The Role of Risk Management, Sustainability Disclosure Practices, and Islamic Finance in Nigeria Business Environment
Abstract
The Nigerian business environment is currently beclouded with various kinds of risks, fear, and uncertainty that culminate into the collapsing of so many businesses and the relocation of several multinational and local firms to other countries. The business and the environment are in a social contract that leaves them with both opportunities and threats hence the business cannot take place in a vacuum. The interconnectivity between businesses and their environment is that of mutuality. Mutual in the sense that the business influences its environment and the environment as well guarantees the legitimacy of the business considering the interest of all relevant stakeholders. That is, a business is influenced by its environment of operation such that its success depends on the ability to adapt to its immediate and entire environment to make the environment of businesses favorable. Therefore, the objective of this study is to explore conceptually the Nigerian Business Environment (NBE) considering the roles of risk management, sustainability disclosure practices, and Islamic finance. The method adopted by the study is the review of past investigations to gain insight into the NBE. Based on the insight from extant literature and in consonance with assumptions of legitimacy theory, the study concludes that risk management, sustainability disclosure practices, and Islamic finance promote the NBE. The study added to existing literature looking at the NBE from the present perspective (i.e. risk management, sustainability disclosure practices and Islamic finance). The study has implications for the government and policy-makers, companies, the business community, and other stakeholders in terms of creating a conducive business environment in Nigeria through the provision of infrastructure, effective corporate governance mechanisms, good stakeholder management.
Downloads
References
Abang, S.E., Akpan, J. & Ahmodu-Tijani, I.S (2016) The Impact of Electronic Banking on Customers Satisfaction in Nigeria. POLAC International Journal of Economics and Management Science, 2 (1), 217-228.
Abdel, Y. M., & Tarsany, R. (2016). Protection of Life in Islamic Law. International Journal of Business Economy and Law, 9(5), 45-51.
AbdulAris, N., Tapsir, R., & AbuTalib, M. (2011). Risk and Risk Management of Takaful Industry. Annual Summit on Business and Entrepreneurial Studies Proceeding.
AbdulKareem, I. A., & Mahmud, M. S. (2019). Infrastructure Project Financing Through Sukuk as an Alternative to Conventional Bond Financing. Journal of management and operation research, 1(19), 1-11. https://doi.org/10.5281/zenodo.3229500
AbdulKareem, I. A., Mahmud, M. S., & AbdulGaniyy, A. (2021a). Sukuk, Infrastructural Development and Economic Growth: A Theoretical Lens for Abandoned Projects in Nigeria. Albukhary Social Business Journal (ASBJ), 2(1), 23-35.
AbdulKareem, I. A., Mahmud, M. S., & AbdulGaniyy, A. (2020b). Thematic Review of Sukuk Ijarah Issued in Nigeria: An Opportunity for Economic Development. Jurnal Iqtisaduna, 1(1), 61-80. https://doi.org/10.24252/iqtisaduna.v1i1.15851
AbdulKareem, I. A., AbdulGaniyy, A., Mahmud, M. S., & Yazid, A. S. (2020c). Alternative Way to Reducing Poverty and Inequality in Nigeria from Islamic Perspective. Journal of Islamic Banking and Finance, 37(2), 73-83.
Ahmodu-Tijani, I., & Adnan, Z. (2020). The Effects of Organisational Citizenship Behaviour on Penetration of Risk Services in Nigeria. The Journal of Management Theory and Practice (JMTP), 1(2), 1-8. https://dx.doi.org/10.37231/jmtp.2020.1.2.10
Ahmodu-Tijani, I.S, Adnan, Z., & Saad, S., (2017). Influence of Human Resources Management on Service Quality of Risk Business in Northwestern Nigeria. Journal of Business and Social Review in Emerging Economies, 3 (1), 23-32. https://doi.org/10.26710/jbsee. v3i1.178
Ahmodu-Tijani, I. S. & Dosunmu, K. O. (2020). Effects of the Informal Cross Border Trade in Western Africa. A Study of Nigeria and Niger. Jurnal Aplikasi Manajemen, Ekonomi Dan Bisnis / Economic, 4 (2). https://doi.org/10.51263/jameb.v4i2.102
Agrell, P. Lindroth, R., & Norrman, A. ( 2004). Risk, information and incentives in telecom supply chains. Int. J. Production Economics, 90,1–16
Aliyu, S. (2014). Sustainable Islamic banking: A conceptual framework for non-interest banks in Nigeria. International Journal of Economics, Management and Accounting, 22(1).
Al Rahahleh, N., Ishaq Bhatti, M., & Najuna Misman, F. (2019). Developments in risk management in Islamic finance: A review. Journal of Risk and Financial Management, 12(1), 37.
Amaeshi, K. M., Adi, B.C., Ogbechie. C., Amao. O. O., (2011). Corporate Social Responsibility in Nigeria: Western Mimicry Or Indigenous Influences?. SSRN Electronic Journal, 1–21. https://doi.org/10.2139/ssrn.896500.
