Abstract:
Small and Medium Scale Enterprises (SMEs) are known as an important strategic
sector and give their contribution towards economic development. Risk management
has become a challenging task for SMEs, especially due to the current economic
crisis. Therefore, owners of SMEs face challenges in managing risk as well as
keeping business performance. Thus, a systematic literature survey was carried out
in the financial management and risk management field. The study identified existing
empirical, theoretical, methodological and practical research gaps. Thus, the study
investigated the moderating impact of owner’s characteristics on the relationship
between risk management and business performance.The study was a basic,
explanatory type quantitative study followed by the deductive method. Study used
questionnaire survey method. The population was the number of SMEs in North
Central Province. The sample was 200 SMEs based on the convenience sampling.
The independent variable was risk management while the dependent variable was
business performance. The moderator variable was the owner's characteristics of
SMEs. A hierarchical regression used to test hypotheses. Study conducted
prerequisite tests, Reliability, Validity, Correlation Analysis, Variance Inflation
Factor, Shapiro-Wilk Test and Normal Probability Plots. The study generated two
regression models, Model one confirmed risk management significantly impacted on
business performance of SMEs. Model two confirmed both risk management and
owner’s characteristics of SMEs significantly impact on business performance even
though owner’s characteristics were insignificant previously. Further, Model two
confirmed owner’s characteristics significantly moderate the relationship between
risk management and business performance. The study recommends that owners of
SMEs and policy makers should initiate necessary action to improve the level of risk
management and financial literacy.
