Do vulnerability mitigation strategies influence firm performance: the mediating role of supply chain risk

Abstract

PurposeCurrently, small and medium enterprises (SMEs) are facing different types of risk, and mitigating these risks is the primary concern for the emerging firms. This study intends to investigate “do vulnerability mitigation strategies (VMSs) predict firm performance (FP)”? Moreover, it explores the mediation mechanism of supply chain risk (SCR) in the association between VMSs and FP.Design/methodology/approachUsing a survey method, the authors recruited 355 textile SME entrepreneurs and tested their proposed model and hypotheses in AMOS.FindingsThe findings depict that all VMSs significantly minimize SCR, which subsequently enhances FP. Moreover, he atudy also identifies supply chain finance (SCF), a new VMS in the context of textile SMEs.Practical implicationsThe findings help SME officials to minimize SCR through proper implementation of VMSs in the firm's daily operations. SCF is strongly recommended to SMEs because it optimizes working capital and minimizes the risk of default.Social implicationsThis research supports SMEs to overcome vulnerabilities using VMSs and provide sustainable employment to individuals in the society.Originality/valueThis study reviews four VMSs and how these strategies simultaneously mitigate SCR and enhance SME performance in the emerging market context, which was skipped in the literature of supply chain management. Moreover, the study identifies SCF as a significant risk mitigation strategy for SMEs.