Annotated Bibliography 3

Journalof Education and Practice www.iiste.org

ISSN 2222-1735 (Paper) ISSN 2222-288X (Online)

Vol.7, No.29, 201

6

1

Maintaining Health and Safety at Workplace: Employee and

Employer’s Role in Ensuring a Safe Working Environment

Grace Katunge Jonathan

English and Literature Teacher, Mbooni Girls High School

*Rosemary Wahu Mbogo

Dean, School of Education, Arts and Social Sciences, Africa International University

Abstract
The concern for health and safety is legitimate in every context of human enterprise. In schools, for teaching

staff’s safety to be guaranteed, the equipment available should be properly maintained and installation for non-

existent ones done according to the health and safety policies. With a focus on Mbooni West district, this paper

reports the findings of a survey which focused on the health and safety of teachers in secondary schools in the

region. Many secondary school administrators do not consider teaching staff’s involvement in recommending

policies and procedures in curbing safety hazards. This makes it difficult for the teaching staff to take

responsibility for their own safety. The study thus sought to establish teachers’ perspectives on their role in

ensuring health and safety workplaces in secondary schools. The study targeted all teachers and deputy

principals working under Teachers Service Commission (TSC) and those working under the secondary schools’

Board of Management (BOM). Although the study aimed survey principles, they were not available during the

data collection period. The study was conducted using the descriptive research design. A questionnaire guide

was used for data collection which was then analyzed by the use of Statistical Package for Social Science (SPSS)

version 20. Frequency tables and charts were used for data presentation. From the findings, it emerged that

majority of the teaching staff were not involved in the training programs that would equip them with safety skills

in their workplace. Most of them were not involved in discussing safety policies in the workplace. This to a large

extent jeopardized the safety of teachers at workplace affecting their preparedness on matters pertaining health

hazards and thus their general performance. It is recommended that the Ministry of Education, Science and

Technology, in conjunction with the school administrations organize training programs for the teaching staff,

involve teachers in discussion of safety policies to align them with the institutions strategic plans as far as Health

and Safety at workplace is concerned.

Keywords: Health and Safety, Teaching staff, Teachers Service Commission

1. Introduction

Employee health and safety programs should be a major priority for management because they safe lives,

increase productivity, and reduce costs. These health and safety programs should stress employee involvement,

continued monitoring, and an overall wellness component (Anthony et al., 2007). Work safety requires that safe

working conditions should not create significant risk of people being rendered unfit to perform their work.

Health and safety at work is therefore aimed at creating conditions, capabilities, and habits that enable the

worker and his/her organization to carry out their work efficiently and in a way that avoids events which could

cause them harm (Garcia-Herrero et al., 2012). It is clear that safe working conditions have an effect on the

habits of workers, which in turn impacts on efficiency. This implies that employees working in a safe condition

are likely to perform in a way that will not cause them harm.

1.1 Role of Employees in ensuring their own Safety

By comparing two types of models on safety, Robens (1972) offers a challenge to the traditional approach to

safety in the workplace, known as the ‘careless worker’ model. In this model, employers assumed that most of

the accidents were due to the employee’s failure to take safety seriously, or failing to protect themselves. In his

report, he recognized that the ‘careless worker’ model does not explain occupational ill-health caused by toxic

substances, noise and badly designed and unsafe systems of work. A new approach to occupational health and

safety, the ‘shared responsibility’ model assumes that the best way to reduce levels of occupational accidents and

disease relies on the cooperation of both employers and employees (Bratton

& Gold, 1999).

In order to maintain a safe and healthy work place, workers and supervisors must be taught to keep a

health and safety mind set. Such mindedness does not always accompany the acquisition of skill or knowledge

on equipment operation. Most persons learn how to drive an automobile, for example, with relatively little

difficulty. An attitude of maturity is however, necessary (Siegel, 1962). Though employers are required to design

and maintain safe and healthy systems of work, the concomitant duty of the employee is to behave in a manner

that safeguards his or her own health and that of his/her co-workers (Bratton & Gold, 1999).

A research carried out at The Research Centre Design and Technology of the Saxion University of

Journal of Education and Practice www.iiste.org

ISSN 2222-1735 (Paper) ISSN 2222-288X (Online)

Vol.7, No.29, 2016

2

Applied sciences on “Safety at work” concluded that personal safety, a safe environment and safe behaviour

were important components that employers need to ensure their availability within their organizations.

According to this research, enforcing safety by adjusting the environment people have to work in and detecting

risks at work so that workers can avoid dangerous situations is key (Ynze Houten (ed)., 2012). Hints from

statistics in the UK that are compiled every year reveal that the education sector as a whole produces a

significant number of four to five deaths over the last six years and more than 3000 injuries. This means that a

teacher or a classroom assistant could be at risk (HSE, 2001/2004).

Part two of the Canadian Labour Code stipulates the duties of both the employer and employee. These

duties have a goal of preventing occupational related injuries and disease. Employees have a responsibility to

take all reasonable and necessary precautions to ensure their health and safety, and that of anyone else who may

be affected by their work or activities. They are required to use all materials, equipment, devices and clothing

that are provided by the employer (Canadian Labour Code, 2015).

1.2 Role of Administration in Health and Safety Legislation

Early research by psychologists and sociologists examined individual dispositions and social causes utilizing

disciplinary frameworks in developing concepts and theoretical insights into Occupational Health and Safety

(Dawson & Zanko, 2011). The findings were enhanced by the results of workplace surveys by industrial

relations specialists that drew attention to the importance of legislation and innovative non-regulatory as well as

regulatory strategies (Nichols et al., 2007).

The concern for health and safety has been there in history. Early researchers were concerned about

theoretical insights into employee health and safety. Surveys which were done later focused on the importance of

legislation. In technical questions pertaining to workplace health and safety, there is the social element. That is,

for example, the power relations in production: who tells whom to do what and how fast. After all, a machine

does not go faster by itself; someone designed the machinery, organized the work, and designed the job (Sass,

1986). This implies that ‘health and safety is not simply a technical issue such as supplying hard hats and

goggles or ensuring adequate ventilation, because it raises the question of economic costs and power relations’

This is true of all institutions including schools.

A review conducted by the Health and Safety Commission (HSC) under health and safety regulation in

1994 revealed that people were confused about the differences between; Guidance, Approved Codes of Practices

and Regulations. The commission went ahead to provide a way out of this confusion. The results included what

health and safety law requires. The Health and Safety at Work Act of 1974, sets out the duties which employers

have towards employees and members of the public, and also the duties of employers to themselves and to each

other. Legislation applies to employers and employees. The legislation at the national level is supposed to be

made part of domestic law by employers (HSE, 2003/2008).

In India, for an employer to meet the legal requirements, he or she must provide labour welfare facilities

(Logasakthi & Rajagopal, 2013). The two stated that labour health, safety and welfare activities are necessary for

improving employee working conditions, economic and living standards. They were very quick to point out that

in the olden days, employers suppressed the worker by paying less salary and extracting more work in an

unsatisfactory working environment. With the birth of the “Regulation and Employment Act” of 1948,

employers were required to provide satisfactory working environment.

The Safety, Health, and Welfare at Work Act of 2005 repealed and replaced the Safety, Health and

Welfare at work Act of 1989. The purpose of the former was to make further provision for the safety, health and

welfare of persons at work. The act clarifies and enhances the responsibilities of employers, the self-employed,

employees and other parties in relation to safety and health at work. It also provides a range of enforcement

measures that may be applied, and specifies penalties that may be applied for breach of occupational safety and

health laws (Safety, Health, and Welfare at Work Act of 2005, accessed, 2015).

Many states have passed the ‘right to know’ legislation that guarantees individual workers the right to

know of hazardous substances in the workplace, and requires employers to inform employees of the same

(Anthony et al., 2007). There are state and federal laws to protect the welfare of the worker. The major one is the

Occupational and Safety Health Act (OSHA), which became effective in 1971, whose purpose is “to assure” as

far as possible, every working woman and man in the nation safe and healthy working conditions, and to

preserve our human resources.” To accomplish this, there are provisions for safety and health standards, research,

information, and education and training in occupational safety and health (De Reamer, 1980).

OSHA is comprehensive, covering such things as record keeping, inspection, compliance, and

enforcement of safety standards. It lists over 5000 safety and health standards, ranging from density of particle in

the air to the height at which a fire extinguisher is to be mounted (Muchinsky, 1990). On the same note, in the

1960s, white collar trade unions pressed for health and safety legislation to be extended to cover employees in

laboratories, education, hospitals and local government (Bratton & Gold, 1999).

If the research findings by Reilly et al. (1995) that show the benefits of union safety committees can be

Journal of Education and Practice www.iiste.org
ISSN 2222-1735 (Paper) ISSN 2222-288X (Online)
Vol.7, No.29, 2016

3

reproduced, the existing health and safety legislation in France and Germany, which obliges companies above a

certain size to have joint Consultative Health and Safety committees, may become the norm or “maximalist”

model. The Health and safety commission stated; Accidents and ill-health are never inevitable; they often come

from failures in control and organization (Bratton & Gold, 1999). There are current trends working to oppose

safety and health legislation (Bratton & Gold, 1999). This is emphasized by Bain (1997), who persuasively

argues that, in Europe and the USA, powerful business lobbies and governments have mounted an offensive

against health and safety legislation. The source of the current campaign for “deregulation” of health and safety

safeguards is market driven and can be located in growing competitive pressures (Bain, 1997).

Managers can exert a greater influence on health and safety. They are in immediate control and it is up

to them to keep a constant watch for unsafe conditions or practices, and to take immediate action. They can

achieve by establishing safety committees consisting of health and safety representatives who offer advice on

health and safety policies and procedures.

1.3 Role of Management in Maintenance of Safety Equipment

A study on employee welfare facilities adopted at Bosch limited, and involving 100 employees observed that

65% of the respondents indicated that they were provided with safety equipment at work in the organization,

35% of them reported that the organization did not provide safety equipment. The researcher concluded that, due

to the higher percentage of those who reported that the company provided safety equipment at work, the

company then provided safety equipment to its employees during work.

The fatalistic notion that accidents cannot happen to us or that they will occur because of “bad luck”

regardless of our efforts to prevent them is contrary to the facts. The role of luck (including such things as

unavoidable equipment malfunction), as a cause of accidents, has been the subject of considerable study.

