adding valuable insights to the literature on risk management practices and supply chain performance within an emerging market setting. This contextual specificity is crucial as it recognizes Nigerian firms’ unique challenges and opportunities. Secondly, this paper employs SEM, a robust statistical methodology, to analyze the relationship between ERM integration, resilience capability, and supply chain performance. This analytical approach thoroughly examines the complex interplay between these variables and allows for a more comprehensive understanding of their associations.
Furthermore, this study goes beyond examining the direct relationship between ERM integration and supply chain performance by exploring the mediating role of resilience capability. This nuanced analysis provides deeper insights into how ERM integration influences supply chain performance outcomes.
Compared to similar empirical studies, this paper also identifies specific risk management processes within ERM integration that significantly impact resilience capability and supply chain performance. By elucidating these processes, the study offers practical implications for Nigerian firms and potentially other contexts, enabling organizations to focus on key areas for improving their supply chain performance.
Overall, this paper’s contribution lies in its contextual focus, utilization of SEM, investigation of the mediating role of resilience capability, and identification of specific risk management processes. By offering unique insights and practical implications, this study advances the understanding of the relationship between ERM integration, resilience capability, and supply chain performance in Nigerian firms. It potentially serves as a valuable reference for future research and practice in this domain.
Enterprise Risk Management Integration Conceptual Model
To explore the concept and relationship of enterprise risk management integration on supply chain performance. This study conceptualized the mediating role of firm resilience between ERM Integration and the supply chain performance of manufacturing firms. Figure 1 illustrates the conceptual research framework for supply chain performance.
Conceptual framework.
Methods and Measurement
Selection of Context
The quantitative approach was applied to the proposed conceptual model, and 1,207 Nigerian manufacturing firms were randomly selected through the Corporate Affairs Commission database (https://search.cac.gov.ng/home 10/08/2023). To maximize the generalizability of the results, we included a diverse sample of firms from a range of industry sectors and firm features. Previous research suggested that the quantitative approach is reliable for examining the relationship between studied variables. To gather the data, the authors compiled a business list and contacted the firm management, which ensures our work is purely for academic purposes and will be confidential.
A total of 827 questionnaires were sent through both modes (online and offline) to the executives and senior managers involved in firms’ risk management decision-making. The data collection was prolonged to 16 weeks (June 2023 to October 2023). Nonrandom sampling techniques were applied to the targeted population to gather the required data (Ferdinand et al., 2007; Webb et al., 1999). In addition, the respondents’ 300 sample size is sufficient to calculate the reliability and validity of the data, and several factors are involved in applying Structural Equation Modeling (SEM) to the study (Hair et al., 2012). Cohen’s power theory (Cohen, 1988) and prior studies’ findings are adequate for the current sample size (Hair et al., 2017).
Table 2 illustrates the demographics for 572 respondents, 502 of whom were males and 70 (87.76%) females (12.23%). This includes 60 respondents from various manufacturing firms (10.48%), 210 from oil and gas (36.71%), 82 from commerce (14.33%), 57 from construction (9.96%), 41 from mining (7.16%), 54 from healthcare (9.44%), and 68 from hospitality (11.88%).
Respondents Demographics.
Reliability and Convergent Validity
The study conducted an extensive literature review and relied on the existing developed valid scale for survey and analyses. The pilot testing survey was valid and reliable, with 73 respondents between 0.73 and 0.90, and to confirm further analysis, the final survey was conducted on a larger sample. This study included a 7-point Likert scale to measure the studied variables ranging from 1 =
Measures for Studied Variables
Enterprise risk management integration was assessed on three dimensions: RMP with three items, RM with eight items, and four were used to measure IRM. All were adopted from (Dellana et al. (2022), which was consistent with previous studies (Qiao & Zhao, 2023). Firm resilience was measured with six items adapted from the study of (Singh and Singh (2019a). The existing 11-item scale, adopted from Zelbst et al. (2009) and previously used by Ricardianto et al. (2023), was used to measure supply chain performance. This study employed gender, age, professional experience, business, and firm size as a control variable in estimating the path analysis. The decision to use these demographic variables as controls is in line with previous (Rajala & Hautala-Kankaanpää, 2023; Yokoyama et al., 2023).
Managing Attrition and Common Biases
Using a questionnaire approach can generate attritions and biases in the survey results. Therefore, this study used different methods to avoid attritions (Eisner et al., 2019) and biases from the study (Podsakoff et al., 2003; Rodríguez-Ardura & Meseguer-Artola, 2020). The study reduced the impact of attrition by using an online survey that enabled the researchers to reach the appropriate respondents. According to Becker and Glauser (2018) and Eisner et al. (2019), the capacity of researchers to disseminate the survey to numerous respondents may lead to a higher response rate, thereby offsetting the attrition effect caused by participants who might withdraw from the study.
