Faculty of Commerce, Law and Management (ETDs)
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Item Enterprise risk management, corporate governance, performance and risk-taking behaviour of the insurance industry: empirical evidence from Ghana and South Africa(2022) Horvey, Sylvester SenyoThe growing complexities in the business environment have led to the adoption of enterprise risk management (ERM). ERM is a new approach to managing organisational risks holistically to achieve its goals. Regardless of the diversities in the business environment, ERM has become an essential factor for businesses and is believed to enhance shareholder value. Despite the growing number of studies on ERM, literature suffers some limitations regarding its proxies and inconclusive results between ERM and performance. This study adopts a more comprehensive measurement of ERM, which captures various characteristics (such asrisk governance, operational mechanisms, and quality of risk oversight) within the risk ecosystem. The study uses a panel regression technique on a sample of 33 and 63 insurers from Ghana and South Africa, respectively, covering 2015-2019. This thesis is centred on four thematic papers. Each focuses on a specific subject (s) at the heart of the problems or research questions being investigated. The first paper provides a comprehensive and systematic literature review on the measurement and performance of ERM. Google Scholar was the primary search tool for ERM literature spanning 2001 to 2020, and papers listed in SCImago journal ranking were discussed. The study finds that most studies rely on secondary sources, particularly the Chief Risk Officer’s appointment, as a simple ERM proxy. This is widely adopted in the literature due to the difficulty in assessing ERM information. The study recommends that empirical measurement of ERM rely on both primary and secondary data as they complement each other and allow more insight and factors to be considered for a robust ERM measurement. In terms of performance, the ERM literature reveals mixed findings, but enough evidence supports the assertion that ERM enhances firm profitability and value. The study suggests that scholars consider examining the ERM-performance relationship in emerging economies as most of these studies centred on the US and European economies. The second paper analyses the determinants of ERM adoption in Ghana and South Africa using a panel logistic regression technique. Building on the contingency theory, the study posits that several factors contribute to ERM adoption. The study finds that firm size, ownership, leverage, industrial diversification and the type of audit firm are positively associated with ERM adoption in both countries. Findings from the quantile regression also highlight that the initial levels of size, profitability and leverage reduce ERM adoption, and an extreme increase in these factors promotes iii ERM adoption, which implies a nonlinear direct U-shape relationship. On the contrary, the study sees an inverted U-shape for return on assets and leverage for Ghana. Industrial diversification, Big4 audit companies and ownership show consistent patterns of a significant positive effect on ERM adoption at different quantiles for both samples. The findings support the fact that insurers could improve their risk management system by considering the factors that significantly affect them. The third paper first examines the impact of ERM on insurance performance (underwriting performance and Return on Assets) and second investigates how corporate governance (CG) characteristics such as the board size, board independence, and gender diversity interact with ERM in affecting insurance performance. The major findings are summarised as follows: (1) a positive relationship exists between ERM and insurance performance for both countries; and (2) board size, board independence and gender diversity interact with ERM in affecting underwriting performance and return on assets. This was mostly positive and significant in both samples. The study suggests that insurers interested in ensuring an effective ERM system should leverage these corporate governance factors to appreciate the overall impact of ERM on performance. In the final paper, the study examines the linear and non-linear effects of ERM and CG on risktaking behaviour. The result from the linear regression elicits a significant positive relationship between ERM and risk-taking for both countries, implying that insurers with a strong ERM system are more likely to pursue higher risks. The empirical evidence also suggests that board size and board independence have a significant positive impact on risk-taking for both samples. In contrast, gender diversity shows an inverse relationship with risk-taking. Using the dynamic panel regression by Seo et al. (2019), the study confirms non-linearities between ERM, CG and risktaking. Evidence from the South African sample indicates that ERM significantly increases insurers’ risk-taking beyond the threshold level. Again, the South African sample shows significant threshold levels for board size, gender diversity and board independence at 10.03, 0.274 and 0.547, respectively. The Ghanaian sample also documents significant threshold levels at 7, 0.286, and 0.692. The study recommends that insurers consider the significant threshold levels to determine the optimum level of risk that must be pursued.Item Corporate entrepreneurship and innovation performance: the moderating role of endogenous risk management in the South African telecommunications sector(2021) Zondo, Hlengiwe LondiweInnovation and risk are indivisible. The mismanagement of risk can carry an enormous penalty. In recent history, the corporate community has observed a number of risk calamities that have resulted in substantial loss. Harmoniously, mounting evidence advocates for effective risk management as an archetypal characteristic of successful firms. At an academic level, literature discusses the importance of an organisational culture in enterprise risk management as a means of improving firm and innovation performance. However, there is scant empirical evidence to support this connection, an evident research gap within the South African context. At industry level, the South African telecommunications sector has experienced adverse consequences due to the mismanagement of risk that ascended from a lack of control-related structures, policies, systems, and knowledge management systems pertaining to innovation performance. Within this ambit, there lies the need to gain insight on the role of endogenous risk management within the corporate entrepreneurship context and its effect on innovation performance in the aforementioned sector. Consequently, the purpose of this research is to investigate how organisational antecedents of corporate entrepreneurship may influence innovation performance while identifying the potential moderating effect of endogenous risk management on this relationship, within the telecommunications sector in South Africa. This study follows a positivist paradigm, founded on a quantitative research approach utilising a cross-sectional viewpoint. Primary data, with a sample size of 187 participants, was collected by means of an online survey that was self-administered. Two stage probability sampling was adopted for this research. The sampling techniques used were stratified sampling, which was used to sample all the identified telecommunication firms in South Africa with primary focus on the significant market shareholders, and simple random sampling which was applied to employees within the telecommunication firms. Data analysis comprised of correlational analysis, backward elimination method, multiple regression and moderation analysis. The antecedents of corporate entrepreneurship; management support, rewards/reinforcement and time availability were found to be significant predictors of innovation performance at a 99 percent confidence level, whilst organisational boundaries were found to be an insignificant predictor of innovation performance. A significant but indirectly proportional relationship was found between work/discretion/autonomy and innovation performance within this study context. It is noteworthy that the regression analysis revealed time availability, management support and rewards/reinforcement, as the most influential predictors of innovation performance, listed in descending order of strength. Firms with appropriate time availed, rewards/reinforcement and management support for employee entrepreneurial activity, are expected to yield prodigious results in innovation performance. Furthermore, the results indicated that endogenous risk management has a moderating effect on the relationship between corporate entrepreneurship and innovation performance. However, this was discovered to be statistically insignificant for each dimension of corporate entrepreneurship in relation to innovation performance. The findings were precisely the reverse of those found in developed economy context research. The findings of this study have substantial implications for industry, academia and policy makers alike. This study succours telecommunication firms in the establishment and maintenance of internal corporate environments that are conducive to innovation. For longevity and competitive advantage purposes, it is within firms’ best interest to invest in human capital as primary agents of knowledge creation, corporate entrepreneurship and innovation activities. Strategic policy formulation targeted at enhancing innovation outcomes and all the opportunities that come with it – could benefit the country at a micro, meso and macro level. The originality of the study lies its nature within this particular emerging market context and the theoretical contribution made through a construct proposed for inclusion in the antecedents of corporate entrepreneurship framework