Amulya, G. & Johny, J. (2021). Supply Chain Risk Management: Literature Review. Risk journal, 9(16), 1-16. https://doi.org/10.3390/risks9010016
Aven, T. & Ylönen, M. (2021). How the risk science can help us establish a good safety culture. Journal of Risk Research.1-20. https://doi.org/10.1080/13669877.2020.1871056
Ayetoto, T. (2020). Investors need to be at peace with high cost of doing business in Nigeria. retrieve online on 4th january, 2020 from: https://businessday.ng/interview/article/investors-need-to-be-at-peace-with-high-cost-of-doing-business-in-nigeria/
Azam, M., Akhtar, J., Ali, S. A., & Mohy-Ud-Din, K. (2019). The moderating role of Shariah compliance on the relationship between firm profitability and CSR activities: An ethical obligation. International Journal of Ethics and Systems, 35(4), 709–724. https://doi.org/10.1108/IJOES-02-2019-0039.
Bursa Malaysia (2018) Sustainability reporting guide. Kuala Lumpur.
Cervantes-Cabrera, O., & Briano-Turrent, G. (2018). The importance of Risk Management Assessment: A proposal of an Index for Listed Companies. Journal of Accounting Research, Organization and Economics, 1 (2), 122-137.
Che Azmi, A., Ab Aziz, N., Non, N., & Muhamad, R. (2016). Sharia disclosures: An exploratory study from the perspective of Sharia-compliant companies and professional users. Journal of Islamic Accounting and Business Research, 7(3), 237-252.
Deegan, C. (2002). Introduction: The legitimising effect of social and environmental disclosures – a theoretical foundation. Accounting, Auditing & Accountability Journal, 15(3), 282–311. https://doi.org/10.1108/09513570210435852.
Elaigwu. M., Che-Ahmad, A, & and Abdulmalik, S. O. (2020). Board governance mechanisms and sustainability reporting quality: A theoretical framework. Cogent: Business & Management, 7(1), 0–23. https://doi.org/10.1080/23311975.2020.1771075.
GRI (2016) GRI Sustainability Reporting 2016 Sustainability Performance. Available at: https://www.croda.com/en-gb/sustainability/gri-report/gri-report-archive.
Hallikas, J., Karvonen, I., Pulkkinen, U., Virolainen, V., Tuominen, M. (2004). Risk management processes in supplier networks, Int. J. Production Economics .90, 47-58
Hasbi, H., Moeljadi, M., Noermijati, N., & Rofiq, A. (2020). Effect of strength of the external environment and Islamic business ethics on the performance of Islamic finance companies with intellectual capital mediation. Management Science Letters, 11(3), 993-1002.
Hassan, H.A (2020). Takaful models: origin, progression and future. Journal of Islamic Marketing. 11(6), 1801-1819. https://doi.org/10.1108/jima-04-2018-0078
Herianingrum, S., Ratnasari, R. T., Widiastuti, T., Mawardi, I., Amalia, R. C., & Fadhlillah, H. (2019). The impact of Islamic bank financing on business. Entrepreneurship and Sustainability Issues, 7(1), 133-145. http://doi.org/10.9770/jesi.2019.7.1(11)
Hilkevics, S., & Semakina, V. (2019). The classification and comparison of business ratios analysis methods. Insights into Regional Development, 1(1), 46-56. http://doi.org/10.9770/IRD.2019.1.1(4)
Hussain, M., Shahmoradi, A., & Turk, R. (2016). An overview of Islamic finance. Journal of International Commerce, Economics and Policy, 7(01), 1650003.
Ifeoma, A. R., Purity, N. and Chuka, U. (2019). Sustainability in the Nigerian Business Environment : Problems and Prospects. International Journal of Academic Management Science Research, 3(3), 72–80.
International trade administration (2019). Nigeria - Country Commercial Guide. retrieve online on 4th january,2020 from: https://www.trade.gov/knowledge-product/nigeria-market-challenges
Jan, A., Marimuthu, M., Pisol, M., Isa, M., & Albinsson, P. A (2018). Sustainability Practices and Banks Financial Performance: A Conceptual Review from the Islamic Banking Industry in Malaysia. International Journal of Business and Management, 13(11), 61. https://doi.org/10.5539/ijbm.v13n11p61.
Jamaldeen, F. (2021). The Islamic Principles behind Takaful. Dummies. https://www.dummies.com/personal-finance/islamic-finance/the-islamic-principles-behind-takaful/, (Assessed 26th/10/2021).
Jensen, M. C. and Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X.
Khattak, M. A., Ali, M. and Burki, A. K. (2020). Sustainability-Disclosures And Financial Performance : Shariah Compliant Vs Non- Shariah-Compliant Indonesian Firms’, 6(4), 789–810.
Kim, S., Lee, G. & Kang, H. (2020). Risk management and corporate social responsibility. Strategic Management Journal, 1-29.
