The Effect of Enterprise Risk Management Implementation and Information Technology Security on Organizational Performance in Jordan Manufacturing Industry

Abstract

The implementation of Enterprise Risk Management (ERM) has been increased globally due to the financial crisis and COVID-19.  Consequently, the importance of implementing ERM received considerable attention in the recent years. Thus, this research examined the relationship between the implementation of ERM and the mediating role of information technology security (IT security), in relation to financial and non-financial organizational performance. Furthermore, a quantitative methodology was employed to analyze the research framework. Data was gathered from 587 Jordanian manufacturing firms. The Statistical Package for the Social Sciences (SPSS) was utilized to analyze the data. Furthermore, Partial Least Squares Structural Equation Modelling (PLS-SEM) was employed to evaluate the conceptual framework. Seven (7) hypothesis tested in the research were supported. More specifically, the present research found a positive and significant impact of ERM on IT security, financial, and non-financial performance. It also found that a positive relationship exists between IT security and both financial as well as non-financial performance. Moreover, present research found that IT security fully mediated ERM- financial performance and partially mediated ERM non-financial performance. Consequently, the findings provided significant contributions to expanding the theoretical knowledge especially in ERM and IT security. Also, this research presented suggestions to the owners/managers of manufacturing companies in Jordan should pay extra attention to their internal resources and capabilities, such as ERM practices and IT security in order to enhance their companies’ non- financial and financial performance. Similarly, the present research offered some suggestions to the policy makers in Jordan to establish short/long term policies to aid the development of the manufacturing field in Jordan. Consequently, enhance the economy in Jordan.