INFLUENCE OF RISK MANAGEMENT ON THE PERFORMANCE OF SMALL MEDIUM ENTERPRISES IN RWANDA: A CASE STUDY OF PEACE JEWELRIES

Abstract

Small and Medium Enterprises (SMEs) play a vital role in the economic development of Rwanda, contributing to employment generation, income generation, and poverty reduction. However, these enterprises face numerous challenges, including financial, operational, and market-related risks, which can significantly impact their performance. This study investigated the influence of risk management practices on the performance of SMEs in Rwanda, with a specific focus on Peace Jewelries, a representative SME operating in the country's jewelry industry. The research employed a combination of a descriptive survey and a correlational methodology. The sample consisted of 105 participants who were managers employed at Peace Jewelries. The method of selection adopted in this study was stratified sampling. The primary data collection method employed in this study predominantly involved the administration of questionnaires. Participants were asked to rate their responses using a five-point Likert scale, which did not allow for the inclusion of open-ended remarks.  The collection of secondary data was conducted through a diverse range of sources, wherein participants supplied the requisite information by completing a questionnaire. A total of nine people were utilized in the forthcoming pilot investigation. The researchers employed Cronbach's Alpha to assess the degree of reliability. The assessment of the instruments' validity was conducted by a panel of research leaders who possess expertise in the field of project management. This study used SPSS version 21 to analyze the data, and the researchers relied on a mix of frequency tables, descriptive statistics, and regression analysis to draw their conclusions. Both qualitative and quantitative methods were used to analyze the data for the study. The standardized coefficient (Beta) associated with the variable "Risk management" is 0.916. The standardized coefficient offers insights into the magnitude and direction of the association between risk management and small and medium-sized enterprise (SME) performance, while considering the measurement scale. In the present scenario, a Beta coefficient of 0.916 signifies a robust positive correlation between the implementation of risk management strategies and the performance of small and medium enterprises (SMEs). The t-statistic for the variable "Risk management" is 20.074, indicating a high level of statistical significance (p < 0.001). This observation implied that the association between risk management and small and medium-sized enterprise (SME) success is unlikely to be attributed to mere randomness. However, this discovery is both strong and reliable. The results point to several major connections between various parameters and the success of SMEs. The study's findings were expected to contribute valuable insights into the significance of risk management in the context of SMEs in Rwanda, offering practical recommendations to enhance the performance of businesses like Peace Jewelries. As Rwanda continues to promote the growth of its SME sector, understanding the impact of risk management on performance is critical for fostering a resilient and sustainable business environment. Ultimately, this research sought to inform policymakers, business owners, and other stakeholders about the importance of integrating robust risk management practices within the SME sector to facilitate its continued growth and contribution to the nation's economic development.

Keywords: Small and Medium Enterprises (SMEs), Risk management practices, Jewelry industry, performance

CITATION: Irumva, M., &Njenga, S. G. (2023). Influence of risk management on the performance of small medium enterprises in Rwanda: A case study of Peace Jewelries. The Strategic Journal of Business & Change Management, 10 (4), 490 – 504. http://dx.doi.org/10.61426/sjbcm.v10i4.2767.