Does Enterprise Risk Management Influence Performance?
Evidence from Malaysian Private Higher Education Institutions
Tze Yin, Khaw1, Ai Ping, Teoh1*, Siti Nabiha, Abdul Khalid1, Sukumar, Letchmunan2
1 Graduate School of Business, Universiti Sains Malaysia, Penang, Malaysia
2 School of Computer Science, Universiti Sains Malaysia, Penang, Malaysia
*Corresponding Author: [email protected] Accepted: 10 January 2023 | Published: 31 March 2023
DOI:https://doi.org/10.55057/ijaref.2023.5.1.13
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Abstract: Private Higher Education Institutions (PHEIs) play an important role in the country’s growth and development. However, the SARS-CoV-2 pandemic has shut about 60 private higher education institutions (PHEIs) in the year 2020 (Azman, 2021). For firms to attain excellent organisational performance, enterprise risk management (ERM) is viewed as a critical requirement. This study aims to examine the roles of enterprise risk management on the performance of private higher education institutions in Malaysia from customer perspectives, financial perspectives, internal processes perspectives and learning and growth perspectives. To evaluate the hypotheses, data is collected from PHEIs in Malaysia using an online survey questionnaire. Structural equation modelling software SmartPLS 3.3.9 is used to analyse the 186 valid responses received. This empirical research discovers that ERM has positive and significant impact on financial perspective performance, customer-focused perspective performance, internal processes performance and learning and growth perspective performance of PHEIs in Malaysia. The findings contribute to the advancement of the resource-based view (RBV) theory. Practitioners of PHEIs will understand how to maximise the resources and skills to improve ERM that eventually drive the performance of their institution.
Keywords: Performance, enterprise risk management, private higher education institutions, Malaysia
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1. Introduction
Education is expected to help Malaysia become a developed country because it has long been recognised as a powerful tool for accelerating progress and development. Malaysia intends to be the region’s hub for tertiary education academic excellence. As a result, it’s critical to be able to attract and enrol international students. Malaysia is one of the best choices in this aspect since it provides high-quality education at fair rates, and its multiple languages and diverse culture attracts foreign students (Jabatan Pendidikan Tinggi, 2020).
Public higher education institutions in Malaysia comprised of public university (Public U), polytechnic and community college (Community C), while PHEIs consisted of private university (Private U), private university college (Private UC), foreign branch campus, and private college. Private higher education institutions (PHEIs) play an important role in the country’s growth and development. Phoong et al. (2017) discovered tertiary education has the greatest impact on Malaysia’s Gross Domestic Product (GDP), while PHEIs played an
important role in the country’s growth and development. According to the Department of Statistics Malaysia’s Annual GDP 2015-2018, the contribution of private education to the services sector has increased annually (RM9.233 billion in 2015; RM9.856 billion in 2016;
RM10.492 billion in 2017; RM11.120 billion in 2018), with a total share of RM40.7 billion GDP (Jabatan Pendidikan Tinggi, 2020). As of September 2019, PHEIs enrolled 70% of international students (92,415 students), compared to public HEIs which only account for 30%
(39,099 students) (Jabatan Pendidikan Tinggi, 2020). This specifies the important role of PHEIs and confirms the ability of private higher education sector to generate massive revenue and contribute substantially to Malaysia’s economy.
However, the SARS-CoV-2 pandemic has shut about 60 private higher education institutions (PHEIs) in the year 2020 (Azman, 2021). The number of PHEIs reduced since 2018 and decreased drastically for the year 2020, 2021 and 2022. There were more than 640 PHEIs in 2000 but reduced to only 434 in 2022 (Ministry of Higher Education Official Portal, 2022). In fact, the issues have been present since 2015. More than 71% of PHEIs are unable to sustain against risk exposure (Lim and Williams, 2015). In the year 2020, 60 PHEIs were closed, primarily due to financial issues (Azman, 2021). The PHEIs lack sufficient assets to cover their current liabilities, and as a result, they have been unable to secure themselves against risk exposure. A lack of contingency plans has led to panic among incompetent and inexperienced top-level managers in PHEIs (Babulal & Solhi, 2020).