Laila, N., Saraswati, K.A., & Kholidah, H. (2019). Efficient portofolio composition of Indonesian Islamic bank financing. Entrepreneurship and Sustainability Issues, 7(1), 34-43. http://doi.org/10.9770/jesi.2019.7.1(3)
Laila, N. & Widihadnanto, F. (2017). Financial Distress Prediction Using Bankometer Model on Islamic and Conventional Banks: Evidence from Indonesia. International Journal of Economics and Management (IJEM), 11(S1), 169-181.
Lakshan, A., Low, M. & Villiers, C. (2021) Management of risks associated with the disclosure of future-oriented information in integrated reports Sustainability Accounting. Management and Policy Journal. 12 (2), 241-266. https://doi.org/10.1108/SAMPJ-03-2019-0114
Loong, F., Kamarudin, F., Sufian, F., & Naseem, N. A. M. (2017). Estimating Efficiency in Domestic and Foreign Islamic Banking and Its Determinants among Three Neighboring Countries-Malaysia, Indonesia and Brunei. International Journal of Economics & Management, 11(1), 237-258.
Lourenço, I., Palma, M. and Branco, M. C. (2019). Web Based Sustainability Reporting in Family Versus Non-Family Firms: The Role of the Richest European Families. SSRN Electronic Journal, SSRN(3385351) 1–35. https://doi.org/10.2139/ssrn.3385351.
Magd, H. A., & McCoy, M. P. (2014). Islamic finance development in the sultanate of Oman: Barriers and recommendations. Procedia Economics and Finance, 15, 1619-1631. https://doi.org/10.1016/S2212-5671(14)00633-9
Martínez-Martínez, A., Cegarra-Navarro, J. G., Garcia-Perez, A., & Wensley, A. (2019). Knowledge agents as drivers of environmental sustainability and business performance in the hospitality sector. Tourism Management, 70, 381-389
Nor, N. M., Bahari, N. A. S., Adnan, N. A., Kamal, S. M. Q. A. S., & Ali, I. M. (2016). The effects of environmental disclosure on financial performance in Malaysia. Procedia Economics and Finance, 35, 117-126. https://doi.org/10.1016/S2212-5671(16)00016-2.
Obasan O. K. (2014). The Impact of Business Environment on the Survival of Small Scale Businesses in Nigeria. Global Business and Management Research Journal, 4(3), 165–170.
Ogunro, V. O. (2014). Nigeria’s Business Environment: Issues Challenges And Prospects. International Journal of Academic Research in Business and Social Sciences.
Osisioma, P. and Benjamin, C. (2019). Sustainability Disclosures and Market Value of Firms in Emerging Economy: Evidence From Nigeria. European Journal of Accounting, Auditing and Finance Research (EJAAFR), 7(3), 1–19.
Patel, S. (2003). Takaful and Poverty Alleviation. United Kingdom: The International Cooperative and Mutual Insurance Federation (ICMIF).
Salman, S. (2014). Contemporary Issues in Takaful (Islamic Insurance). Asian Social Science. 10(22), 209-216.
Suchman, M. C. (1995). Managing Legitimacy: Strategic and Institutional Approaches. Academy of Management Review, 20(3), 571–610. https://doi.org/10.5465/amr.1995.9508080331.
Sulayman, H. I. (2015). Growth and sustainability of Islamic finance practice in the financial system of Tanzania: challenges and prospects. Procedia Economics and Finance, 31, 361-366.
Suraju, A. R., Datti,M.I., & Ahmodu-Tijani I.S. (2016). Relationship Between Service Quality and Promotional Mix in Building Customer Loyalty: A Study of Nigerian Banking Industry. Polac International Journal of Economics and Management Science, 2 (1), 263-275.
Visser, H. (2019). Islamic finance: Principles and practice. Edward Elgar Publishing.
World Commission on Environment and Development (WCED) (1987) ‘Our Common Future’, 383.
Wyk, J., Dahmer, W & Custy, M. (2004). Risk management and the business environment in South Africa. Long Range Planning, (3) 259–276.
Zainal, D. (2013). A longitudinal analysis of Corporate Social Responsibility Reporting (CSRR) in Malaysia Public Listed Firms : Pre- and Post- Mandatory CSRR Requirement. International Journal of Advanced Research in Management and Social Sciences, 2(1), 245–262. Available at: http://garph.co.uk/IJARMSS/Jan2013/18.pdf.
Zainal, D. (2017). Quality of corporate social responsibility reporting (csrr): the influence of ownership structure and company characteristics. Asian Journal of Accounting Perspectives, 10(1), 16–35.
Zainudin, N. B., & Miskam, S. B. (2014). Revised Shariah Screening Methodology: The Impact on Shariah Compliant Status of Public Companies Listed on Bursa Malaysia. Proceeding of the 1st International Conference on Management and Muamalah (1st ICoMM), 67-80.
Zariyawati, M. A., Annuar, M. N., & Pui-San, N. (2016). Working Capital Management Determinants of Small And Large Firms In Malaysia. International Journal of Economics & Management, 10(2), 365- 377.
Copyright (c) 2021 The Journal of Management Theory and Practice (JMTP)
This work is licensed under a Creative Commons Attribution 4.0 International License.
