INFLUENCE OF RISK MANAGEMENT STRATEGIES ON THE ORGANIZATIONAL PERFORMANCE OF VENTURE CAPITAL COMPANIES IN NAIROBI COUNTY, KENYA
Abstract
This study established the influence of risk management strategies on the organizational performance of venture capital companies Kenya. The specific objective was to assess the influence of risk acceptance strategy on performance of venture capital companies. The population constituted 46 employees both from management and subordinate employees of venture firms in Nairobi. Simple random sampling technique was used to sample employees. The study adopted the use of questionnaires and administering interviews in collection of data from the organization. Drop and pick method was used to collect data from the respondents. Descriptive statistics was used to analyze the data gathered and the findings presented mainly through tables, pie charts and bar graphs by the use of SPSS version 21 software. Regression model was also developed to check the relationship between risk management strategies and organizational performance. Findings from study showed that a significant change in an aspect of risk acceptance positively impacted on the performance of VCC. The infusion of a collaborative approach by venture capital firms through formation of mergers and joint ventures to create an environment for marshaling and pulling resources together was found to be one of the best approaches of risk acceptance. This approach was cited to help firms counter the effects of risks especially when considerable amount of resources were required to minimize the risk effect on their performance. It was further recommended that organizations should diversify investment portfolio across different investment types and economic sectors to reduce the overall risk by spreading risks over a variety of portfolio . This will ensure that the firms have detailed information about their clients’risk tolerance level and thereby help when making decisions on what they can and cannot include in their portfolio.The study variables accounted for 46.9% of the variation in organizational performance at 95% confidence interval. The remaining 53.1% is an indication that there are factors not studied in this research that also have an impact on organizational performance. Therefore, the study recommended that other variables should be established and their effects assessed as well.
Key Words: Risk Acceptance, Venture Capital
CITATION: Iminzah, J., & Litunya, R. (2021). Influence of risk management strategies on the organizational performance of venture capital companies in Nairobi County, Kenya. The Strategic Journal of Business & Change Management, 8 (3), 562 – 572.
Full Text:
PDFReferences
Alexeev, M., & Conrad, R. F. (2017). Income equivalence and a proposed resource rent charge. Energy Economics, 66, 349-359.
Charles E. Bamford & Edward B. Douthett, J. (2013). Venture Capital and Risk Management: Evidence from Initial Public Offerings. Journal of Managerial Issues, 222.
Chen, J. (2019, August 28). Laws & Regulations. Know Your Customer.
Chen, J. (2019, April 14). Modigliani-Miller Theorem (M&M). Retrieved from Investopedia: https://www.investopedia.com/terms/m/modigliani-millertheorem.asp
Chen, J. (2019, April 14). Private Equity. Retrieved from Investopedia: https://www.investopedia.com/terms/ p/privateequity.asp
Chen, J. (2019, June 26). Venture Capital Funds. Retrieved from Investopedia: https://www.investopedia.com/terms/v/vcfund.asp
Cohen, L., Manion, L., & Morrison, K. (2007). Observation. Research methods in education, 6, 396-412.
Fraser-Sampson, G. Venture Capital Investment Criteria. An analysis of criteria and their relative importance. Recuperado de http://www. redemprendedoresbavaria. net/redangeles.
Greene, J., & Stellman, A. (2014). Learning Agile. O'Reilly Media, Incorporated.
Deloitte. (2015). Africa private equity confidence survey. Retrieved from Deloitte financing avenues though commercial lenders.: https://www2.deloitte.com/content/dam/Deloitte/na/Documents/ finance/na_za_private_equity_confidence_survey_may2015.pdf
Dorian, P., Wiebke, S., Andreas, P., & Michael, S. (2016). Risk management in the venture capital industry: Managing risk in portfolio companies. The Journal Of Entrepreneurial Finance , 2373-1761.
Kaczmarek, S. (2017). BUSINESS & ENTREPRENEURSHIP, LEADERSHIP & MANAGEMENT. Retrieved from Risk Management Approach and Control Techniques in VC Funds: https://sylvesterkaczmarek.com/blog/risk-management-approach-control-techniques-vc-funds/
Kaczmarek, S. (2017). Risk Management Approach and Control Techniques in VC Funds . Business & Entrepreneurship, Leadership & Management.
Kaplan, S. N., & Schoar, A. (2005). Private equity performance: Returns, persistence, and capital flows. The journal of finance, 60(4), 1791-1823.
Kothari, C. R. (2004). Research methodology: Methods and techniques. New Age International.
LiPuma, J., & Park, S. (2014). Venture Capitalists' Risk Management of Portfolio Company Internationalization, Entrepreneurship Theory and Practise. 38, 1183– 1205.
Malit, R. (2018, March 19). The Venture Capital Gap in Kenya. Retrieved from Her Business: http://www.herbusiness.co.ke/the-venture-capital-gap-in-kenya/
Mugenda, O. (2003). &Mugenda A.(2003). Research methods: quantitative and qualitative approaches.
PMI. (2008). A Guide to the Project Management Body of Knowledge (PMBOK Guide), 4th ed. Newtown Square: Project Management Institute.
Ray, S. (2017). The Risk Management Process in Project Management. Project Manager.
Spikin, I. C. (2013). Risk Management theory.
Subrahmanya M. H. Bala, J. K. (2015). Information Asymmetry Risks in Venture Capital Investments: Strategies of Transnational Venture Capital Firms in India [Dagger]. South Asian Journal of Management.
VC4Africa. (2015). Venture Finance in Africa: ‘The progress of early-stage high-potential growth companies. Retrieved from VC4A: https://vc4a.com/blog/2014/12/17/vc4africa-2015-report-venture-finance-in-africa/
DOI: http://dx.doi.org/10.61426/sjbcm.v8i3.2047
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.