Rapid changes define today’s corporate environment, making it harder for organisations to achieve performance by striking a balance between the triple bottom line: people, planet and profit. Including higher education institutions in the United States, the higher-education operational strategies were already under significant pressure, many institutions noticed their spending exceed their profits well before SARS-CoV-2 pandemic (Boggs et al., 2021). Many PHEIs are unprepared to adapt to changing trends, lack the funds to improve their infrastructure, and were forced to cut down budgets (Babulal & Solhi, 2020). The performance of higher education institutions thus gaining more and more attention from researchers recently.
There is a wide field of study on measuring the effectiveness of educational institutions, particularly higher education institutions to identify how they survive and overcome all the stiff challenges due to the COVID-19 outbreak (Camilleri, 2021a; Antonopoulou et al., 2021), all intended to understand how to improve the performance of higher education institutions.
Hence, PHEIs in Malaysia has an urgent need to rectify the issues that deteriorate their performance, to ensure they can continue to contribute to the country’s economic growth. The aim of this study is to investigate the influence of enterprise risk management on performance of PHEI’s in Malaysia. This study will address the following research question:
What is the influence of enterprise risk management on performance of PHEI’s in Malaysia?
2. Literature Review
2.1 Theoretical Lens
From the academic view, this research contributed to the expanding theoretical knowledge in the resource-based view (RBV) theory. Based on the RBV theory, an organisation’s profitability is defined by its resources (Barney, 1991). All assets and organisational processes are included in a firm’s resources (Barney, 1991). The RBV theory’s fundamental principle is that firms would achieve competitive advantages and generate profits with valuable, scarce, costly to imitate and non-substitutable resources (Barney, 1991).
PHEIs face a lot of risks as they compete in such dynamism, working in an unpredictable business landscape. By developing a competency such as ERM may assist PHEIs in identifying potential risks as well as changes to dynamic environmental circumstances. According to Caldiera et al. (2003), resources such as ERM that are difficult to acquire, require extensive training, or are tied to a particular company culture are uncommon resources that rivals cannot imitate. ERM is a crucial intangible resource that the PHEIs must have because according to RBV theory, it is valuable and difficult to imitate, giving PHEIs a sustainable competitive advantage (Barney, 1991). ERM also plays a role in contributing to institutional performance (Grant, 1996). ERM, one of the valuable resources of PHEIs is thus selected as independent variables of this study.
Practically, this study helped the PHEIs to have a better understanding on how ERM can lead to performance. The use of the balanced scorecard (BSC) in measuring performance provided a more understanding view for the practitioners from customer perspective, internal process perspective, learning and growth perspective and financial perspective.
2.2 Enterprise Risk Management (ERM)
ERM is a process recommended by the accountancy profession, a powerful management approach that may help HEIs achieve strategic goals (Al-Subari et al., 2020a). Risks have an impact on performance thus ERM must be employed (Gordon et al., 2009). For firms to attain excellent organisational performance, enterprise risk management (ERM) is viewed as a critical requirement. Performance improvements, goal accomplishments, improved decision- making processes, and increased organisational resilience were RM’s four key positive outcomes (Khaw & Teoh, 2022). According to Malik et al., 2020, the exact implementation of risk management enables managers to seize opportunities that align with their strategic goals and detect possible threats for subsequent evaluation using the established procedure. It systematically identifies and resolves risks to achieve competitive advantage (Baharin et al., 2021). It also manages unforeseen contingencies such as economic instability, technological advancement, or a shift in governmental governance (Baharin et al., 2021). Previous study found that ERM has a significant and positive influence on SMEs performance (Eh Poon et al., 2022), financial performance (Olayinka et al., 2017), long term performance (Nasr et al., 2019) and the firm performance of public listed companies in Malaysia (Teoh & Muthuveloo, 2015;
Soltanizadeh et al., 2016) and organisational performance (Hamzah et al., 2022). However, in Malaysia’s private higher education sector, finding a research framework that explores the relationship between ERM and performance of PHEIs in Malaysia is rare. Thus, this study aimed to examine the influence of ERM on performance of PHEIs in Malaysia from customer perspective, internal process perspective, learning and growth perspective and financial perspective.