This methodology also serves as an effective strategy to mitigate the impact of attrition and alleviate non-response biases within a survey. By imposing constraints on survey items, participants are compelled to respond to all questions, thereby enhancing data completeness. Furthermore, leveraging participants’ contact information, including email addresses and phone numbers, enables researchers to engage in proactive communication, reminding and encouraging them to participate in the online survey. For individuals unreachable via phone or email, efforts were made to visit their workplaces until their availability or capacity to respond to the survey was ascertained.
Harman’ Single Factor and ANOVA Test
Additionally, Harman’s single-factor test was employed to detect potential common method bias in our data. The analysis revealed that only 29.16% of the variation could be attributed to a single eigenvalue of 10.69, indicating that less than 50% of the variance was explained. This finding suggests that our study did not exhibit typical methodological biases. Furthermore, confirmatory factor analysis utilizing the common latent factor was conducted to further validate Harman’s single-factor test. However, the results indicated that the model did not adequately reflect the dataset, indicating that common method bias was not a concern in this study. To assess the demographic determinants of the key variables under investigation, an ANOVA test was conducted to examine mean differences. The results indicated no statistically significant difference (
Results
The study checked the normality of the data set before performing further analysis. The study performed the Kolmogorov-Smirnov and Sharpiro-Wilk normality tests. Also, we checked the skewness and Kurtosis of the data distribution since the Kolmogorov-Smirnov and Sharpiro-Wilk normality tests are strict to sample size, and they may not be sufficient to justify the normality of the data set. From the Kolmogorov-Smirnov and the Shapiro-Wilk normality tests (see Table 3), we found out that all variables for the Kolmogorov-Smirnov and the Shapiro-Wilk tests had statistics values that were significant (
Test of Normality.
We also performed skewness and kurtosis analysis (see Table 4). The results showed the skewness and kurtosis values were within the ±2 and ±4 threshold, suggesting an endorsement of sample distribution symmetry and peakedness, respectively (George, 2011; Gravetter et al., 2020; P. Mishra et al., 2019). According to Kim (2013) and P. Mishra et al. (2019), sufficient normality can be determined using an absolute skewness value of less than two or an absolute kurtosis value of less than four as reference values. Therefore, based on skewness and Kurtosis, our data set achieved acceptable normality.
Results of Skewness and Kurtosis.
Table 5 illustrates the correlation analysis for studied variables with control variables, with mean, standard deviation, and correlation, which shows a significant relationship among primary variables. The correlation values range from 0.221 to 0.364, which is close to the threshold value of 0.70, and the findings show no discriminant validity issue. The result shows that enterprise risk management integration dimensions, such as RMP, RM, and IRM, significantly correlate with SCP and FR.
Means, Standard Deviation, and Correlations.
The significant results provide preliminary support for H1, H1a, H1b, H2, H2a, H2b and H3, H3a, H3b. Also, firm resilience is significantly correlated with supply chain performance. This outcome preliminary supports H4.
Reliability and Validity Analysis
Table 6 shows the diagnostic test to determine the validity and reliability of scales used to gather, which includes testing internal consistency. The value for Cronbach’s alpha ranged between .778 and .951, which was greater than the threshold value of 0.7 (Hair et al., 2019; Li et al., 2023). Furthermore, the values for confirmatory factor analysis (CFA), factor loadings 0.7, composite reliability 0.7, and average variance extracted (AVE) 0.5 should be greater for model fit statistics (Ashraf et al., 2024). The CFA loadings ranged from 0.593 to 0.967 and were significant at
Confirmatory Factor Analysis.
The test for divergent (discriminant) validity (see Table 7) showed that the variables were related but distinct. This is because the discriminant validity coefficients presented in bold were greater than their corresponding correlation values. The model fit assessment test also revealed a good fit of a Chi-square = 790.878, degree of freedom (
Correlation and Discriminant Validity Analysis.
Hypotheses Testing
Figure 2 illustrates the conceptual framework model, including the structural mediating effect. Y. Zhu et al. (2022), analyze such a complex framework with SEM techniques, and estimate the direct effect then mediation. Therefore, using SEM as the primary estimator to test the study’s hypothesized relationships, we followed: Table 8 illustrates the direct and indirect relationship between enterprise risk management integration with supply chain performance and firm resilience. The table also describes the mediating value for firm resilience between enterprise risk management integration and supply chain performance.