Estimates of the percentage of accidents due to such causes, and therefore unpreventable, vary between 10 and

20 percent (Siegel, 1962). On the same argument, (Armstrong, 2006) stresses that health and safety inspections

are designed to examine a specific area of the organization—to locate and define any faults in the system,

equipment, plant or machine. The concern of these writers reveals the importance of maintaining health and

safety equipment.

The health and safety function is directly related to the elements of the HRM cycle-selection, appraisal,

rewards and training. Maintenance of a healthy and safe workplace can be facilitated in the selection process by

selecting applicants with personality traits that decrease the likelihood of accidents. Safe work behaviour can be

encouraged by a reward system that ties bonus payments to the safety record of a work group or section (Bratton

& Gold, 1999).

In Beer’s model of HRM, it is acknowledged that work systems cannot only affect commitment,

competence, cost effectiveness and congruence-the four Cs’ – but also have long-term consequences for

individual’s wellbeing, there is evidence to indicate that work systems design may have effects on physical

health, mental health, and longevity of life itself (Beer et al., 1984), and continuous attention to health and safety

is important because ill-health and injuries caused by the systems of work or working conditions cause suffering

and loss to individuals and their dependants (Armstrong , 2006).

Managers and supervisors must serve as role models for the safety programs. They should ask for

employee suggestions for improving workplace safety, and implement the suggestions in a timely fashion (Reber

et al., 1990). It is the managers’ responsibility to perform the job exactly as outlined by the safety programmes.

Workers will want to know “what’s in it for me”. While the Company is sure to benefit from increased safety

through such programmes, workers may not see a personal advantage to abiding by the new safety plan.

Therefore, including incentives for workers could often reverses this trend and increases compliance.

2. Materials and Methods

Methodology involves the description of the methods applied in carrying out the study (Kombo and Tromp). It

answers the question “what”, “why” and “where” (Kothari 2004).

The focus for this paper was on public secondary schools in Mbooni West district of Mbooni Sub-

County which has about 50 public secondary schools. Though 10% of the population is recommended (Mugenda,

1999), the author selected 20% of these public secondary schools which was about 10 public secondary

schools.

For each 10 schools, the Deputy Principal was selected to make a total of 10, and 4 teaching staffs to make a

total of 40. The study used both simple random sampling and purposive sampling. Random sampling, on the one

hand, is a method which provides equal chance to every member of the population to be included in the study

(Kasomo, 2006). The author randomly selected 10 public secondary schools, which is 20% of the 50 public

secondary schools. The 10 public secondary schools were selected randomly. Purposive sampling on the other

hand, means that the sample may not be representative of the population (Kombo and Tromp, 2008, p. 83).

Purposive sampling was used to select participants from the administration. The total sample size therefore

constituted 40 teachers, 10 administrators to make a total of 50. The study used questionnaire guide and

Journal of Education and Practice www.iiste.org
ISSN 2222-1735 (Paper) ISSN 2222-288X (Online)
Vol.7, No.29, 2016

4

observation protocol to collect data. The study used descriptive statistics. The data collected was analyzed using

descriptive statistics and presented in charts and tables.

3. Findings

The demographic data consisted of gender, age, designation, academic qualification, length of service, and

departmental representation. This is shown in the consequent table.

Table 1: Gender of the Respondents

Gender Frequency Percent Cumulative Percent

Male 25 51.0 51.0

Female 24 49.0 100.0

Total 49 100.0

The male teachers and deputy principals almost equated to the female representing a 51% and 49% respectively.

Table 2: Respondents’ Age

Age Frequency Percent Cumulative Percent

20-30 26 53.1 53.1

30-40 7 14.3 67.3

40-Above 16 32.7 100.0

Total 49 100.0

N=49

Majority of the respondents were in the Age bracket of 20-30 years, which accounts for 53.1% of the total.

Those between 30-40 years were the fewest, represented by 14.3%, while those above 40 years of age

represented 32.7% of the total.

Table 3: Designation of the Respondents

Designation Frequency Percent Cumulative Percent

Deputy Principal 11 22.4 22.4

HOD 12 24.5 46.9

Assistant- Teacher 26 53.1 100.0

Total 49 100.0
N=49

Most of the respondents were assistant teachers represented by 26 (53.1%).HODs were 12(24.5%) while 11

(22.4%) of the respondents, were deputy principals. It is therefore evident that assistant teachers represented the

highest number of the respondents who provided information on health and safety within the selected secondary

schools.

Table 4 Academic Qualifications of the Respondents

Qualification Frequency Percent Cumulative Percent

Master’s degree or ongoing 2 4.1 4.1

Degree 38 77.6 81.6

Diploma 7 14.3 95.9

Do not know 2 4.1 100.0

Total 49 100.0
N=49

It is evident that majority of the teachers were degree holders (77.6%) followed by those with diploma’s (14.3%)

while those with masters degree or ongoing represent (4.1%) of the total. From this data, we can deduce that

majority of the respondents are above the minimal academic requirement (Diploma level) in teaching. It is

therefore expected that they have better knowledge on health and safety in their workplace, and are able to

provide reliable information.

Table 5: Length of Service of the Respondents

Length Frequency Percent Cumulative Percent

Less than 5 years 24 49.0 49.0

5-10 7 14.3 63.3

11-15 5 10.2 73.

5

16-20 5 10.2 83.

7

21-Above 8 16.3 100.0

Total 49 100.0
N=49

Majority (25) of the teachers and deputy principals were more than 5 years old in the teaching profession. Quite

a number 24(49.0%) of the respondents had served in the teaching profession for less than 5 years. This implies

that both those who were young in the service were represented as well as those who showed a longer length of

Journal of Education and Practice www.iiste.org
ISSN 2222-1735 (Paper) ISSN 2222-288X (Online)
Vol.7, No.29, 2016

5

service. The frequency in respondents however, was skewed towards those who were young.

Table 6: Departmental Representation

Department Frequency Percent Cumulative Percent

Sciences 10 20.4 20.4

Mathematics 3 6.1 26.5

Languages 18 36.7 63.3

Humanities 15 30.6 93.9

Applied Sciences 2 4.1 98.0

Art & Music 1 2.0 100.0

Total 49 100.0
N=49

It is evident that the languages department represented the highest number of respondents 18, (36.7%).

This department is closely followed by the Humanities with 15(30.6%), the science 10 (20.4%), Mathematics 3

(6.1%) and Applied Sciences (4.1%) while Art & Music (2.0%) were represented by a minority of the

respondents. We can therefore deduce that, the information given by the respondents was reliable since all the

departments were represented.

The data from the responses by teachers and deputy principals showed that 28 (57.1%) were not

involved in any form of training program on health and safety at the workplace. Among those who said that they

were involved in training programs, 10 (20.4%), mentioned that it was done annually; 8 (16.3%) said it was

carried out on a termly basis, 1 (2.0%) said it was carried out on monthly basis while another 1 (2.0%) said that

the training was done weekly. This implies that majority (57.1%) of the teachers and deputy principals are not

involved at all in training programs within the

workplace.

Table 9: Response by the Administration on Reported Safety Issues

Response Frequency Percent Cumulative Percent

Readily 37 75.5 75.5

Reluctantly 5 10.2 85.7

Do not know 7 14.3 100.0

Total 49 100.0
N=49

To establish how the school administration responds to issues of safety that have already been

discovered and reported, teachers showed that 37 (75.5%) respondents reported that the school administration

responds readily to information on safety once they are reported. A total of 5 (10.2%) respondents said that the

school administration was reluctant, while 7 (14.3%) respondents did not know how the school administration

responds to reported safety issues. We can therefore deduce that majority of the respondents (75.5%) reported

that the school administration responds readily to reported issues on health and safety in the workplace.

Table 11: Involvement of Teaching Staff in Discussion of Safety Policies

Communication mode Frequency Percent Cumulative Percent

Daily 2 4.1 4.1

Weekly 6 12.2 16.3

Monthly 1 2.0 18.4

Termly 13 26.5 44.9

Annually 4 8.2 53.1

Not at all 22 44.9 98.0

Total 49 100.0
N=49

The study also sought to know the frequency of involvement of the teaching staff in discussion of safety

policies in their workplace. Table 11 shows that 22 (44.9%) of the respondents felt that they were not involved at

all in discussion of safety policies in their workplace. Among the respondents who said that they were involved

in such a discussion annually were 4(8.2%), only 1(2.0%) said that such discussions were carried out on daily

basis while 13 (26.5%) reported that they were involved on termly basis. Only 6 (12.2%) said that they were

involved in the discussion weekly and 2 (4.1%) indicating daily involvement. From this data, it is clear that most

of the teachers and deputy principals (44.9%) were not involved at all in discussion of safety policies in their

workplace. This agrees with a study carried out by Eaton et al., (2000) on employee wellness programs. The

results of their study showed that most (67.2%) of the respondents observed that health promotion can attract and

retain skilled faculty and staff (Eaton et al., 2000). This implies that training programs are important in

equipping the teaching staff with required safety skills in order to promote their health and longer stay in their

workplace.

As concerns their role in ensuring safety, 36.7% of the teachers and deputy principals reported that they

Journal of Education and Practice www.iiste.org
ISSN 2222-1735 (Paper) ISSN 2222-288X (Online)
Vol.7, No.29, 2016

6

participated in formal meeting while 12.2% said that they participated in informal meetings. At least 10.2%

were of the opinion that they ensured their own safety by getting safety information from schools’ notice board

while 18.4% reported that they did not know how they accessed safety information in order to ensure their safety.

Though most of these percentages are below average (50.0%), the study established that the teaching staff at

least played a role in ensuring their own safety by getting acquainted with safety information through

formal/informal meetings and the schools’ notice board.

4. Conclusion

The teaching staff is involved in discussing safety policies in marginal ways in their work places. It is worth

noting that the staff are policy implementers and implementation cannot be complete without full knowledge of

the policies to be implemented. Therefore the Government should look into ways of address this issue at schools,

so that implementation of such safety policies is made possible. This agrees with the result of a study carried out

by Allender (2011) which found out that work place safety and health leads to motivation and satisfaction. When

the teaching staff is fully involved in discussing health and safety policies, it will also be motivated to carry out

policy implementation which will finally lead to job satisfaction.

5. Recommendations
The benefit of running safety programs in the workplace is a matter that should be given priority by the

Government through the Ministry of Education, Science and Technology. Haines (2007) confirms this when he

asserts that health promotion programs positively impact on employees’ health, increase staff productivity and

reduce work absenteeism.

The Government through the Ministry of Education, Science and Technology should come up with a

policy to support the existence of an Emergency Response Plan in each school so that emergency cases are

responded to with the urgency that they clearly deserve.

