Enterprise Risk Management as a Dynamic Capability: A test of its effectiveness during a crisis

Anil Nair, Elzotbek Rustambekov, Michael McShane and Stav Fainshmidt

Managerial and Decision Economics, 2014, vol. 35, issue 8, 555-566

Abstract: The dynamic capabilities framework has emerged as a growing area of research within business disciplines—the framework seeks to explain how and why firms adapt successfully to changes in their environments. Yet, whether such capabilities are effective in periods of environmental changes that can be characterized as a crisis remains an unexplored area of research. This paper adopts the position that enterprise risk management (ERM) constitutes a dynamic capability, and examines whether a firm's ERM capability allowed it to respond effectively to the financial crisis of 2008. We find that superior ERM capability was associated with smaller decline in stock price during the downturn and superior profitability during the upturn. The results suggest that firms may need different types of dynamic capabilities to react and respond to different dimensions of environment and types of change. Copyright © 2013 John Wiley & Sons, Ltd.

Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://hdl.handle.net/

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:35:y:2014:i:8:p:555-566

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().