Path analysis for enterprise risk management integration on supply chain performance.
Results of the Main and Structural Mediation Effect Model.
Table 8 describes the relationship between RMP and SCP with H1, and the results are significant (β = .128 and
The (
However, Figure 2 shows the relationship between enterprise risk management integration and supply chain performance to calculate the model fitness values (Chi-square = 675.457, Chi-square/df = 2.282, CFI = 0.962, SRMR = 0.093, RMSEA = 0.047, and PClose = 0.816). The ERM integration dimensions accounted for a 13.2% variance in the supply chain performance.
While testing the structural mediation model, a bootstrapping method with 5,000 samplings and a 95% bias-corrected confidence interval (CI) was used. The bootstrapping method provided more accurate results for the indirect effect (mediation) analysis. The outcome showed that the risk management process indirectly and significantly influenced supply chain performance through firm resilience at a standardized estimate of β = .055 (
The path analysis showed that RMP, RM, and IRM were significantly related to supply chain performance. The findings therefore confirm H1, H2, and H3.
In addition, Figure 3 also shows the mediating role of firm resilience between ERM integration and SCP, which shows an excellent fit index after adding firm resilience as a mediator between supply chain performance and enterprise risk management integration (Chi-square = 897.566, Chi
Structural mediation effect model.
The direct path results from the structural mediation analysis showed that risk mitigation and internal risk management significantly affected supply chain performance. Unfortunately, the impact of the risk management process on supply chain performance was not directly significant in the structural mediation model. These results give a clue to a possible mediation effect in the model. The path analysis further revealed that risk management process, risk mitigation, and internal risk management significantly influenced firm resilience, supporting H1a, H2a, and H3a. The path analysis also showed that resilience significantly impacted supply chain performance, supporting H3.
Discussion
The study objective is to explore the relationship between ERM integration and financial performance, which does business to earn profit. The empirical analysis results show the positive and significant effect of ERM integration on manufacturing firms’ supply chain performance and indirectly on firm resilience. The findings are consistent with the previous studies of (Can Saglam et al., 2021; Chirchir, 2022), where ERM integration showed a positive and significant effect on supply chain performance. However, the current finding is also incompatible with (Bharathy & McShane, 2014; Shad et al., 2019), who observed that an additional increase in firm resilience enhances the supply chain performance of a firm by implementing ERM integration as their risk management system.
The literature shows that ERM integration is a holistic technique, and it is related to all firms’ performance (Ping & Muthuveloo, 2015). It integrates different risk management practices; therefore, it affects a firm’s supply chain performance. In other words, ERM integration considers all risks for firm resilience and supply chain performance (Beasley et al., 2008). In addition, all manufacturing firms manage the potential risks that may affect supply chain performance, customer trust, innovation, internal business processes, and competitive advantage. Therefore, ERM integration’s effect on supply chain performance by evaluating firm resilience sheds new light on the role of ERM on overall performance in a firm. The results are consistent with the resource-based view theory assumption about firm supply chain performance, which is that firm resilience increases ERM integration.
In this regard, the implementation of a risk management system such as ERM integration could increase the overall firm performance and, consequently, supply chain performance. Moreover, the ERM integration can be known as a strategic asset for firm resilience and supply chain performance. In terms of mediating variables, the finding indicates a positive and significant effect on supply chain performance between ERM integration and supply chain performance. Briefly, when the employees in a firm know how to overcome the firm’s resilience, that may improve the ERM integration. Firm resilence gives awareness to the employees toward events and risk, as well as their role and responsibility in the firm plan, which is critically important for managing risk (Al-Khadash et al., 2017; Florio & Leoni, 2017).
In addition, firms that have people who genuinely have adequate firm resilience regarding firm performance could reduce the risks of the human actions of the supply chain performance (Curkovic et al., 2013a). Moreover, employees who are more aware of potential risks, organization situations and plans, events, and uncertainty are more likely to show a better reaction to risks and opportunities (Saeidi et al., 2021). The awareness of risk at the early stage, with the help of awareness among employees, ultimately leads to the adoption of best practices. These firms can recognize potential opportunities and risks better than other firms that do not integrate with ERM integration (Bogodistov & Wohlgemuth, 2017).