The authors recommend that the government organizes the preparation of Training Manuals on the

safety of the teaching staff, and create training forums in all the forty seven counties.

The Ministry of Education, Science and Technology should incorporate the staff in forums that are

supposed to address the challenges of their own safety.

The authors also recommend creation of safety committees by the administration in each school to look

into ways of implementing existing policies on safety, and create new policies in schools

As Klein et al. (2008) puts it, it is the duty of the administrators to review periodically, with the science

staff members the use of the fire-fighting apparatus found in the science department.

Teachers should ensure their own safety by participating in formal/informal meetings and reading safety

information on notice boards and guiding manuals on safety.

References

Allender, S., Colquhoun, D., & Kelley, P. (2011). Competing discourses of workplace health. Journal for the

Social Study of Health, Illness and Medicine, 10(1) 75-93.

Anthony, V., Mark, P., Michael, B., & Ajay, D. (2007). A data-based evaluation of the relationship between

occupational safety and operating performance. The Journal of SH & E Research. Spring, 4 (1).

Armstrong, M. (2006). A handbook of human resource management practice. (10thEd.). London: Kogan Page

Limited.

Bain, T. (1997). Health and safety: keep it together. England: MacmillanBeer, in M. Spector, B., Lawrence, P.R.,

Quinn Mills, D & Walt on, R. (1984). Managing Human Assets. New York: Free Press.

Bratton, J. & Gold, J. (1999). Human resource management theory and practice. Macmillan Press, London.

Dawson, P. & Zanko, M. (2011). Occupational health and safety management in organizations: a review.

International Journal of Management Reviews, 14(3), 328–344.

Eaton, A. & Nocerino, T. (2000). The effectiveness of health and committees: Results of a survey of public-

sector workplaces .Industrial Relations, 39, 265-90.

Garcie-Herrero, S. (2012). Working conditions, Psychological, physical symptoms and occupational accidents”.

Bayesian network models, safety science. 50 (9), 1760-1774.

Haines, D. J. Davis, L., Rancour, P., Robinson, M., Neel-Wilson, T., & Wagner, S. (2007). A Pilot intervention

to promote walking and wellness and to improve the health of college faculty and staff. J Am Coll

Health, 55 (4), 219-225.

Kombo, D.K., & Tromp, D.L.A. (2008). Proposal and Thesis Writing: An Introduction. Paulines Publications

Africa, Don Bosco Printing Press, Nairobi Kenya.

Logasakthi, K. & Rajagopal, K. (2013). A study on employee health, safety and welfare measures of chemical

industry in the view of Salem Region. International Journal of Research in Business Management 1(1),

1-10.

Journal of Education and Practice www.iiste.org
ISSN 2222-1735 (Paper) ISSN 2222-288X (Online)
Vol.7, No.29, 2016

7

Muchinsky, P. M. (1990). Psychology applied to work: an introduction to industrial and organizational

psychology (3rd ed.). Pacific Grove, CA: Brooks/Cole Publishing Company.

Nichols T., Walters, D. & Tasiran A. (2007). Trade Unions, Institutional Mediation and Industrial Safety:

Evidence from the UK. Journal of Industrial Relations, 49(2), p. 211-225.

Reber, R.A., Wallin, J.A., & Chhokar, J.S., (1990). Improving safety performance with goal setting and feedback.

Human Performance 3, 51-61.

Reilly, B., Paci, P. & Holl, P. (1995). Unions, safety committees and workplace injuries. British Journal of

Industrial Relations, 33 (2): 273-88.

Robens, L. (1972). Safety and Health at Work: Report of the Committee 1970-72, Cmnd 5034 (London: HMSO).

Sass, R. (1986). Workplace health and safety: report from Canada. International Journal of Health Services, 16

(4) 565-582 Ynze, Van Houten (Eds). (2012). Safety at work. Saxion research centre design and

technology. Enscheda, the Netherlands.

Business risk management in the context of small
and medium-sized enterprises

Jan Dvorskya , Jaroslav Belasa , Beata Gavurovab and Tomas
Brabenecc

aDepartment of Business Administration, Tomas Bata University in Zlin, Zlin, Czech Republic; bFaculty
of Mining, Ecology, Process Control and Geotechnologies, Institute of Earth Resources, Technical
university of Ko�sice, Ko�sice, Slovakia; cFaculty of Finance and Accounting, University of Economics,
Prague, Czech Republic

ABSTRACT
The aim of this paper is to review the impact of entrepreneurs’
attitudes toward the defined business risks on the perception of
the future of small and medium-sized enterprises (SMEs). 454
SMEs from the Czech Republic (CR) participated in the research
and completed an online questionnaire. Structural equation mod-
elling and factor analysis were used to identify the causal relation-
ships between the examined variables. Entrepreneurs’ attitudes
toward business failure also have a positive effect on the future
of the SME. The perception of financial risk in positive indicators
of financial performance and the perception of financial risk as
part of the company’s everyday life have the most significant
impact on future business. Operational risk is reflected in the util-
isation of corporate resources, reducing customer complaints
about the quality of the company’s products and the company’s
independence of a limited number of suppliers. The company’s
sales volume adequacy provides a source of market risk. It has
the third strongest positive impact on the future business in the
SME segment. The research results provide a valuable platform
for the authors of national and regional development strategic
plans looking for SME support and development as well as the
authors of the relevant policies.

ARTICLE HISTORY
Received 19 August 2020
Accepted 27 October 2020

KEYWOR

DS

Small and medium-sized
enterprises; business failure;
business environment;
business risk;
compan�ys future

JEL CODES
L21; L26; M21; C36

1. Introduction

The responsibility of an SME owner/top SME manager to make strategic decisions
plays the key role in ensuring financial prosperity and the sustainability of SMEs in
the business environment (Cepel et al., 2018) or a smooth digitalization process
(Dinc�a et al., 2019). Business decisions are made under uncertainty and risk. SMEs
are becoming more aware of the need for risk management and control (Wegner
et al., 2017).

CONTACT Jan Dvorsky j1dvorsky@utb.cz
� 2020 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/
licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is
properly cited.

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA
2021, VOL. 34, NO. 1, 1690–1708
https://doi.org/10.1080/1331677X.2020.1844588

http://crossmark.crossref.org/dialog/?doi=10.1080/1331677X.2020.1844588&domain=pdf&date_stamp=2021-12-29

http://orcid.org/0000-0002-6078-2636

http://orcid.org/0000-0002-5900-997X

http://orcid.org/0000-0002-0606-879X

http://orcid.org/0000-0001-6348-2252

http://creativecommons.org/licenses/by/4.0/

http://creativecommons.org/licenses/by/4.0/

https://doi.org/10.1080/1331677X.2020.1844588

http://www.tandfonline.com

The benefits of SME risk management are highlighted by several authors. The pri-
mary effects are seen in the gradual increase of SME financial performance; improv-
ing the SME position in the business segment; improving services/products for
customers and the employee productivity (Psarska et al., 2019). The secondary effects
become evident not only in the improved economic indicators (purchasing power of
the population, etc.) in the SME location (city, region) but also in the country’s
macroeconomic indicators (Audretsch & Keilbach, 2005).

It is important to help companies with risk management, i.e. identify, analyse,
evaluate and manage risks (Belas et al., 2018). The diagnostics of risk sources in
SMEs is the most important phase of risk management because preventive actions
can only be devised to eliminate the identified risk (Gorze�n-Mitka, 2019).

The adverse consequences of the absence of business risk management threaten
the very existence of a company (Balcaen & Ooghe, 2006). This includes the inability
to pay debts to suppliers, employees, the state, and the lack of job orders from cus-
tomers, unfavourable values of financial indicators of the company, or stressful situa-
tions between employees and the management. These side effects translate into the
company’s insolvency and often lead to its liquidation (Chłodnicka & Zimon, 2020).

Given the important position of SMEs in the overall economic system of national
policies and the European Union as a whole, there are efforts to analyse the business
risks and their relationship to the direction of a business in the future in more detail
(Lima et al., 2020).

The study was motivated by these consistent facts, focusing on the perception of
business risks and business failure in relation to future business in the SME segment.

The structure of the paper is as follows: The literature review is focused on busi-
ness risk management. In the next part of the study, the database, methodology and
procedures are described. The analytical part contains a proposed and verified SEM
model with fit-test characteristics and the most important results of factor analysis.
They provide a platform for the discussion part and conclusions. The conclusion of
the study is a comprehensive evaluation of the results and their applicability for dif-
ferent types of policies. It also implies many topics for subsequent research in
this field.

2. Literature review

Fear of the future is amongst the most important reasons why entrepreneurs do not
engage in business (Cacciotti et al., 2016). Business literature identified the difference
between entrepreneurs and managers lies in their level of openness to experience (e.g.
Zhao & Seibert, 2006). Shane et al. (2010) says that openness to experience explains
much of the variation in the genetic predisposition of an individual and underlines
its importance in the business process. Business stability and performance is based on
the implementation of an enterprise risk management system (Gordon et al., 2009).

Several studies (e.g. Dvorsky et al., 2020; Grimsdottir & Edvardsson, 2018) confirm
the application of strategic management elements in the SME sector is somewhat dif-
ferent compared to large enterprises and it is considerably limited and questionable.
Svarova and Vrchota (2013) examined a sample of 176 respondents for the

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 1691

relationship between the implementation of strategic management in the SME seg-
ment and its market stability and financial success of the company. The authors con-
cluded based on empirical research that a formulated strategy has a positive effect on
the SME financial performance while at the same time it does not influence the
financial success of the SME. Klammer et al. (2017) provide that SMEs that are busi-
ness-oriented and willing to learn can have successful strategic management.

H1: The entrepreneur’s attitude toward strategic risk management has a positive effect on
the perception of a company’s future (FB).

Market risk is determined by a number of causes focused on the overall level of
market competitiveness (Malega et al., 2019). Market risk can be defined as the stra-
tegic risk of SMEs which consists in the long-term retention of the existing customers
and in the acquisition and retention of new customers and in the production of new
products or delivery of new services (Rowland et al., 2019). Nothing but a sufficient
number of customers allows SMEs to implement a reasonable sales volume which
allows them to maintain their market position (Herath & Mahmood, 2014). The level
of a company’s competitiveness is largely based on two main factors of the competi-
tive environment: customers and competitors (De Clercq et al., 2013). SMEs must
develop their competitive advantages to survive; the companies managing scarce
resources that are difficult to replace typically gain a competitive advantage
(Vochozka & Psarska, 2016). One such resource is human resources (Caseiro &
Coelho, 2018). Businesses must be able to innovate new products, achieve success
and growth, and satisfy consumer demand (O’Cass & Sok, 2014). Business perform-
ance is the primary goal of any type of firm, being a top priority for managers (Trif
et al., 2019).

