Effects of Firm Characteristics on Enterprise Risk Management: Case Study of Chinese Construction Firms Operating in Singapore

The objective of this study is to investigate the effects of regulatory pressure, firm ownership, and firm size on enterprise risk management (ERM) implementation in international construction firms. To achieve this objective, a questionnaire survey was conducted with 35 professionals from Chinese construction firms (CCFs) operating in Singapore. Partial least-squares structural equation modeling was used to analyze the data. The analysis results confirmed the three constructs of ERM implementation: commitment and involvement of top management (CITM), communication and understanding (CU), and execution and integration (EI). Additionally, the results showed that: (1) higher regulatory pressure led to a higher level of CITM and EI; (2) a higher level of government ownership contributed to a higher level of CITM, CU, and EI; and (3) larger firm size led to a higher level of CITM and EI. The quantitative results were complemented by qualitative evidence from six semistructured interviews, which validated the proposed framework. These findings are arguably the first to be presented for the construction industry and therefore add to the existing body of knowledge on ERM. Additionally, the findings can help management teams tailor their ERM practices in accordance with firm characteristics, thereby contributing to current ERM practices. Although this study is focused on ERM in Singapore-based CCFs, a similar research design and method can be used to investigate the role of firm characteristics in ERM implementations in construction firms located in other countries. The future development of the ERM body of knowledge can, for enhancement purposes, take into account various firm characteristics for implementation. Therefore, this study contributes to the ERM body of knowledge.