2.3 Performance and the Balanced Scorecard
Performance is an organisation’s efficiency and effectiveness of resources implementation to achieve goals (Chen et al, 2009) and objectives successfully (King & Pollalis, 2000). However, employing financial performance assessment alone nowadays is insufficient. It may lead to inaccuracy because according to Moshari (2013), an organization’s value is generated from the other intangible metrics such as intellectual property and knowledge-based assets. Performance can be monitored using both financial and non-financial measures (Ittner, 2008), which offer information regarding the impact of the objectives’ achievements, and the organisation’s strategy. According to Overstreet et al. (2013), performance may be evaluated using two different but interrelated components: operational and financial performance. Sustainable performance of a company is linked to a number of characteristics including goals, strategies,
technology and organisational culture that keep the company moving, performing and succeed in a long-term (Ciemleja & Lace, 2011). Therefore, the balanced scorecard (BSC) approach becomes such an important instrument.
According to Kaplan and Norton (1996), by restructuring each element of the company’s management system, the BSC helps a company to coordinate its business strategy, concentrates the organisation on accomplishing long-term goals and connects individual efforts towards the attainment of business unit objectives. Many higher education institutions in various countries have used the BSC to evaluate performance. Al-Hosaini and Sofian (2015) reviewed those perspectives from the BSC are significant for higher education institutions. Philbin (2011) used the BSC in his study and advised that it should be used at other academic institutes. Camilleri (2021b) recommended the use of BSC as a tool for strategic communication and performance management in higher education institutions. The BSC has also been used by Yaakub and Mohamed (2019) to measure the performance of PHEIs in Malaysia. Therefore, the balanced scorecard (BSC) approach becomes such an important instrument, and it is proposed in this study.
2.4 Research Hypotheses
Based on a review and analysis of previous research, the following hypotheses are developed in this study.
2.4.1 The Relationship between Enterprise Risk Management and Financial Perspective Performance
Financial indicators and measurements are critical in assessing success of business in companies (Kyere & Ausloos, 2021), small and medium-sized enterprises (SMEs) (Bahta et al., 2021), banking industry (Nguyen et al., 2021) and manufacturing industry (Menezes et al., 2021). The effectiveness of ERM on listed companies’ financial performance is significant (Olayinka et al., 2017). ERM assists HEIs respond to uncertainties, avoid risks from various sources including financial shock, and manage all the institutional resources (Al-Subari et al., 2020b). A good ERM system is vital to increase the financial performance of an organisation (Hameed et al., 2020). Financial performance accomplishment and risk management have a strong positive relationship. According to Kizza and Samali (2022)’s findings, risk management became a primary concern, which helped microfinance organisations enhance their financial performance. Thus, the following hypothesis is proposed:
H1. Enterprise risk management has a positive influence on the financial perspective performance of PHEIs in Malaysia.
2.4.2 The Relationship between Enterprise Risk Management and Customer-focused Perspective Performance
However, for measuring PHEIs performance, the financial measurement alone is insufficient.
The literature of Stanciu et al. (2014) suggests that in today’s dynamically changing and highly competitive measuring only financial performance is insufficient for effective decision- making. The recent performance measurement has placed a strong emphasis on non-financial measurements such as organisational management, people structure (Yeo, 2003), organisational innovation, market share (Hyvönen, 2007), customers, suppliers, employees, processes, and technology (Ratnayake, 2009). The BSC thus evolves into the ideal performance measurement instrument for the higher education sector.
From the perspective of the customers, an organisation’s capability to deliver high-quality goods and services and overall customer satisfaction are all addressed (Altanasha et al., 2019).
