Managing environmental uncertainty for improved firm financial performance: the moderating role of supply chain risk management practices on managerial decision making

Abstract

With increasing global exposure, organisations have started to witness supply chain risks that they traditionally were not exposed to. This article therefore attempts to answer the research question of how environmental uncertainty within a firm’s supply chain, impacts firm financial performance. We further evaluate the role of supply chain risk management practices in mitigating the negative impact of such disruption events. To answer the research question, we conduct a literature review and develop the corresponding hypothesis. We test our hypothesis using both primary and secondary data. The results show that environmental uncertainty has a negative impact on firm financial performance, with entrepreneurial managerial capitalism mediating the impact. However, organisations that adopt macro and network supply chain risk management practices are able to improve managerial decision making frame, and mitigate the negative impact of environmental uncertainty on firm financial performance. The article concludes with our findings, along with managerial and practitioner implications of the research.