H2: The entrepreneur’s attitude toward market risk management has a positive effect on
the perception of a company’s future.

The level of financial risk must be assessed in terms of the risk performance in a
company towards successful financial risk management decisions because risk is con-
sidered an integral part of a company’s business (Olah et al., 2019). Financial risk is
one of the main threats to SME business (Yang, 2017). Difficulties in business financ-
ing and lack of funds are the most common symptoms of SME financial risk (Bosma
et al., 2018) because most of the operation of the company is financed by the capital
of owners or managers themselves. This may result in the increase of operating costs
and corporate debt, and debt repayment problems and consequently high financial
risk. Access to finance is likely to improve the quality of a business environment by
leading firms toward a more productive scope of business.

The purpose of the Yao Wang study (2016) was to analyse the biggest obstacles to
the growth of SMEs from the perspective of business managers based on the World
Bank enterprise survey including data from 119 developing countries. SMEs consider
the access to funds as the critical obstacle to their growth while managers consider
the access to finance, tax rates and competition as the biggest obstacles to the external
financing of SMEs.

H3: The entrepreneur’s attitude toward financial risk management has a positive effect on
the perception of a company’s future.

1692 J. DVORSKY ET AL.

The quality of human capital in a company provides the basis for increasing the
company’s performance (Gede Riana et al., 2020). Empirical studies show that volun-
tary efforts by employees will increase productivity and ultimately performance
(Neary et al., 2018). They also create a competitive advantage for the company
(Habanik et al., 2020). It is important to develop a positive interpersonal relationship
between individuals working at different levels of the organisation (Alnoor, 2020).
Employees working together with others to build a social interpersonal relationship
uphold the need for affiliation and fellowship. The social exchange and reciprocity
theories explain how managers and the behaviour of co-workers determine the quality
of this relationship and influence the judgments of employees (Redmond &
Sharafizad, 2020).

H4: The entrepreneur’s attitude toward personnel risk management has a positive effect
on the perception of a company’s future.

The political stability and orientation of a country the company chooses to operate
in are highly important for SMEs. Political factors set up the legal framework and
control the business environment (Dickson & Weaver, 2008).

Cepel et al. (2018) says the political and legal environment provides a legal and
supporting framework for business activities and it regulates the international busi-
ness relations, tax and levy policies, antitrust policy, the stability of the legal environ-
ment, judicial efficiency, and law enforcement, or the administrative burden on
businesses, etc.

The government regulation is perceived as the major obstacle to market entry
(Lutz et al., 2010). Stenholm et al. (2013) studied a sample of 65 countries to identify
how differences in the institutional organisation may affect business activities in a
country. The authors consider the institutional methods and regulatory provisions are
connected to the level of business activities, and therefore they suggest to facilitate
the entry of new companies into the market which may have a positive effect on
business activities.

H5: The entrepreneur’s attitude toward legal risk management has a positive effect on the
perception of a company’s future.

The impact of SME internal capabilities on a competitive advantage was studied by
Games and Roliza (2019) while they also considered the age of the company. In the
case of Indonesia, the SME internal capability had a strong and positive correlation
with a competitive advantage. For SMEs with less than five years of operation, this con-
nection is weak in comparison to older companies. Innovation has a profound and sig-
nificant influence on the company’s competitiveness through increasing productivity as
documented in the transitional market study (Ngoc Mai et al., 2019). A higher level of
customer satisfaction and loyalty leads to a higher support for the purchasing processes.
The important indicators that may affect the narrower business environment include
the support of business customers and suppliers (Balan et al., 2019). The support of
corporate customers has a greater effect on the narrower business environment. Mafini
and Muposhi (2017) studied the relationship between SMEs and their suppliers. The
authors suggest the existence of long-term relationships between SMEs and their sup-
pliers does not automatically lead to better risk management.

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 1693

H6: The entrepreneur’s attitude toward operational risk management has a positive effect
on the perception of a company’s future.

Empirical studies emphasize the determinants and consequences of business failure
(Karabag, 2019). In general, SME bankruptcy research can be divided into three main
parts: (i) predictive models, (ii) finance and law, and (iii) organizational failure.
Another current research topic addresses the issue of perception, consequences and
costs of business failure (Ucbasaran et al., 2013).

The significant causes of business failure include: lack of planning activities of the
company’s management; lack of working capital; offering too much credit to custom-
ers (Hanzaee et al., 2011); failure to implement rapid outsourcing; market competi-
tion; insufficient monitoring of corporate finances (Santisteban & Mauricio, 2017).

Other factors may also contribute to business failure. S€usi and Lukason (2019)
stated the risk of failure decreases as the manager’s age increases and managerial
ownership is present. On the other hand, the presence of larger management boards
and managers in other companies will increase the risk of failure.

H7: The entrepreneur’s attitude toward business failure (BF) has a positive effect on the
perception of a company’s future.

3. Purpose, data and methodology

The aim of this paper is to review the impact of entrepreneurs’ attitudes toward the
defined business risks on the perception of the future of SMEs. Following the goal
definition, empirical research was conducted using online questionnaires. Data was
collected in the CR from 9/2019 to 3/2020. 8250 SMEs were randomly selected from
the Cribis database. This SME database is considered to be the most reliable sources
of information concerning businesses in the Czech business environment. The ques-
tioning technique was used to receive feedback from respondents to specific state-
ments by completing an online questionnaire. In the first phase, respondents were
contacted by email with a structured request for completion of a questionnaire. In
the second phase, SMEs were contacted by telephone.

The questionnaire consisted of several parts. The questions were assigned to the
questionnaire by random (except for the demographic characteristics of respondent).
The statements concerning business risks, the perception of BF and future business
were formulated in a positive way to maintain the continuity of logical thinking.
Provided that business risks are managed correctly by SMEs, then the future of SMEs
is perceived more positively. The average return of questionnaires was 3.6%.
Respondents’ opinions were based on the Likert’s five-point scale: 1 “I strongly agree”
to 5 “I strongly disagree” with a statement. The questionnaire was completed by 465
respondents. The number of correctly/incorrectly completed questionnaires (herein-
after referred to as the sample) was represented by 454/11 respondents. The general
evaluation of questions looking at the characteristics of a company and respondent is
shown in Table 1.

To achieve the aim of the study, the authors selected methods of mathematical sta-
tistics (factor analysis (FA) and structural equation modelling – SEM) for verification.

1694 J. DVORSKY ET AL.

Ta
b
le

1.
St
ru
ct
ur
e
of

re
sp
on

d
en
ts

ac
co
rd
in
g
to

d
em

og
ra
p
h
ic
ch
ar
ac
te
ri
st
ic
s.

C
om

p
an
y
Si
ze

Le
n
g
th

of
Bu

si
n
es
s

O
p
er
at
io
n

Bu
si
n
es
s

Se
ct
or

M
ic
ro

Bu
si
n
es
s

63
.9
%

Le
ss

th
an

3

ye
ar
s

5.
9%

Se
rv
ic
e

29
.3
%

Sm
al
l
Bu

si
n
es
s

23
.6
%

3
�
5
ye
ar
s

6.
2%

Tr
ad
e

20
.1
%

M
ed
iu
m
-s
iz
ed

Bu
si
n
es
s

12
.5
%

5
�
10

ye
ar
s

14
.1
%

Pr
od

uc
ti
on

17
.4
%

Le
g
al

Fo
rm

M
or
e
th
an

10
ye
ar
s

73
.8
%

Bu
ild
in
g
in
d
us
tr
y

13
.9
%

So
le

tr
a

d
er

29
.7
%

Ed
u
ca
ti
o
n
to

B
u
si
n
es
s
Se
ct
o
r
R
el
at
io
n
sh
ip

To
ur
is
m

2.
4%

Li
m
it
ed

lia
b
ili
ty

co
m
p
an
y

58
.6
%

A
g
ri
cu
lt
ur
e

2.
4%

Jo
in
t
st
oc
k
co
m
p
an
y

7.
5%

Re
la
te
d

37
.7
%

Tr
an
sp
or
t

2.
2%

O
th
er

4.
2%

Re
la
te
d
to

so
m
e
ex
te
n
t

34
.8
%

O
th
er

12
.3
%

H
ig
h
es
t
A
ca
d
em

ic
D
eg

re
e

G
en

d
er

H
ig
h
sc
h
oo
l
w
it
h
ou

t
sc
h
oo
l
le
av
in
g
q
ua
lif
ic
at
io
n

10
.1
%

N
ot

re
la
te
d

27
.5
%

M
al
e

71
.1
%

A
g
e

Fe
m
al
e

28
.9
%

H
ig
h
sc
h
oo
l
w
it
h
sc
h
oo
l
le
av
in
g
q
ua
lif
ic
at
io
n

7.
5%

U
n
d
er

35

ye
ar
s
of

ag
e

15
.2
%

P
o
si
ti
o
n

A
g
ed

b
et
w
ee
n
36

�
45

ye
ar
s

23
.3
%

O
w
n
er

22
.0
%

Ba
ch
el
or

40
.8
%

A
g
ed

b
et
w
ee
n
46

�
55

ye
ar
s

26
.9
%

In
g
/M

as
te
r

37
.0
%

A
b
ov
e
56

ye
ar
s
of
ag
e

34
.6
%

M
an
ag
er

78
.0
%

Ph
D

4.
6%

So
ur
ce
:
O
w
n
d
at
a
co
lle
ct
io
n
.

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 1695

The FA was applied in the first step. The process of the FA exploration technique
can be logically organized into three steps: i. data validation; ii. factor extraction; iii.
factor rotation (Brown, 2015).

The SEM method is an appropriate tool for constructing, identifying and quantify-
ing the relationships between latent variables (Smith et al., 1998) as well as their
graphical representation using a structural model. The final structural model can
identify and quantify complex, not only direct but also indirect relationships of latent
variables to each other and between latent and manifest variables (Levy, 2011).

Latent variables are considered to be the most significant business risks that are
impossible to measure directly. Latent variables can be defined using manifest varia-
bles (Babin et al., 2008).

