Sustainability, Risk Management, and Innovation: Enhancing Performance in Indonesian Social Enterprises

Azhar Maksum, Munawarah (), Yuni Lestari Br Sitepu and Fauziah Kumalasari
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Azhar Maksum: Department of Accounting, Faculty Economics and Business, Universitas Sumatera Utara, Medan 20155, Indonesia
Munawarah: Department of Accounting, Faculty Economics and Business, Universitas Sumatera Utara, Medan 20155, Indonesia
Yuni Lestari Br Sitepu: Department of Accounting, Faculty Economics and Business, Universitas Sumatera Utara, Medan 20155, Indonesia
Fauziah Kumalasari: Department of Accounting, Faculty Economics and Business, Universitas Sumatera Utara, Medan 20155, Indonesia

JRFM, 2024, vol. 17, issue 12, 1-12

Abstract: This study investigates the integration of sustainability practices and risk management in Indonesian social enterprises, emphasizing the role of innovation as a mediator and operational type as a moderator. Social enterprises face unique challenges in balancing economic sustainability with social impact, especially in emerging markets like Indonesia. A structured survey was conducted with 118 social enterprises to assess their sustainable practices, risk management procedures, innovation scores, and operational models (permanent vs. project-based). Using Structural Equation Modeling (SEM) and Partial Least Squares (PLS) analysis, the results show that sustainability practices positively influence innovation, while both innovation and risk management significantly improve sustainable performance. Additionally, innovation mediates the relationship between sustainability practices, risk management, and performance. The operational type moderates the link between risk management and sustainable performance but does not influence the connection between sustainability practices and performance. These findings suggest that innovation is crucial for improving the sustainability of social enterprises and that risk management strategies should be tailored to the operational model. Social enterprises in Indonesia should prioritize innovative approaches and effective risk management to enhance their long-term sustainability and social impact.

Keywords: sustainability practices; risk management; social enterprises; innovation; sustainable performance; operational type; emerging markets (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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