The Role of Enterprise Risk Management in enhancing Firm Performance: does Strategic Renewal really matters?

Abstract

This study aims to measure the impact of enterprise risk management (ERM) to improve firm performance in manufacturing companies in Indonesia. This study also examines the role of strategic renewal in ERM's influence on firm performance. The AMOS application's SEM analysis technique was used to evaluate the research model used in this study. Data from 207 different firms in Indonesia's manufacturing sector were obtained. The originality of this research is adding strategic renewal as a mediating variable that has not been widely used in previous research in analysing the relationship between the ERM and firm performance. The study's results show empirical evidence that internal resources in the form of ERM significantly affect firm performance. Additionally, according to the research findings, strategic renewal is the best way for businesses to deal with environmental uncertainty and dynamic changes. Companies are expected to have adequate resources, but they also need to make changes and implement strategies to turn those resources into better performance.