The Impact of Enterprise Demographics on Adoption of Financial Risk Management Strategies: Evidence from Ludhiana’s Small Enterprises

Description

Konica and Navdeep Aggarwal (School of Business Studies, Punjab Agricultural University, Ludhiana, Punjab)

Small enterprises in Ludhiana are crucial to the local economy, yet their scarce resources make them especially vulnerable to financial risks. Understanding how these companies handle financial risks is crucial, as it reveals the real challenges they encounter and the tactics they employ to stay resilient. This research examines the impact of demographic factors on the implementation of financial risk management strategies in small businesses in Ludhiana. Ludhiana particularly in Punjab considered as hub of small scale industry. For research, primary data were collected through a pre-designed questionnaire covering demographic factors of small enterprises and financial risk management strategies adopted by small enterprises. The relationship between demographic variables and financial risk management strategies was studied using statistical tools such as PLS-SEM (Partial Least Squares Structural Equation Modelling). The results of this study indicate that age of small enterprises and market served by the small enterprise significantly affects the adoption of financial risk management strategies, but nature of small enterprises and location of small enterprises do not significantly affect the financial risk management strategies. The findings highlight the heterogeneity in SMEs’ financial risk-management behaviour and emphasize the need for policies and training programs tailored to enterprise demographics. The study contributes to enriching the literature by researching a specific context from Ludhiana, Punjab.