The suitability of a test model can be verified by selected measures: Goodness of
Fit (GFI); CMIN/DF – The minimum discrepancy; Comparative Fit index (CFI); Roat
Mean Square Error of Approximation (RMSEA); Normed fit index (NFI). The SEM
model is statistically significant if: the GFI p-value is greater than 0.05 (Hooper et al.,
2008); CMIN/Df value is within the interval of �2 to 2 (Byrne & Reinhart, 1989); the
RMSA value ranges from 0 to 0.05 (Smith et al., 1998); the NFI index value is greater
than 0.9 (Bentler, 1990); the CFI value is greater than 0.95 (Wheaton et al., 1977). All
the above tests were performed through IBM SPSS Statistics and IBM SPSS Amos.

4. Results

The general description of business risk indicators, BF indicators and the perceived
future of business (mean (M), standard deviation (SD), sample skewness (S) and kur-
tosis (K)) are summarized in Table 2. Table 2 shows the results of factor reliability
and the relationship between the corrected item (CI) and the total correlation (TC)
of a selected factor.

The results in Table 2 show that although the Cochran�s alpha values exceed 0.7,
the corrected item-total correlation (CI-TC) of indicators such as MR4, FR1, FR4,
LEG4, BF5 is lower than 0.5. The indicator reliability is not acceptable according to
Hair et al. (2010). These results were also confirmed in the individual (factor) KMO
tests. The factor loading (FL) understood as a correlation of each item and a factor
should be better than 0.5 (Hair et al., 2010) to ensure the indicator is correlated with
the type of business risk or BF. The results indicate that MR4 (FL ¼ 0.214); FR3 (FL
¼ 0.284); FR4 (FL ¼ 0.322); LEG2 (FL ¼ 0.417); PER3 (FL ¼ 0.474); PER4 (FL ¼
0.451); BF3 (FL ¼ 0.397) do not meet the above threshold requirements. The results
of a KMO test and Bartlet test of sphericity without the above indicators are illus-
trated in Table 3.

The KMO test results in Table 3 confirmed a proportion of variance of the indi-
vidual variables that can be explained by background factors. The reason is that the
KMO test value is close to the value of 1, or a large proportion of the variance is
explained by factors. Also, the results of the Bartlet test (P – value ¼ 0.000) showing
the null hypotheses that the correlation coefficient of the variables in the sample is
zero are accepted at a significance level of 0.05.

1696 J. DVORSKY ET AL.

The Varimax rotation technique (6 iterations) was used to interpret the factor
matrix. If the results of the indicator iterative process showed a less communality of
indicators with high transverse overload (> j 0.4 j), then they were removed. Table 4
summarizes the results of the rotated solution of the indicator matrix.

The results obtained with the Principal Component Analysis extraction method: 8
factors; the maximum number in the range of 5-10 factors. The result of the BIC
method is 8 factors. The obtained results are very satisfactory in view of the defined
number of latent variables (6 – business risk types, 1 – perception of BF by the respond-
ent) and 1 endogenous variable (perception of future business by the respondent).
Table 5 shows the results of the total variance explained by the above factors.

Based on the values in Table 5, it was concluded that the selected factors explain
nearly 64.7% of the variability in the total variance. Based on the results in Tables 4
and 5, it was concluded that all selected factors are identified. These results are iden-
tical to the scree plot which also confirmed the number of 8 factors since the very 8
components, consequently denoted by factors, were obtained using Kaiser rule (more

Table 2. Descriptive statistics (DS) of indicators and Cronbach�s Alpha (CA) test results.

DS

SR; CA ¼ 0.819 MR; CA ¼ 0.704
SR1 SR2 SR3 SR4 MR1 MR2 MR3 MR4

CI-TC 0.586 0.715 0.644 0.620 0.642 0.770 0.714 0.374
M 1.802 2.542 2.194 2.707 2.458 2.035 2.260 2.564
SD 0.825 1.072 0.991 1.174 1.022 1.009 0.941 1.085
S 1.421 �0.301 �0.070 2.014 0.114 0.599 0.190 �0.524
K 1.046 0.398 0.601 2.147 0.625 0.977 0.657 0.340

FR; CA 5 0.727 PER; CA 5 0.717

DS FR1 FR2 FR3 FR4 PER1 PER2 PER3 PER4

CI-TC 0.774 0.848 0.317 0.448 0.621 0.560 0.446 0.424
M 1.938 2.231 1.965 2.121 2.678 2.430 2.348 2.744
SD 0.965 0.989 0.891 0.907 1.140 1.244 1.109 1.155
S 2.312 0.406 0.644 0.627 �0.587 �0.679 �0.259 �0.692
K 2.077 0.776 0.841 0.741 0.448 0.559 0.675 0.277

LEG; CA 5 0.807 OPE; CA 5 0.741

DS LEG1 LEG2 LEG3 LEG4 OPE1 OPE2 OPE3 OPE4

CI-TC 0.745 0.371 0.571 0.807 0.589 0.634 0.674 0.363
M 2.773 2.954 3.370 1.870 2.077 2.198 1.731 2.357
SD 1.109 1.282 1.295 0.832 0.843 0.986 0.875 1.304
S �0.549 �1.015 �0.950 0.775 0.397 �0.106 1.324 �0.883
K 0.419 0.150 �0.358 0.849 0.673 0.594 1.185 0.565

BF; CA 5 0.728

DS BF1 BF2 BF3 BF4 BF5 FB

CI-TC 0.508 0.513 0.174 0.513 0.547
M 3.070 3.551 2.896 3.604 1.555 2.238
SD 1.257 1.205 1.198 1.146 0.769 1.116
S �0.998 �0.548 �0.837 �0.472 3.144 �0.053
K �0.046 �0.541 0.015 �0.561 1.597 0.735

Source: Own data collection.

Table 3. Kaiser-Meyer-Olkin test (KMO) and Bartlett�s test results.
KMO- test 0.796

Bartlett�s test of sphericity Approx. Chi-square 2,445.981
Df (no. of degrees of freedom) 253
P- value (Sig.) 0.000

Source: Own data collection.

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 1697

than 1% of the total variance; Bentler, 1990). Other non-significant indicators which
do not strongly correlate with the selected factors are shown below the running mark
in the scree plot (MR4, FR3, FR4, LEG2, PER3, PER4 and BF3 – see also Table 2).
The scree plot is not included in the results due to duplicated results obtained in
Tables 4 and 5.

The characteristics of a structural model (Figure 1) that was subsequently verified
by the summary fit characteristics are as follows: one dependent variable and seven
independent variables; latent variables measured by manifest variables (indicators),
each manifest variable contains an unexplained part (residual errors not explained by
the model); the relationship between latent exogenous variables (SR, … , OPE, BF)
and endogenous variables (FB) is determined by an arrow. The above process resulted
in a structural (SEM) model (Figure 1) of the relationship between business risks,
perception of BF and perception of future business.

Table 4. Rotated component matrix – indicator to business risk relationship.

Indicators

Business Risks and Perception of BF

CSR PER BF MR LEG FR OPE FB

SR1 0.741 0.614
SR2 0.839 0.751
SR3 0.778 0.666
SR4 0.746 0.635
PER1 0.677 0.748
PER2 0.854 0.774
BF1 0.814 0.695
BF2 0.737 0.646
BF4 0.694 0.649
BF5 0.601 0.545
MR1 0.713 0.562
MR2 0.671 0.577
MR3 0.557 0.558
LEG1 0.649 0.569
LEG3 0.853 0.740
LEG4 0.798 0.693
FR1 0.625 0.518
FR2 0.857 0.605
OPE1 0.566 0.627
OPE2 0.527 0.584
OPE3 0.531 0.568
OPE4 0.784 0.668
FB 0.706 0.695
�Note: C – Communalities. Source: Own data collection.

Table 5. Total variance explained.

Latent variables
Extraction Sums of Squared Loadings

Rotation Sums of Squared Loadings

Cumulative (%) Total % of Variance Cumulative (%)

SR 20.590 2.720 10.878 10.878
MR 29.798 2.525 10.100 20.978
FR 38.093 2.252 9.007 29.985
PER 44.121 2.019 8.076 38.060
LEG 49.688 1.772 7.089 45.150
OPE 54.332 1.719 6.877 52.027
BF 58.568 1.635 6.541 58.568
FB 64.695 1.574 6.127 64.695

Source: Own data collection.

1698 J. DVORSKY ET AL.

The resulting model (Figure 1) is the best solution to the proposed model and
empirical data based on the Summary Fit Model (see Table 6). The resulting model
assumes that selected types of business risks are independent. To achieve satisfactory
results, it was necessary to remove variables from the SEM model (based on the path
coefficient: OPE2, MR2, SR1, SR3, BF3. Before interpreting the structural model of
relationships (see Figure 1), the most important FIT tests of the created SEM model
were calculated and interpreted (see Tables 6 and 7).

The results of the GFI characteristic (see Table 7) demonstrated the statistical sig-
nificance of the structural model (p-value ¼ 0.061). The SEM model has the value of
CMIN/Df. ¼ 1.914. This value is at the upper limit of acceptability because the

Figure 1. SEM model with standardized estimates. Source: created by the authors in the IBM SPSS
AMOS software.

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 1699

CMIN/Df value higher than 2 indicates a poor fit of the proposed SEM model with
data in the sample of SME attitudes. The RMSA value is higher than the recom-
mended SEM model acceptance interval <0; 0.5>. However, Smith et al. (1998) pro-
vides that if the RMSA value is in the range <0.5; 0.8>, the SEM model is accepted.
The values of the NFI and CFI fit tests are below the limit of perfect agreement.

Based on the above results of the SEM model verification, hypotheses H1, … , H7
are supported.

5. Discussion

The results of the SEM model of the specific research areas of business risks and BFs
allowed us to set up an interesting discussion platform. It was identified that the per-
ception of positive future business is influenced by all identified types of business
risks. The level of their impact is not the same as that which is also connected with
the many macroeconomic effects as well as the attitudes of the examined SMEs. The
effective risk management in SMEs is deciding to a large extent whether they are fit
to survive in the market and contributes to the development not only of a company
but also its market and social environment. At the same time, note the appropriate
risk management requires a certain degree of risk perception in a given business
environment, risk identification, planning and alignment of preventive measures, or
risk management systems (�Slusarczyk & Grondys, 2019). The results show that finan-
cial risk has the most significant positive impact on a perception of the future (path
coefficient – PC ¼ 0.16). Financial risk is determined by a positive perception of
financial risk as part of everyday life as well as a positive perception of financial per-
formance. Financial risk largely explains the perception of the financial performance
of a business which is linked to the perception of financial risk as part of everyday
life. Ausloos et al. (2018) argues that a reasonable company’s performance assessment
is required to review the need for investment in the light of a credible expected long-
term increase in sales, assets and other profitability indicators. The indicators such as

Table 7. SEM model – summary fit model.
Fit test GFI p-value CMIN/Df RMSEA CFI NFI

SEM model results 0.061 1.914 0.071 0.948 0.897
Accepted value of the fit test <0.05 <-2.0;2.0> <0;0.5> <0.95 <0.90

Source: Own data collection.

