The Relationship Between Enterprise Risk Management, Competitive Advantage, and Firm Performance

Abstract

Enterprise Risk Management (ERM) has gained attention from both scholars and the practical world. ERM is beginning to gain acceptance as an area of potential value, there are still gaps to fill regarding the extent and meaning of the relationship between ERM and firm performance. This research intends to develop these gaps through investigating the relationships with future performance and connecting ERM dimensions to competitive advantage. In this article, we intended to systematically review ERM using the Resource Based View (RBV) and Contingency theories which have connected ERM dimensions to performance in a sample of financial firms. In this article, the competitive advantage is playing a mediating role in the relationship between ERM and firm performance. This research advances the study of ERM, and demonstrates new insights, particularly at building a clear road map of ERM. The paper is not limited to emphasising the core aspects of ERM and their impact on firm performance, but it also contributes to the employees in their thinking about ERM within the firm. The research aims to advance the understanding of the strategic alignment of ERM, while also providing critical actionable recommendations to implement ERM into the organisation's structure properly.