Credit risk management was discovered to have a major impact on customer satisfaction in the banking industry (Danjuma et al., 2016). Enterprise risk management raises the likelihood of the organisation accomplishing its overarching goals (Danjuma et al., 2016), leads to good customers (students)’s experience. Therefore, we proposed:
H2. Enterprise risk management has a positive influence on the customer-focused perspective performance of PHEIs in Malaysia.
2.4.3 The Relationship between Enterprise Risk Management and Internal Processes Perspective Performance
The process perspective’s goals indicated how the business would develop and deliver its differentiated value proposition and attain its financial goal (Kaplan, 2009). ERM has evolved from a tool for preventing safety-related mishaps to a primary tool for effective decision- making (Priyarsono et al., 2019). ERM helps top-level management make appropriate decisions to minimise risks, optimise opportunities, and provide solutions for responding ERM (Al-Subari et al., 2020a; Araújo & Gomes, 2021), minimise costs and risks, exploit opportunities to achieve better results (Hassen & Zakaria, 2013). ERM influences strategic agility positively, and strategic agility favourably influences the development of new business models (Wirahadi & Pasaribu, 2022). ERM strategies also increase a company’s resilience, which would aid stakeholders in making wise decisions (Lisdiono det al., 2022). When HEIs deploy RM effectively, they respond more rapidly to unforeseen issues and challenges (Baharin et al., 2021), ensure good internal processes. Hence, the following hypothesis is proposed:
H3. Enterprise risk management has a positive influence on the internal processes perspective performance of PHEIs in Malaysia.
2.4.4 The Relationship between Enterprise Risk Management and Learning and Growth Perspective Performance
The goals for employees, information systems, and organisational alignment were outlined in the learning and growth perspectives’ objectives (Kaplan, 2009). Homan resources perspective is also known as the learning and growth perspectives (Grigoroudis et al., 2012). Meanwhile, the organisational culture, styles of leadership, and business strategy all influenced by enterprise risk management (Yilmaz & Flouris, 2017). Unclear RM rules and regulations will lead to problems such as unclear regulatory systems, uncertainty in requirements and confusion and constrain growth of PHEIs (Tamrat & Teferra, 2020), which eventually affect performance of PHEIs. Therefore, the following hypothesis is proposed:
H4. Enterprise risk management has a positive influence on the learning and growth perspective performance of PHEIs in Malaysia.
The proposed research model is shown in Figure 1.
Figure 1: The Conceptual Framework
3. Method
3.1 Population, Sampling Procedures
This study was explanatory research that explained the relationships of the variables. The adopted research method was a quantitative approach. This study employed a descriptive survey design with a survey questionnaire and a statistical approach to evaluate the primary data collected. The unit of analysis was organisation, namely private higher education institution. Only one respondent per institution was required to participate in this study. The decision makers who hold a position in upper management, have better understanding of their institution’s performance is recognised as the targeted survey respondents.
Non-probability purposive sampling was used in this research because the targeted respondents is limited to groups of people who meet some established criteria (Sekaran & Bougie, 2016).
The decision makers holding managerial level are chosen because they are in a managerial position, responsible for developing an institution’s strategies, coordinating operational activities, and making strategic decisions in order to lead the company towards organisational success, making them ideal representatives to answer the surveys. The management level has extensive knowledge and expertise with institutional operation, thus were expected to make more pertinent, accurate and comprehensive recommendations. The population of this study focused on all the private higher education institutions in Malaysia. The Ministry of Higher Education Official Portal (2022) website offered a list of 434 registered PHEIs with current information such as the institution’s name, address, general office contact number as well as contact numbers and email addresses of CEO and secretary.
Recent study suggested that researchers should use power analysis to select sample size (Hair et al., 2019; Uttley, 2019; Kang, 2021). Thus, the minimal sample size in this study was determined by power analyses (G*Power 3.1.9.7). With a medium effect size=0.15, power=0.80, α=0.05, and number of predictors=4, a minimum sample size of 85 was required.