Table 6. Hypothesis testing and path coefficients (positive effects).
Hypothesis Path Coefficient Conclusion

H1 SR -> FB1 0.020� Supported
H2 TR -> FB1 0.119�� Supported
H3 FR -> FB1 0.157�� Supported
H4 PER -> FB1 0.050� Supported
H5 LEG -> FB1 0.066� Supported
H6 OPE -> FB1 0.136�� Supported
H7 BF -> FB1 0.125�� Supported
�Notes: � The positive effect is significant at the 0.05 level;.
��The positive effect is significant at the 0.01 level. Source: Own data collection.

1700 J. DVORSKY ET AL.

the respondent’s ability to understand the most important aspect of financial risk and
the respondent’s ability to properly manage financial risk do not form financial risk.
It appears that the level of financial risk is most dependent on the macroeconomic
situation of the country, thus macroeconomic indicators, and to a lesser extent on
managerial characteristics. It raises many questions for discussion related to the sur-
vey of managerial competencies and the personality traits of managers, or their finan-
cial literacy, etc.

Operational risk has the second most important positive effect on the perception
of a positive future (PC ¼ 0.13). Operational risk is determined by a reasonable util-
isation of corporate resources, reducing customer complaints concerning the quality
of products/services as well as the company not being so dependent on a limited
number of suppliers. Operational risk as a factor is best explained by the reasonable
utilisation of corporate resources. An interesting finding is that service/product
innovation and their positive reflection on the stability (performance) of a company
is not an indicator that would determine operational risk. It is because operational
risk is attached to the quality of the business process management while innovation
processes are attached to the company at the stage preceding the process manage-
ment, e.g. at the stage of product development, investment decision-making, modern-
ization of production and services, etc. The results of the research are also supported
by Mafini and Muposhi (2017) and Sinha et al. (2011) studies.

Market risk is another significant factor with a positive effect on the perception of
a favourable future of the company (PC ¼ 0.12). A positive perception of capital
adequacy, i.e. expected lack of sales, as well as a reasonable challenge for selling prod-
ucts/services determines market risk. These results are supported by the conclusions
of O’Cass and Sok (2014). The influence of business competitors as a driving factor
for entrepreneurs and the company’s ability to acquire new markets in innovative
ways have not been confirmed as important determinants of market risk. The results
of the research are opposite to the results of studies by Vargas-Hern�andez et al.
(2016) and De Clercq et al. (2013) who argue that SMEs have low working capital in
comparison with their bigger competitors and they must adopt sophisticated and
effective investment, innovation and competitive strategies. Therefore, it becomes the
focus to examine the extent to which and in what types of companies, with a view to
their sector differentiation and size, innovative development is important as a factor
of prosperity and long-term progress of a company. Innovative development is associ-
ated with the allocation of capital which may not be available to every company. In
particular, SMEs have many limitations in terms of their access to or funding
of innovation.

The values similar to market risk were also identified in the perception of BF (PC
¼ 0.12). Positive attitudes of entrepreneurs toward statements: BF is a natural part
of business; BF does not mean the entrepreneur’s failure; BF does not reduce self-
confidence, and the correct understanding of a commitment to prevent BF has a posi-
tive effect on the entrepreneurs’ perception of a positive future. BF as a factor best
explains the entrepreneurs’attitudes toward the self-confidence statement. The percep-
tion of BF (bankruptcy) as a factor is not derived from the indicator: the specific BF
experience of an entrepreneur. Cacciotti et al. (2016) says that fear of failure may also

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 1701

affect business motivation but not always in a negative way. In many cases, it may
involve the decision to take an even more conservative approach. In addition, there
are business performance, prosperity and profit margin implications. Thus it becomes
the focus to more deeply study the factors determining the managers’ risk acceptance
level depending on the risk quantification and the impact on the further development
of a company. Being highly conservative in the decision-making processes can lead to
business stagnation, a low level of creativity in the process of the identification of the
ways for business growth and ultimately, apathetic managers and hampering their
motivation levels in other business activities.

Legal risk is an equally positive factor that influences the perception of future busi-
ness (PC ¼ 0.07). The positive attitude of entrepreneurs was as follows: i. the legal
environment in the CR is not overregulated; ii. legal risk is considered as reasonable
(without any adverse impact on business); iii. the basic legal aspect of business as a
factor (legal risk) has a positive effect on the positive perception of future business.
These findings are directly proportional to the study of Cepel et al. (2018). It would
be interesting to review these attitudes in different phases of the business cycle, e.g.
in the aftermath of the economic crisis, or after a pandemic and any other globalisa-
tion threats when managers are more sensitive to the legal aspects of business and
tend to exert pressure and seek legislative changes through many relevant
institutions.

Personnel risk is another significant factor with a positive impact on the percep-
tion of a positive future (PC ¼ 0.05). The positive attitudes of entrepreneurs toward
the interest of employees to increase their performance and low employee turnover in
the company are the indicators that measure personnel risk. Redmond and Sharafizad
(2020) also emphasize the interest of employees to improve their performance.
Respondents’ attitudes toward the employee error rate or the adequacy of personnel
risk are not measured by this indicator. These factors can also be identified as trad-
itional where changes are seldom observed. The company’s performance and a low
turnover rate have always been the essential parameter of business success in different
types of companies and are also the cardinal indicators of measurement systems.

The positive perception of future business is also influenced by the positive atti-
tudes of entrepreneurs toward the selected statements on strategic risk (PC ¼ 0.02).
This factor has the least impact on the perception of future business. Regular moni-
toring, evaluation and management of strategic risk by the company as well as the
fact that the company has implemented a strategic management system are all of the
indicators that measure strategic risk. Regular monitoring, evaluation and manage-
ment of strategic risks by the company is better explained by strategic risk. This fac-
tor is not determined by the opinion of entrepreneurs that quality strategic
management increases the company’s competitiveness. These conclusions are in direct
agreement with Klammer et al. (2017). Nor this factor is determined by the position
that strategic management is an important part of corporate governance. This attitude
of the companies under review shows a lack of perception of the importance of stra-
tegic management in the SME segment, the absence of the development of formalized
strategies and their related strategic planning processes. This in turn explains why
SMEs do not implement performance measurement and management systems that

1702 J. DVORSKY ET AL.

have been used abroad for more than two decades and are also applied by SMEs. No
measurement system can be set up without vision and strategy definition, and stra-
tegic and operational goals, and without a monitoring and evaluation system in place,
and this is another reason why many small companies will not survive during chal-
lenging times.

6. Conclusion

The aim of the study was to review the impact of entrepreneurs’ attitudes toward the
defined business risks on the perception of the future of companies in the
SME sector.

The results show the identified market, financial, personnel and operational risk
have a positive effect on future business of SMEs. Operational risk has the most sig-
nificant positive effect on future business in the form of the utilisation of corporate
resources. Other significant risks with a positive effect include financial and strategic
risk. The results showed a positive effect of corporate risk management and
entrepreneurs’ attitudes toward the threat of business failure on the perception of
future business of a company. Different types of risks and their impact on future
business were also confronted with research studies to provide a discussion platform.
In the crisis and post-crisis times, these comparative trajectories may lose their sig-
nificance due to changes in the risk prioritization currently perceived by entrepre-
neurs. A financial and economic crises will significantly change the views of risk
management not only within SMEs but also in large companies. Companies of all
sizes are now taking a proactive approach to risk management, seeking to centralize
risk management and develop integrated management systems. It is not only a
national but a pan-European trend. The most common goal of risk management
would be to eliminate the impact of risk on the economic result. Businesses try to
eliminate the negative impact of the different types of risks on the economic result in
accordance with legal requirements which was evident when the area of legal risks
was reviewed. Businesses are aware of the need for better risk management in con-
nection with the ever more challenging external business conditions in the post-crisis
times, so they must pay more attention to internal controls and process changes to
eliminate risk. Importantly, businesses must also identify new types of risks not previ-
ously monitored and evaluated by them. Legal risk, as well as risks involved in inter-
national trade become ever more challenging which generates pressures to set up
special risk management teams, or even departments and divisions in large compa-
nies. The biggest barriers that will prevent companies from managing risks effectively
in the future include the availability of information, both internal and external,
required to manage and evaluate risks and integrate them into decision-making proc-
esses. The study and its results call for the creation of specific databases to support
research in this field and help develop relevant policies and set up stabilisation and
regulatory mechanisms for SME support and eliminate the impact of economic and
epidemiological crises and disasters directly projected into the economy of countries
and their further development.

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 1703

The study is limited by a lower number of respondents in the research sample
(454) although the total number of business entities invited to participate was quite
high � 8000 SMEs in the CR. It is not the issue of data collection in a given country,
or a problem stemming from the nature of research, but a clear consequence of gen-
eral apathy and the burden perceived by entrepreneurs to monitor and submit any
kind of data about their businesses. As a result, agencies focused on the support of
the business environment and did not gather extensive and comprehensive business
data which does not provide a platform for creating the necessary conceptual frame-
work of policies for the government and other relevant institutions. The results of the
study were supposed to eliminate this research gap and provide the current relevant
outputs from the research of various types of risks for the future business and devel-
opment of SMEs. At the same time, they highly appeal for creating dedicated SME
databases to support the formation of national and international benchmarking indi-
cators. During the covid-19 pandemic, the importance of dealing with this issue has
significantly grown and provides a strategic platform in the economic policy of
governments.

Future research will focus on verifying the results achieved on a new sample of
SMEs in the CR, but also on the identification of disparities within the perception of
the business risks on the future of enterprises between entrepreneurs the Vysehrad
Group countries.

Disclosure statement

No potential conflict of interest was reported by the authors.

Funding

Publication of this paper was supported by: The Internal Grant Agency No. IGA/FAME2019/
001 Key Factors Determining the Business Performance of Small and Medium-Sized
Enterprises for the FaME, Tomas Bata University in Zl�ın.

