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

Nair, A, Rustambekov, E, Mcshane, M et al. (2014). Enterprise Risk Management as a Dynamic Capability: A test of its effectiveness during a crisis . 35(8), 555-566. 10.1002/mde.2641



cited authors

  • Nair, A; Rustambekov, E; Mcshane, M; Fainshmidt, S

fiu authors

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.

publication date

  • December 1, 2014

Digital Object Identifier (DOI)

start page

  • 555

end page

  • 566

volume

  • 35

issue

  • 8