The influence of demographic factors and culture on the risk management practices of SMEs in Zimbabwe

Abstract

Organisations are confronted with risks that negatively affect their performance. Risk management practices focus on detecting, calculating and evaluating threats to reduce material, reputation, opportunity and other costs. While business frameworks play a significant role in accomplishing impactful and profitable innovations, various studies point to the lack of a comprehensive SME risk management framework. This study sought to identify the level of SME risk management practices; determine their perception of the relevance of risk management in their businesses; and ascertain the influence of demographic factors and culture on Small and Medium Enterprises’ (SMEs) risk management practices in Zimbabwe. Furthermore, the study aimed to develop a risk management framework that ensures SME survival. The adoption of a risk management framework is hoped to guide effective SME risk management. A mixed-method research design was used, with a target population of 35 700 SMEs from Harare and Mashonaland Central provinces. Cluster and simple random sampling methods were used to select a sample of 276 SMEs. Data was collected using a structured questionnaire and semi-structured interviews. Quantitative Data was analysed using the Spearman rho test, descriptive statistical analysis, frequency analysis as well as correlations, inferential statistical analysis, T-tests and regression analysis whilst qualitative data was analysed using thematic analysis. Findings showed that risk management practices in SMEs were low, reflecting a negative perception of its relevance in business success. Age, gender, race and marital status, as well as educational and income levels, influenced the adoption of risk management practices by SMEs in Zimbabwe, whilst family size did not. Social complexity, fate control and religiosity were found to also influence SME risk management practices, whilst social cynicism and reward for application had no impact. The study recommended the adoption of a risk management framework for SMEs, SME capacity building through education and access to information, networking, the transformation of SME business principles and SME policy reform