ORCID

Jan Dvorsky http://orcid.org/0000-0002-6078-2636
Jaroslav Belas http://orcid.org/0000-0002-5900-997X
Beata Gavurova http://orcid.org/0000-0002-0606-879X
Tomas Brabenec http://orcid.org/0000-0001-6348-2252

References

Alnoor, A. (2020). Human capital dimensions and firm performance, mediating role of know-
ledge management. International Journal of Business Excellence, 20(2), 149–168. doi:10.1504/
IJBEX.2020.105357

Audretsch, D. B., & Keilbach, M. (2005). Entrepreneurship capital and regional growth. The
Annals of Regional Science, 39(3), 457–469. doi:10.1007/s00168-005-0246-9

Ausloos, M., Cerqueti, R., Bartolacci, F., & Castellano, N. G. (2018). SME investment best
strategies. Outliers for assessing how to optimize performance. Physica A: Statistical
Mechanics and Its Applications, 509, 754–765. https://doi.org/10.1016/j.physa.2018.06.039Ff

1704 J. DVORSKY ET AL.

https://doi.org/10.1504/IJBEX.2020.105357

https://doi.org/10.1504/IJBEX.2020.105357

https://doi.org/10.1007/s00168-005-0246-9

https://doi.org/10.1016/j.physa.2018.06.039Ff

Babin, B. J., Hair, J. F., & Boles, J. S. (2008). Publishing research in marketing journals using
structural equations modeling. Journal of Marketing Theory and Practice, 16(4), 279–285.
doi:10.2753/MTP1069-6679160401

Balan, M., Marin, S., Mitan, A., P̂ınzaru, F., V�at�am�anescu, E.-M., & Zbuchea, A. (2019).
Leaders in focus: Generational differences from a personality-centric perspective.
Management & Marketing. Challenges for the Knowledge Society, 14(4), 372–385. doi:10.
2478/mmcks-2019-0026

Balcaen, S., & Ooghe, H. (2006). 35 years of studies on business failure: An overview of the
classic statistical methodologies and their related problems. British Accounting Review, 38(1),
63–93. https://doi.org/10.1016/j.bar.2005.09.001

Belas, J., Smrcka, L., Gavurova, B., & Dvorsky, J. (2018). The impact of social and economic
factors in the credit risk management of sme. Technological and Economic Development of
Economy, 24(3), 1215–1230. doi:10.3846/tede.2018.1968

Bentler, P. M. (1990). Comparative fit indexes in structural models. Psychological Bulletin,
107(2), 238–246. https://doi.org/10.1037/0033-2909.107.2.238

Bosma, N., Content, J., Sanders, M., & Stam, E. (2018). Institutions, entrepreneurship, and eco-
nomic growth in Europe. Small Business Economics, 51(2), 483–499. https://doi.org/10.1007/
s11187-018-0012-x

Brown, T. A. (2015). Confirmatory factor analysis for applied research. The Guilford Press.
2015. ISBN 978-1462-1536-3.

Byrne, D. G., & Reinhart, M. I. (1989). Work characteristics, occupational achievement and
the type A behaviour pattern. Journal of Occupational Psychology, 62(2), 123–134. doi:10.
1111/j.2044-8325.1989.tb00483.x

Cacciotti, G., Hayton, J. C., Mitchell, J. R., & Giazitzoglu, A. (2016). A reconceptualization of
fear of failure in entrepreneurship. Journal of Business Venturing, 31(3), 302–325. doi:10.
1016/j.jbusvent.2016.02.002

Caseiro, N., & Coelho, A. (2018). Business intelligence and competitiveness: The mediating
role of entrepreneurial orientation. Competitiveness Review: An International Business
Journal, 28(2), 213–226. doi:10.1108/cr-09-2016-0054

Cepel, M., Stasiukynas, A., Kotaskova, A., & Dvorsky, J. (2018). Business environment quality
index in the SME segment. Journal of Competitiveness, 10(2), 21–40. doi:10.7441/joc.2018.02.
02

Chłodnicka, H., & Zimon, G. (2020). Bankruptcu risk assessment measures of polish SMEs.
WSEAS Transactions on Business and Economics, 17, 14–20. https://doi.org/10.37394/23207.
2020.17.3

De Clercq, D., Dimov, D., & Thongpapanl, N. T. (2013). Organizational social capital, formal-
ization, and internal knowledge sharing in entrepreneurial orientation formation.
Entrepreneurship: Theory and Practice, 37(3), 505–537. doi:10.1111/etap.12021

Dickson, P. H., & Weaver, K. M. (2008). The role of the institutional environment in deter-
mining firm orientations towards entrepreneurial behavior. International Entrepreneurship
and Management Journal, 4(4), 467–483. doi:10.1007/s11365-008-0088-x

Dinc�a, V. M., Dima, A. M., & Rozsa, Z. (2019). Determinants of cloud computing adoption by
Romanian SMEs in the digital economy. Journal of Business Economics and Management,
20(4), 798–798. https://doi.org/10.3846/jbem.2019.985620.

Dvorsky, J., Petrakova, Z., Ajaz Khan, K., Formanek, I., & Mikolas, Z. (2020). Selected aspects
of strategic management in the service sector. Journal of Tourism and Services, 11(20),
109–123. doi:10.29036/jots.v11i20.146.

Games, D., & Roliza, R. (2019). SME internal capability and competitive advantage in an
emerging market: Moderating effects of firm age. AMAR (Andalas Management Review)),
3(1), 103–114. doi:10.25077/amar.3.1.103-114.2019

Gede Riana, I., Suparna, G., Gusti Made, I., Kot, S., & Rajiani, I. (2020). Human resource
management in promoting innovation and organizational performance. Problems and
Perspectives in Management, 18(1), 107–118. doi:10.21511/ppm.18(1).2020.10

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 1705

https://doi.org/10.2753/MTP1069-6679160401

https://doi.org/10.2478/mmcks-2019-0026

https://doi.org/10.2478/mmcks-2019-0026

https://doi.org/10.1016/j.bar.2005.09.001

https://doi.org/10.3846/tede.2018.1968

https://doi.org/10.1037/0033-2909.107.2.238

https://doi.org/10.1007/s11187-018-0012-x

https://doi.org/10.1007/s11187-018-0012-x

https://doi.org/10.1111/j.2044-8325.1989.tb00483.x

https://doi.org/10.1111/j.2044-8325.1989.tb00483.x

https://doi.org/10.1016/j.jbusvent.2016.02.002

https://doi.org/10.1016/j.jbusvent.2016.02.002

https://doi.org/10.1108/cr-09-2016-0054

https://doi.org/10.7441/joc.2018.02.02

https://doi.org/10.7441/joc.2018.02.02

https://doi.org/10.37394/23207.2020.17.3

https://doi.org/10.37394/23207.2020.17.3

https://doi.org/10.1111/etap.12021

https://doi.org/10.1007/s11365-008-0088-x

https://doi.org/10.3846/jbem.2019.985620

https://doi.org/10.29036/jots.v11i20.146

https://doi.org/10.25077/amar.3.1.103-114.2019

https://doi.org/10.21511/ppm.18(1).2020.10

Gordon, L. A., Loeb, M. P., & Tseng, C. (2009). Enterprise risk management and firm per-
formance: A contingency perspective. Journal of Accounting and Public Policy, 28(4),
301–327. doi:10.1016/j.jaccpubpol.2009.06.006

Gorze�n-Mitka, I. (2019). Interpretive structural modeling approach to analyze the interaction
among key factors of risk management process in SMEs: Polish experience. European
Journal of Sustainable Development, 8(1), 339–349. doi:10.14207/ejsd.2019.v8n1p339

Grimsdottir, E., & Edvardsson, I. R. (2018). Knowledge management, knowledge creation, and
open innovation in icelandic SMEs. Entrepreneurship/Small Business, 8(4), 1–13. https://doi.
org/10.1177/2158244018807320

Herath, H. M. A., & Mahmood, R. (2014). Strategic orientations and SME performance:
Moderating effect of absorptive capacity of the firm. Asian Social Science, 10(13), 95–107.
doi:10.5539/ass.v10n13p95

Habanik, J., Martosova, A., & Letkova, N. (2020). The impact of managerial decision-making
on employee motivation in manufacturing companies. Journal of Competitiveness, 12(2),
38–50. doi:10.7441/joc.2020.02.03

Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis.
Prentice Hall.

Hanzaee, K. H., Ghalandari, K., & Norouzi, A. (2011). The effect of brand social power dimen-
sions on purchasing decision based on Iranian customers’ subjective readiness. World
Applied Sciences Journal, 13(5), 1197–1208.

Hooper, D., Coughlan, J., & Mullen, M. R. (2008). Structural equation modelling: Guidelines
for determining model fit. Electronic Journal of Business Research Methods, 6(1), 53–60.

Karabag, S. F. (2019). Factors impacting firm failure and technological development: A study
of three emerging-economy firms. Journal of Business Research, 98, 462–474. doi:10.1016/j.
jbusres.2018.03.008

Klammer, A., Gueldenberg, S., Kraus, S., & �ODwyer, M. (2017). To change or not to change –
antecedents and outcomes of strategic renewal in SMEs. International Entrepreneurship and
Management Journal, 13(3), 739–756. doi:10.1007/s11365-016-0420-9

Levy, R. (2011). Bayesian data-model fit assessment for structural equation modeling.
Structural Equation Modeling, 18(4), 663–685. doi:10.1080/10705511.2011.607723

Lima, P. F. D., Crema, M., & Verbano, C. (2020). Risk management in SMEs: A systematic lit-
erature review and future directions. European Management Journal, 38(1), 78–94. doi:10.
1016/j.emj.2019.06.005

Lutz, C. H. M., Kemp, R. G. M., & Dijkstra, S. G. (2010). Perceptions regarding strategic and
structural entry barriers. Small Business Economics, 35(1), 19–33. doi:10.1007/s11187-008-
9159-1

Mafini, C., & Muposhi, A. (2017). Predictive analytics for supply chain collaboration, risk
management and financial performance in small to medium enterprises. Southern African
Business Review, 21, 311–338.