Consequently, by utilizing and improving ERM integration in the firm, the impact of ERM integration on firm supply chain performance can be increased (Ricardianto et al., 2023). Furthermore, the hypothesis results showed that, in contrast to theoretical literature, it confirms the positive effect of ERM integration on improving the supply chain performance of firm performance and the significant mediating role of firm resilience between ERM integration and supply chain performance (Hieu et al., 2024). Specifically, by increasing and improving firm resilience, the firm may increase the influence of ERM integration on firm supply chain performance. According to Okoumba et al. (2020), firm resilience between enterprise risk management integration and firm performance leads to better firm performance (Yang et al., 2018). This study found that enterprise risk management integration dimensions (risk management process, risk mitigation, and internal risk management) influence supply chain performance significantly directly and through firm resilience in different types of manufacturing firms (Rashid et al., 2024).
However, this study focused on the simultaneous impact of individual dimensions of ERM integration on supply chain performance; the outcome gives further support from the existing studies (Spanò & Zagaria, 2022; Talluri et al., 2013; Zouari-Hadiji, 2021), who concluded that ERM has a favorable impact on supply chain performance in manufacturing firms. Based on RBV theory, ERM integration recognizes the firm’s potential resources and links with the firm’s competencies that perform significantly for higher supply chain performance (Florio & Leoni, 2017; Gates et al., 2012). Meanwhile, the risk management process influences the supply chain performance because it allows the firm to develop appropriate training programs to improve and cover the specific gap, which is useful for facing challenges.
Firms regularly training their employees can increase the supply chain performance (Linnander et al., 2022; Thakkar et al., 2009). According to Baryannis et al. (2019), ranking risks enables the firm to prioritize, manage and improve with firm resilience for supply chain performance and to manage internal risk significantly. These relations could be fueled with firm capacities that ensure firm members understand their internal risk management process with their experience to engage management with reliable solutions, which improves supply chain performance (Jankensgård, 2019).
In previous literature, researchers investigated the relationship of risk management phenomena with supply chain risk management. The routine use of ERM integration with firm resilience helps to use firm resources for competitive advantages and performance and develop the weaker parts (Klein & Todesco, 2021). Furthermore, our study shows the significant impact of ERM integration on firm resilience, including three dimensions, which are supported by the existing studies (Yang et al., 2021).
Firm resilience enables the firm to be flexible and proactive in supply chain performance with dynamic capabilities. These capabilities help the firm respond to market changes according to demands and disruptions to deliver with agility, which thereby increases supply chain performance (Beuren et al., 2022). Our study proposed that firm resilience significantly impacts supply chain performance, which is supported by the findings of (Belhadi et al., 2024).
In addition, firm resilience significantly mediates the relationship between enterprise risk management integration factors and supply chain performance. This study’s findings are supported by Um and Han (2021b) though they examined firm resilience as a mediator between internal and external supply chain risk management and supply chain performance. The findings indicate that businesses operating in a contingent market are full of risks, such as concentrating on a single concept stream of enterprise risk management, which may not be sufficient to enhance supply chain performance (X. Q. Zhu & Y. J. Wu, 2022). Firms, therefore, may require other capabilities like resilience to account for the optimum benefit that enterprise risk management integration can have on supply chain performance.
Conclusion, Implications, Limitations, and Future Prospects
Conclusion
This study developed a model to explore the mediating role of firm resilience in the relationship between ERM integration and supply chain performance. This study empirically supported the resource-based view theory, contrary to the previous studies merely focusing on the relationship between ERM and firm supply chain performance; this investigation confirmed intangible factors of ERM integration that affect supply chain performance. Since limited research is available on measuring ERM integration dimensions in the risk management area with supply chain performances, these results further support the RBV theory, which demonstrates the link between ERM integration and firm supply chain performance because ERM would eventually protect and increase customer stakeholder interest, and this reflects superior performance. Moreover, regarding the direct effect of ERM on firm resilience, it could be confirmed that the RBV theory can be used as another foundation in ERM integration research, whereby ERM could be recognized as a strategic asset leading to firm resilience.
In other words, not all Nigerian manufacturing firms use ERM integration as their risk management with supply chain performance. Thus, ERM integration as a strategic asset could be a good strategy for firms that use ERM integration to obtain a competitive advantage and increase supply chain performance. This study has extended earlier studies on enterprise risk management by contributing to the body of knowledge on the relationship between enterprise risk management integration and supply chain performance. Considering several firm players as participants increase the study’s generalizability, and incorporating resilience capability as a mediating effect builds upon previous research. Our research suggests that one important aspect to consider when using ERMI is how it (ERMI) can enhance a firm’s contingent capability, specifically its resilience capability. Also, the study found that, in some scenarios, company resilience can account for the effectiveness of ERMI on supply chain performance.
