Export promotion programs, export capabilities, and risk management practices of internationalized SMEs

We cannot ignore the interest in the enterprise risk management (ERM) concept, which has grown rapidly over the past two decades, with regulators, professional associations calling for its adoption, the most common being the COSO framework (COSO 2004). This approach of risk management, largely based on the reference to large companies, suggests that firms address all their risks (operational, financial, legal, strategic) comprehensively and coherently, instead of managing them individually (Bromiley et al. 2015). The aim of this holistic framework is the identification, assessment, and monitoring of all threats and opportunities facing a firm, in order to promote increased risk-management awareness and culture, translating into mature operational and strategic management decisions and, hence, offers competitive advantage (Farrell and Gallagher, 2015; Nocco and Stulz 2006; Brustbauer 2014). However, it appears that the best practices that these frameworks are supposed to provide do not have a clear theoretical or empirical foundation, and their effectiveness is still largely unanswered (Paape and Speklé 2012). The application of a standardized framework does not systematically help to improve risk management quality, but, on the contrary, less structured, less standardized, more subjective, and exploratory risk management approach to risk management would be more relevant (Mikes 2009; Paape and Speklé 2012). Moreover, ERM is frequently an “umbrella concept” and finally refers to a very heterogeneous set of more or less informal practices (Power 2009). These arguments invite us not to use an over-sized analytical framework of risk management in our research, fundamentally anchored in the small business context for which the pragmatic nature of risk management is essential.

Researches in strategic management have recently developed and tested models that not suggest a simple linear relationship between an antecedent variable (e.g., practices or formal procedures) and a desirable outcome variable (e.g., performance, innovation, effectiveness), but a U-shaped (or inverted U-shaped) relationship (Busse et al., 2015; Haans et al. 2016). Many relationships studied follow an inverted U-shaped pattern, meaning that “too much can be as bad as too little.” One explanation of this phenomenon can be found in the “too-much-of-a-good-thing” effect (Busse et al., 2015), which provides from a compensation of desired effects (benefits) by parallel and undesired effects (costs). For example, in the entrepreneurship field, Chrisman et al. (2005) tested an inverted U-shaped relationship between the amount of formal planning and firm performance, because beyond a certain level of formalization, the incremental benefits (understanding of capacities and resources, development of long-term policies) are not sufficient to support the incremental costs (overconfidence and cognitive rigidity). However, in our study, we do not sense this quadratic effect, because of the context of the businesses and the research topic in itself. The companies concerned by public support are small companies, poorly equipped in terms of risk management tools, who can only benefit from being helped in the development of managerial practices. There is little risk that the costs of implementing risk management practices exceed the benefits generated. This is all the more true that public aid provided by specialists is very targeted and adapted to the firm’s characteristics (specially its size) and to the firm’s specific international strategy and that leaders prefer to set up practices sized to their needs. A risk of overconfidence or organizational rigidity is less conceivable in the small business context.