Title: Benchmarking currency risk management practices of small and medium enterprises

Authors: S. Vasumathy Hariharan

Addresses: Sir. M. Visvesvaraya Institute of Management and Research, Wadala West, Mumbai, Ph. 9940071530, India

Abstract: The burgeoning growth of small businesses in the Indian export industry warrants studies that depict the best practices in currency risk management. This study redresses the gap by developing such scale. The key variables of risk management system, exposure management, hedging decisions, derivative management and residual risk management have been identified from the literature. Residual risk management is a totally new dimension to foreign exchange risk management. Firms' uses of these variables have been tested in the form of a structured questionnaire, and a test-retest method has been used to assess reliability. A model using the main variables was constructed and tested for acceptance among the three subsectors of manufacturing, services, and trading. The study found that these variables represent the best-use practices of successful Indian exporters. The scale that was developed aids both nascent and matured firms equally with respect to understanding peer practices.

Keywords: benchmarking; currency risk; risk management; SMEs; derivatives; residual risk; hedging; risk management systems; validated scale; exposure management; export firms.

DOI: 10.1504/IJBEX.2021.115836

International Journal of Business Excellence, 2021 Vol.24 No.3, pp.340 - 359

Received: 06 May 2019
Accepted: 18 Jun 2019
Published online: 25 Jun 2021 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article