Implications of the Study
This study provides some highly valuable and practical implications for improving supply chain performance. First, the risk management process is a major precursor of SCP. Specifically, the three constructs of ERMI, that is, RMP, RM, and IRM, each improve firm resilience, which further impacts the supply chain performance. Conversely, firms with lower levels of ERM integration may not be able to have profound firm resilience, thus compromising their supply chain performance. Firms need to develop their risk management process and then focus on improving supply chain performance. Therefore, it is recommended that firms consider firm resilience development as a critically important strategy, especially for manufacturing firms.
At present, a large majority of firms do not recognize the critical role that ERM integration plays in building the resilience of a firm. This lack of recognition inhibits firms from systematically developing RMP, RM, and IRM. This, despite substantial efforts in other domains, restricts firms from developing a highly resilient supply chain. Outcomes of research studies have often informed policies related to training and development, collaboration, competitive intelligence and information systems. From this study, senior managers have learned that risk management integration with key suppliers and the use of firm resilience can greatly help a firm improve its supply chain performance. Senior managers who embrace resilience and learning benefit from close partnerships with suppliers and contracts, allowing for changes in delivery schedule; manufacturing facilities that can be used to produce multiple products, a multi-skilled workforce empowered to move quickly from one task to another; and strong relationships ensuring continuity in troubled times.
Specifically, in the context of developing countries such as Nigeria, strategic sourcing and supplier development are the two key aspects. Theoretically, the study has proven that all three dimensions of ERM integration- risk management process, risk mitigation, and internal risk management- significantly and positively impact supply chain performance. Applying knowledge embedded in firm resilience, policies, and procedures helps to communicate and reduce the risk management responsibilities and influence behaviors that spur business changes, thereby promoting a positive toward supply chain management. The use of available knowledge during recruitment and introduction sessions helps articulate what values and behaviors are expected from a new entity and how risk management is valued and rewarded, which work as a powerful catalyst to implement SCP. Thus, firm managers are advised to acknowledge that the development of ERM integration as a precursor to SCP takes time and knowledge management practices that should resonate with people working in the firm, and ERM integration and firm resilience which should be reflected in human resource management policies and employees’ work practices.
Practically, the study’s findings offer great incentives for users of firm resources to know where much attention is needed to improve supply chain performance. Since internal risk management from the elements of ERM integration had the greatest impact on supply chain performance, it gives a clue that firms should make a significant effort to sustain it. This could be achieved if firms can develop a risk register containing all possible threats or hazards that can harm the smooth operations of the business. The findings also suggest that firms can invest in other activities that can help improve risk mitigation and risk management processes. For instance, firms can ensure that they involve all stakeholders and communicate risk at all levels. According to Aksoy et al. (2022), this approach can promote the development of a robust risk management culture. Firms with robust risk management cultures can communicate their values, attitudes, and beliefs relating to risk and compliance in a top-down approach, leading to proper risk awareness and higher supply chain performance (Osei et al., 2023). Furthermore, the significant role of firm resilience in ERM integration and supply chain performance relationships is a wake-up call for management to develop infrastructure and people who can help the firm develop coping abilities. These abilities can help the firm recognize risks and demand changes and properly address them.
Limitations and Future Prospects
However, the current study contributed to the existing literature by filling in a void between ERM integration and supply chain performance and firm resilience; it has some limitations, which offers opportunities for future researchers. First, this study considered risk management process, mitigation, and internal risk management; we could not include other constituents that could have been enriched to avoid the different kinds of risk that may affect the supply chain performance. Firm associations, governmental institutions, and financial institutions are a few examples of this. The present study models all dimensions of ERM integration to examine their role in supply chain performance and firm resilience. We suggest future researchers take a broader scale of ERM integrations, taking care of all such constituents of risk while studying ERM integration and performance.
Due to the prevailing pandemic situation, we could not take a large sample survey to test our hypotheses. We would also suggest future researchers take large and possibly cross-country data in order to examine the stability of the results across various situations. Using a self-reported questionnaire could generate biases about the study’s outcome. To reduce biases associated with self-reported questionnaires, we employed several approaches outlined by Podsakoff et al. (2003). The reliability coefficients for all variables were above 70, suggesting that our data set was free from biases. This study was a quantitative survey. Future studies can consider a mixed method approach to help validate and give confidence to the quantitative outcomes.
Footnotes
Author Contributions
Declaration of Conflicting Interests
Funding
Ethics Statement
Declarations
ORCID iDs