Since Roscoe (1975) judged 30-500 sample size is sufficient, the sample size for this study was targeted at a minimum of 85.
3.2 Data collection
The questionnaire comprised of a total of 20 questions. All constructs were measured using a 5-point Likert Scale, because it is clearly interpretable (Weijters et al., 2010), has better quality, response rate (Revilla et al., 2014). The measurement items were adapted from previous study
Enterprise Risk Management
Financial perspective performance Customer-focused perspective performance Internal processes perspective performance Learning and growth perspective performance H1
H2
H3
H4
on performance (Chen et al., 2009) and enterprise risk management (Sakrabani & Teoh, 2020).
ERM construct was measured with eight items; financial perspective and learning and growth perspective three items; internal process perspective two items while customer-focused perspective one item. Since SmartPLS can handle constructs with single and multi-items (Hair et al., 2014a), the major data analysis used in this study is SmartPLS 3.3.9. The primary data for this study was acquired by sending a self-administered online questionnaire to all 434 registered PHEIs in Malaysia. A total of 186 valid responses were obtained. The online questionnaire was structured to mandatory responses for all questions, so there are no missing values in any of the responses.
4. Findings
4.1 Profile of survey respondents
From the results, 5.4% of the respondents were from foreign branch campuses, 38.7% from private colleges, followed by 25.8% from private universities, and 20.4% from private university colleges. The respondents mainly held Head position (29.0%), Director (21.5%) and Manager position (20.4%), besides 92.4% of them had at least a master’s degree. Most of the respondents had 21-25 years of working experience (37.6%).
The major data analysis tools used in this study is IBM SPSS and SmartPLS 3.3.9. Researchers proposed that PLS-SEM is more accurate in finding the complete model (Hair et al., 2016;
Ramayah et al., 2018).
4.2 Common Method Variance (Bias)
Harman’s Single-Factor test was used to check common method bias (CMB), a typical phenomenon created by the research method utilised (Kock, 2017) due to the issue of using a single data source with a common measurement scale. The total variance tested using IBM SPSS was 35.58% of squared variance, less than the 50% threshold value (Podsakoff et al., 2012; Rahi et al., 2019), indicated the inexistence of CMB, appropriate for inferential data analysis.
4.3 Measurement Model Analysis 4.3.1 Convergent validity
Convergent validity is established when two separate measures react to the same construct with a high degree of correlation (Sekaran & Bougie, 2016). Firstly, factor loading of the items were accessed. All loadings ≥0.7 were retained, including customer-focused perspective construct with a loading of 1.000 due to its single item measures (Hair et al., 2014a). Secondly, the composite reliability (CR) of all constructs was ≥0.7, so the reliability was confirmed (Hair et al., 2020). Thirdly, each construct’s average variance extracted (AVE) was ≥0.5. The measurement items that did not fulfil the stated criteria (P4, P5, P9 and ERM8) were eliminated. The other items’ loadings all exceeded the recommended values, indicating that the items were reliable (Table 1). As such, there was no existence of convergent validity issue (Hair et al., 2017).
Table 1: Measurement Model Analysis of Loadings, Composite Reliability and AVEs
Constructs Items
Indicators Loadings Composite
Reliability Average Variance Extracted
Enterprise Risk Management ERM1 0.821 0.904 0.574
ERM2 0.723
ERM3 0.779
ERM4 0.744
ERM5 0.740
ERM6 0.705
ERM7 0.787
Financial perspective performance P1 0.855 0.896 0.743
P2 0.817
P3 0.911
Customer-focused perspective performance P6 1.000 1.000 1.000 Internal processes perspective performance P7 0.847 0.811 0.682
P8 0.805
Learning and growth perspective
performance P10 0.835 0.852 0.659
P11 0.710
P12 0.880
4.3.2 Discriminant Validity
Heterotrait-Monotrait (HTMT) ratio was applied in this study to measure discriminant validity.
HTMT values of all the constructs below 0.90 (Gold et al., 2001), various latent variable measurements are different and were not correlated with one another. This confirmed the discriminant validity (Sekaran & Bougie, 2016).
