Are external pressures always behind ERM implementation? Evidence from Spanish listed firms

The global financial crisis evidenced weaknesses in companies’ risk management systems and sparked interest on how corporate risk management should be practiced. Following the tenets of the stakeholder–agency theory, this research analyzes whether external pressures are the major driving force behind ERM implementation. Survey data were used to test the influence of five variables (quotation on the NYSE, industry membership, firm size, belonging to the IBEX-35 index and risk level) that may be associated with the extent to which Spanish listed firms face external pressures to implement ERM. Empirical evidence seems to suggest that external pressures, from stakeholders, could exert some influence on ERM implementation, but other factors may play a part in the firms’ decision to implement ERM. Opposed to previous research’s results, this study found a remarkable absence of evidence about the influence of firm size on ERM implementation. This study’s findings contribute to the understanding on the determinants of ERM implementation across different institutional contexts and could serve as a starting point for future research into this field focusing on other countries with economic or cultural characteristics similar to Spain. This study enriches the current knowledge about the drivers of ERM implementation by providing data from a context with characteristics distinct from most previously analyzed countries.