Malega, P., Rudy, V., Kovac, J., & Kovac, J. (2019). The competitive market map as the basis
for an evaluation of the competitiveness of the Slovak Republic on an International Scale.
Journal of Competitiveness, 11(4), 113–119. doi:10.7441/joc.2019.04.07

Neary, B., Horak, J., Kovacova, M., & Valaskova, K. (2018). The future of work: Disruptive
business practices, technology-driven economic growth, and computer-induced job displace-
ment. Journal of Self-Governance and Management Economics, 6(4), 19–24. https://doi.org/
10.22381/JSME6420183

Ngoc Mai, A., Van Vu, H., Xuan Bui, B., & Quang Tran, T. (2019). The lasting effects of
innovation on firm profitability: Panel evidencefrom a transitional economy. Economic
Research-Ekonomska Istra�zivanja, 32(1), 3417–3430. doi:10.1080/1331677X.2019.1660199

O’Cass, A., & Sok, P. (2014). The role of intellectual resources, product innovation capability,
reputational resources and marketing capability combinations in firm growth. International
Small Business Journal: Researching Entrepreneurship, 32(8), 996–1018. doi:10.1177/
0266242613480225

1706 J. DVORSKY ET AL.

https://doi.org/10.1016/j.jaccpubpol.2009.06.006

https://doi.org/10.14207/ejsd.2019.v8n1p339

https://doi.org/10.1177/2158244018807320

https://doi.org/10.1177/2158244018807320

https://doi.org/10.5539/ass.v10n13p95

https://doi.org/10.7441/joc.2020.02.03

https://doi.org/10.1016/j.jbusres.2018.03.008

https://doi.org/10.1016/j.jbusres.2018.03.008

https://doi.org/10.1007/s11365-016-0420-9

https://doi.org/10.1080/10705511.2011.607723

https://doi.org/10.1016/j.emj.2019.06.005

https://doi.org/10.1016/j.emj.2019.06.005

https://doi.org/10.1007/s11187-008-9159-1

https://doi.org/10.1007/s11187-008-9159-1

https://doi.org/10.7441/joc.2019.04.07

https://doi.org/10.22381/JSME6420183

https://doi.org/10.22381/JSME6420183

https://doi.org/10.1080/1331677X.2019.1660199

https://doi.org/10.1177/0266242613480225

https://doi.org/10.1177/0266242613480225

Olah, J., Kovacs, S., Virglerova, Z., Lakner, Z., Kovacova, M., & Popp, J. (2019). Analysis and
comparison of economic and financial risk sources in SMEs of the visegrad group and
Serbia. Sustainability, 11(7), 1853.

Psarska, M., Vochozka, M., & Machova, V. (2019). Performance management in small and
medium-sized manufacturing enterprises operating in automotive in the context of future
changes and challenges in SR. AD ALTA: Journal of Interdisciplinary Research, 9(2),
281–287.

Redmond, J., & Sharafizad, J. (2020). Discretionary effort of regional hospitality small business
employees: Impact of non-monetary work factors. International Journal of Hospitality
Management, 86, 102452. doi:10.1016/j.ijhm.2020.102452

Rowland, Z., Machova, V., Horak, J., & Hejda, J. (2019). Determining the market value of the
enterprise using the modified method of capitalized net incomes and Metfessel allocation of
input data. AD ALTA: Journal of Interdisciplinary Research, 9(2), 305–310.

Santisteban, J., & Mauricio, D. (2017). Systematic literature review of critical success factors of
information technology startups. Academy of Entrepreneurship Journal, 23(2), 1–23.

Shane, S., Nicolaou, N., Cherkas, L., & Spector, T. D. (2010). Do openness to experience and
recognizing opportunities have the same genetic source? Human Resource Management,
49(2), 291–303. doi:10.1002/hrm.20343

Sinha, P., Akoorie, M. E., Ding, Q., & Wu, Q. (2011). What motivates manufacturing SMEs to
outsource offshore in China? Comparing the perspectives of SME manufacturers and their
suppliers. Strategic Outsourcing: An International Journal, 4(1), 67–88. doi:10.1108/
17538291111108435

�Slusarczyk, B., & Grondys, K. (2019). Parametric conditions of high financial risk in the SME
Sector. Risks, 7(84), 1–17. doi:10.3390/risks7030084

Smith, R. M., Schumacker, R. E., & Bush, M. J. (1998). Using item mean squares to evaluate
fit to the Rasch model. Journal of Outcome Measurement, 2(1), 66–78.

Stenholm, P., Acs, Z. J., & Wuebker, R. (2013). Exploring country-level institutional arrange-
ments on the rate and type of entrepreneurial activity. Journal of Business Venturing, 28(1),
176–193. doi:10.1016/j.jbusvent.2011.11.002

S€usi, V., & Lukason, O. (2019). Corporate governance and failure risk: evidence from Estonian
SME population. Management Research Review, 42(6), 703–720. doi:10.1108/MRR-03-2018-
0105

Svarova, M., & Vrchota, J. (2013). Strategic management in micro, small and medium-sized
businesses in relation to financial success of the enterprise. Acta Universitatis Agriculturae et
Silviculturae Mendelianae Brunensis, 61(7), 2859–2866. doi:10.11118/actaun201361072859

Trif, S.-M., Duīu, C., & Tuleu, D.-L. (2019). Linking CRM capabilities to business perform-
ance: A comparison within markets and between products. Management & Marketing.
Challenges for the Knowledge Society, 14(3), 292–303. doi:10.2478/mmcks-2019-0021.

Ucbasaran, D., Shepherd, D. A., Lockett, A., & Lyon, S. J. (2013). Life after business failure:
The process and consequences of business failure for entrepreneurs. Journal of Management,
39(1), 163–202. doi:10.1177/0149206312457823

Vargas-Hern�andez, J. G., Casas Cardenaz, R., & Calder�on Campos, P. (2016). Internal control
and organizational culture in small businesses: A conjunction to competitiveness. Journal of
Organisational Studies and Innovation, 3(2), 16–30.

Vochozka, M., Psarska, M. (2016). Factors supporting growth of added value, performance and
competitiveness of SMEs and selected EU countries. In Proceedings of the Innovation
Management Entrepreneurship and Corporate Sustainability (pp. 756–767).

Wang, Y. (2016). What are the biggest obstacles to growth of SMEs in developing countries? –
An empirical evidence from an enterprise survey. Borsa Istanbul Review, 16(3), 167–176.
doi:10.1016/j.bir.2016.06.001

Wegner, D., Zarpelon, F. M., Verschoore, J. R., & Balestrin, A. (2017). Management practices
of small-firm networks and the performance of member firms. Business: Theory and
Practice, 18 (0), 197–207. doi:10.3846/btp.2017.021

ECONOMIC RESEARCH-EKONOMSKA ISTRAŽIVANJA 1707

https://doi.org/10.1016/j.ijhm.2020.102452

https://doi.org/10.1002/hrm.20343

https://doi.org/10.1108/17538291111108435

https://doi.org/10.1108/17538291111108435

https://doi.org/10.3390/risks7030084

https://doi.org/10.1016/j.jbusvent.2011.11.002

https://doi.org/10.1108/MRR-03-2018-0105

https://doi.org/10.1108/MRR-03-2018-0105

https://doi.org/10.11118/actaun201361072859

https://doi.org/10.2478/mmcks-2019-0021

https://doi.org/10.1177/0149206312457823

https://doi.org/10.1016/j.bir.2016.06.001

https://doi.org/10.3846/btp.2017.021

Wheaton, B., Muth�en, B., Alwin, D. F., & Summers, G. F. (1977). Assessing reliability and sta-
bility in panel models. In D. R. Heise (Ed.), Soxciological methodology 1977 (pp. 84–136).
Jossey-Bass. https://doi.org/10.2307/270754[]

Yang, J. S. (2017). The governance environment and innovative SMEs. Small Business
Economics, 48(3), 525–541. https://doi.org/10.1007/s11187-016-9802-1

Zhao, H., & Seibert, S. E. (2006). The big five personality dimensions and entrepreneurial sta-
tus: A meta-analytical review. The Journal of Applied Psychology, 91(2), 259–271. https://doi.
org/10.1037/0021-9010.91.2.259

1708 J. DVORSKY ET AL.

https://doi.org/10.2307/270754

https://doi.org/10.1007/s11187-016-9802-1

https://doi.org/10.1037/0021-9010.91.2.259

https://doi.org/10.1037/0021-9010.91.2.259

© 2020 The Author(s). Published by Informa UK Limited,
trading as Taylor and Francis Group. This work is licensed

under the Creative Commons Attribution License
creativecommons.org/licenses/by/4.0/ (the “License”).

Notwithstanding the ProQuest Terms and Conditions, you may
use this content in accordance with the terms of the License.

• Abstract

Introduction
Literature review
Purpose, data and methodology
Results
Discussion
Conclusion
Disclosure statement
Funding
Orcid
References

AnnotatedBibliography

Your ABs should be ½ to ¾ pages long. It should be double-spaced, and you are to use Times New

Roman 12 font.

For your AB, you must have:

• Your name, date, course, and AB number at the top (see example)

• APA Reference before the information (see example)

Annotated bibliographies must be written in a manner, in which, they are understandable. You must

describe all important data such as:

• The participants

• The reason the study was conducted

• What research design was used (surveys, interviews, case studies, etc.)

• Which research analysis was used (MANOVA, ANOVA, Kruskal Wallace, etc.)

• The results of the study along with any conclusions of the author(s)

Your study must include all of these (if applicable). Your AB MAY NOT be copied and pasted directly

from the source. Similarity report less than 10%.

I HAVE ATTACHED THE TWO PEER-REVIEW ARTICLES.

PLEASE REVIEW THE ATTACHED EXAMPLE.

Annotated Bibliography Example

Name:

Date:

Course Objective

APA REFERENCE

Craig, W. (2015). From Family To Franchising: Five Ways To Start Your Business Empire.

Forbes.

According to this article, there are more than half a million new businesses started across the

country every single month (Craig, 2015). There are many ways to become a business owner in

the world today and there are many risks involved with each of those avenues as well. When

starting a business from scratch the most important aspect is having a product that people want.

According to this article, nine out of ten startup companies fail and 42% of polled startup owners

claimed their business failed due to a lack of need for or her product (Craig, 2015). A business can

also be acquired by inheritance or taking over of a family business. Craig (2015) also found, that

only about 10% of family-owned businesses will survive long enough to see the third generation

take over. The reasons for this are the perception by younger generations that the family business

will always be available as a backup option if other ventures don’t work out. Buying an existing

business is also an option for those who have keen insight into opportunities. Becoming a franchise

owner is another way to become a business owner. This step also takes determination and focus

but can be very rewarding. There is stability that comes with taking over a location that has an

established corporate presence already backing it up with corporate sponsors that are ready and

willing to help get you started on the right track.