The Nexus between Risk-Taking Strategies and the Performance of Manufacturing Firms Operating in an Economic Crisis. A Case Study of the Zimbabwean Manufacturing Firms (1998-2009).

Abstract

Due to the instability and changeability of economic crises, companies confront major challenges to survival and sustainability. Successful methods from a decade ago may not function now due to the shape of the economic crisis. Thus, historical economic crisis studies are crucial. The 1998–2009 Zimbabwean economic crisis prompted this study to examine if risk-oriented techniques improved manufacturing performance. For this study, we surveyed 86 manufacturing companies that had to take risks to survive. The positivist research philosophy guided survey data collecting. Explanatory research underpinned the study. The study found that all risk-taking methods hurt business profitability and growth. The analysis showed that risk-oriented strategies hurt organizations’ profit margins and growth. During Zimbabwe’s economic crisis, high-risk operations, new and diverse initiatives, and inadequate due diligence on new investments hurt manufacturing enterprises’ profit margins and growth. Control variables were company size and industry. According to the report, organizations that take on new projects during economic downturns without first guaranteeing their profitability and sustainability will lose profit margins and growth. In economic downturns, enterprises using less “tried and tested” production, marketing, and operational practices lose profit margins and growth. According to the findings, firms shouldn’t use high-risk techniques to weather economic storms like Zimbabwe’s 1998–2009. Businesses that take risks to survive an economic crisis should also undertake risk management. In an economic crisis, manufacturing firms should use more analysis-based approaches to reduce risks. Companies can diversify their risk-taking strategies. Future research may analyse the impact of risk-taking strategies in other sectors.