4.4 Structural Model Analysis 4.4.1 Assessment of Collinearity
High multicollinearity influences the magnitude of the path coefficients (Hair et al., 2020).
Variance Inflator Factor (VIF) was used to test multicollinearity. All VIF values of this study were less than 3.3, show that there was no collinearity problem (Diamantopoulos & Siguaw, 2006).
4.4.2 Assessment of Path Coefficients
The PLS-SEM bootstrapping approach with 5000 resamples was used to estimate the significance of path coefficients (Hair et al., 2020). All hypotheses H1, H2, H3 and H4 were supported. ERM has a positive influence on financial perspective performance (H1: β=0.480, t=4.594), customer-focused perspective performance (H2: β=0.494, t=7.141), internal processes perspective performance (H3: β=0.430, t=5.025) and learning and growth perspective performance (H4: β=0.311, t=2.597).
4.4.3 Assessment of Coefficient of Determination, R2
The value of R2 indicates how well the data support the hypothesised research model. The financial perspective performance, customer-focused perspective performance, internal processes perspective performance and learning and growth perspective performance achieved R2 values of 0.244, 0.231, 0.185 and 0.097, respectively. Since R2 values of 0.26, 0.13, and 0.02 were classified respectively as substantial, moderate, and weak (Cohen, 1988), this shows that the variance for financial perspective, customer-focused perspective and internal processes perspective were moderate, whereas the variance for learning and growth perspective was relatively weak.
4.4.4 Assessment of Predictive Relevance, Q2
The Q2 values for the financial perspective performance, customer-focused perspective performance, internal processes perspective performance and learning and growth perspective were 0.164, 0.229, 0.112 and 0.051, respectively. Since all Q2 value >0, the model has predictive relevance (Hair et al., 2020).
5. Discussion
The present study revealed that ERM has a positive impact on the four perspectives of firm performance as given by the BSC. ERM has the highest influence on customer-focused perspective performance (H2: β=0.494, t=7.141), followed by internal processes perspective performance (H3: β=0.430, t=5.025), financial perspective performance (H1: β=0.480, t=4.594), and finally the learning and growth perspective performance (H4: β=0.311, t=2.597).
This study found that ERM implementation in Malaysian PHEIs has the greatest impact in achieving customer-focused perspective performance. ERM increases a PHEI’s capability to deliver high-quality services, accomplish its overarching goals (Danjuma et al., 2016), which in turn increases overall customer satisfaction (Altanasha et al., 2019). Previous research also found students’ satisfaction to be significant in higher education industry (Butt & Ur Rehman, 2010; Siming et al., 2015). Therefore, PHEIs should implement ERM, to handle risks efficiently to provide a convenient and favourable environment for its customers to ensure customers’ satisfaction which will eventually enhance financial performance (Chi and Gursoy, 2009).
ERM was also found to have positive and significant impact on internal processes perspective performance. The results showed that PHEIs in Malaysia have been focusing on ERM implementation to achieve internal processes perspective performance. ERM is a primary tool for effective decision-making (Priyarsono et al., 2019), helps top-level management make appropriate decisions to minimise risks, optimise opportunities, and provide solutions for responding (Al-Subari et al., 2020a; Araújo & Gomes, 2021). ERM can help PHEIs respond more rapidly to unforeseen issues and challenges (Baharin et al., 2021), decrease operational risks (Sakrabani & Teoh, 2020), thus ensure good internal processes. With proper and strategic internal processes after ERM implementation, PHEIs can achieve organisational performance (Hamzah et al., 2022).
Moreover, this study found that enterprise risk management has a positive influence on the financial perspective performance of PHEIs in Malaysia. The finding is consistent with previous study (Olayinka et al., 2017; Kizza & Samali, 2022). Enterprise risk management influences strategic agility positively, and strategic agility favourably influences the development of new business models which lead to a favourable impact on the financial performance of companies (Wirahadi & Pasaribu, 2022). A good ERM system assists PHEIs respond to uncertainties, avoid risks from financial shock (Al-Subari et al., 2020b) hence increase the financial performance (Hameed et al., 2020), ensure organisational success (Yeo, 2003; Kyere & Ausloos, 2021).
The results showed that ERM has a positive influence on learning and growth perspective performance. This finding is unsurprising because the organisation’s approach to generate revenue relates to intangible assets (Kaplan & Norton, 2004). Sustainable performance of a company is also linked to characteristics including goals, strategies, technology, and organisational culture that keep the company performing and succeed in a long-term (Ciemleja
& Lace, 2011). The learning and growth perspective states that as this perspective advances, the other three performance perspectives will also improve. PHEIs in Malaysia should therefore implement ERM to improve the learning and growth perspective, ensure good organisational culture for great performance. ERM rules and regulations should be clear to avoid confusion and growth constraints (Tamrat & Teferra, 2020). Additionally, employees should receive all essential training to ensure they have the required ERM capabilities because organisational culture, styles of leadership, and business strategy all influenced by enterprise risk management (Yilmaz & Flouris, 2017).
5.1 Theoretical and Practical Implications
Theoretically, this paper adds to the body of knowledge in various ways. This study contributes to RBV, shows that ERM is a valuable resource that can enhance PHEIs performance from the four BSC perspective if use strategically and effectively. The findings allow the researchers to further explore RBV success model in understanding the contribution of ERM to performance of higher education, meanwhile applicable to all industries, because ERM is widely known to increase firm performance.
Practically, management of PHEIs are recommended to apply the findings of this study, focus on ERM implementation for great performance in the dynamic business world. ERM implementation in Malaysian PHEIs was found to have the greatest impact in achieving customer-focused perspective performance as ERM system will improve customer perspectives and increase customers confidence in the higher education institutions. In addition, PHEIs should provide training to the employees because employees will be the ones who first encounter such risks in their daily operations, and the knowledge and understanding of the ERM concept is the key to guarantee a successful ERM implementation (Mustapha &
Adnan, 2015). It will also ensure employees participation and satisfaction because ERM improves learning and growth perspective performance. BSC model should be used by policymakers as a performance measuring tool in higher education and various industries. It provides a more understanding view for the practitioners from financial perspective, customer- focused perspective, internal process perspective, and learning and growth perspective.
5.2 Limitations and Recommendations for Future Studies
It is critical to recognise that this study has been interpreted considering its limitations. It will take further research to close the research gap. This study was conducted only in Malaysia, thus is geographically limited. Besides, this study only included Malaysian PHEIs, limiting its generality. There was only one dimension, enterprise risk management (independent variable) applied in this study, thus it is suggested to include other dimensions in the future studies.
Future researchers may consider including public HEIs for future study. The developed model may also be used to study the relationship of ERM and firm performance from different industries and cover broader locations. Moreover, there is one construct that measures with only a single item in this study, multi-items measures were recommended for future studies.
The results were analysed based on 186 PHEIs, perhaps a bigger sample size may be applied to allow more statistical power analysis.
6. Conclusion
The primary objective of this study was to examine the impact of ERM on performance of PHEIs in Malaysia, from four perspectives according to the BSC model, which are the financial perspective, customer-focused perspective, internal process perspective, and learning and growth perspective. This study demonstrates how implementing ERM can enhance the four
performance perspectives described in the BSC. Thus, a practice of ERM by PHEIs in identifying threats and opportunities will help in making decisions, creating a competitive advantage to achieve success, consistent with RBV. PHEIs should implement ERM, especially comprehensive planning approach that helps to tackle risks in this ambiguous business environment. BSC model should also be used by the policymakers as a performance measuring tool in higher education and various industries as it provided a more understanding view for the practitioners from different perspectives.
Acknowledgement
The authors would like to acknowledge the Ministry of Higher Education Malaysia for Fundamental Research Grant Scheme with Project Code: FRGS/1/2020/SS01/USM/02/14.
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