Financial Risk Management Strategy in Facing Fluctuations in Raw Material Prices at Modern Coffee Shops in Bogor City: Initial Empirical Evidence
Keywords:
Financial Risk Management; Raw Material Price Fluctuation; Enterprise Risk Management; Supply Chain Risk; Digital Financial Literacy; Business Performance.
Abstract
Raw material price fluctuations represent a significant challenge to the sustainability of modern coffee shops because they can increase operating costs, reduce profit margins, and affect financial stability. This study aims to analyze financial risk management strategies in dealing with raw material price fluctuations among modern coffee shops in Bogor City through an initial empirical examination of the relationship between Supply Chain Risk (SCR), Digital Financial Literacy (DFL), and Enterprise Risk Management (ERM) and Financial Risk Management (FRM), as well as the relationship between FRM and Business Performance (BP). The study employed a quantitative explanatory research design involving 100 owners or managers of modern coffee shops in Bogor City selected through purposive sampling. Data were collected using a structured questionnaire and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results show that ERM has a positive and significant relationship with FRM (β = 0.733; p < 0.001), whereas SCR (β = 0.180; p = 0.551) and DFL (β = 0.077; p = 0.799) did not receive statistical support. Furthermore, FRM has a positive and significant relationship with BP (β = 0.653; p < 0.001). The R² values indicate that the model explains 82.9% of the variance in FRM and 42.6% of the variance in BP. However, the HTMT and VIF results indicate limitations in construct distinctiveness and multicollinearity. Therefore, the findings provide initial empirical evidence and partial support for the proposed model, highlighting the importance of integrating risk management processes with financial planning and control.
References
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Hair, J.F., Sarstedt, M., Ringle, C.M., Sharma, P.N., & Liengaard, B.D. (2024). Going beyond the untold facts in PLS-SEM and moving forward. European Journal of Marketing, 58(13), 81–106.https://doi.org/10.1108/EJM-08-2023-0645
Hanoum, S., Palalic, R., Durman, T.Y., & Shubbak, M. (2025). Enhancing SME performance through e-business: The interplay of ambidexterity and entrepreneurial orientation in technology parks. Journal of Innovation and Entrepreneurship, 14, Article 72.https://doi.org/10.1186/s13731-025-00556-y
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Jidda, D.J., Zhen, L., Ashraf, S.F., Nasir, A., & Amoako, T. (2025). Value of enterprise risk management integration and supply chain performance: Mediating role of firm's resilience capability. SAGE Open, 15(1).https://doi.org/10.1177/21582440241305618
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Xiao, J., Wen, Z., Jiang, X., Yu, L., & Wang, S. (2024). Three-stage research framework to assess and predict the financial risk of SMEs based on hybrid method. Decision Support Systems, 177, 114090.https://doi.org/10.1016/j.dss.2023.114090
Yadav, M., & Banerji, P. (2024). Systematic literature review on digital financial literacy. SN Business & Economics, 4, Article 142.https://doi.org/10.1007/s43546-024-00738-y
Zhu, D., Li, Z., & Mishra, A. R. (2023). Evaluation of the critical success factors of dynamic enterprise risk management in manufacturing SMEs using an integrated fuzzy decision-making model. Technological Forecasting and Social Change, 186, 122137.https://doi.org/10.1016/j.techfore.2022.122137
Affandi, Y., Ridhwan, MM, Trinugroho, I., & Adiwibowo, DH (2024). Digital adoption, business performance, and financial literacy in ultra-micro, micro, and small enterprises in Indonesia. Research in International Business and Finance, 70, 102376.https://doi.org/10.1016/j.ribaf.2024.102376
Arthur, J.L., Amofah, K., Arthur, S.D., Boateng, R., & Oppong, D. (2025). Small and medium enterprise approaches to risk management in the Kumasi metropolis. Journal of Innovation and Entrepreneurship, 14, Article 121.https://doi.org/10.1186/s13731-025-00519-3
Babu, H., & Yadav, S. (2023). A supply chain risk assessment index for small and medium enterprises in the post COVID-19 era. Supply Chain Analytics, 3, 100023.https://doi.org/10.1016/j.sca.2023.100023
Bashiri, M., Tjahjono, B., Lazell, J., Ferreira, J., & Perdana, T. (2021). The dynamics of sustainability risks in the global coffee supply chain: A case of Indonesia–UK. Sustainability, 13(2), 589.https://doi.org/10.3390/su13020589
Chowdhury, P., Paul, S.K., Emperor, S., & Moktadir, M.A. (2021). COVID-19 pandemic related supply chain studies: A systematic review. Transportation Research Part E: Logistics and Transportation Review, 148, 102271.https://doi.org/10.1016/j.tre.2021.102271
Clavijo-Buritica, N., Triana-Sanchez, L., & Escobar, J. W. (2023). A hybrid modeling approach for resilient agri-supply network design in emerging countries: Colombian coffee supply chain. Socio-Economic Planning Sciences, 85, 101431.https://doi.org/10.1016/j.seps.2022.101431
Crovini, C., Ossola, G., & Britzelmaier, B. (2021). How to reconsider risk management in SMEs? An advanced, reasoned and organized literature review. European Management Journal, 39(1), 118–134.https://doi.org/10.1016/j.emj.2020.11.002
Dankyira, F.K., Essuman, D., Boso, N., Ataburo, H., & Quansah, E. (2024). Clarifying supply chain disruption and operational resilience relationship from a threat-rigidity perspective: Evidence from small and medium-sized enterprises. International Journal of Production Economics, 274, 109314.https://doi.org/10.1016/j.ijpe.2024.109314
Bogor City Cooperatives, Small and Medium Enterprises, Trade and Industry Office. (2024). Number of productive micro, small and medium enterprises (MSMEs) in Bogor City. Bogor City Open Data.https://opendata.kotabogor.go.id/dataset/jumlah-usaha-mikro-kecil-dan-menengah-umkm--yang-produktif-di-kota-bogor
El Baz, J., & Ruel, S. (2021). Can supply chain risk management practices mitigate the disruption impacts on supply chains' resilience and robustness? Evidence from an empirical survey in a COVID-19 outbreak era. International Journal of Production Economics, 233, 107972.https://doi.org/10.1016/j.ijpe.2020.107972
Fraser, J. R. S., Quail, R., & Simkins, B. J. (2022). Questions asked about enterprise risk management by risk practitioners. Business Horizons, 65(3), 251–260.https://doi.org/10.1016/j.bushor.2021.02.046
Glowka, G., Kallmünzer, A., & Zehrer, A. (2021). Enterprise risk management in small and medium family enterprises: The role of family involvement and CEO tenure. International Entrepreneurship and Management Journal, 17(3), 1213–1231.https://doi.org/10.1007/s11365-020-00682-x
Gungor, A., Bamforth, C. J., & Dalrymple, J. (2025). An investigation of factors affecting Australian small and medium enterprise performance during the pandemic. Journal of Innovation and Entrepreneurship, 14, Article 80.https://doi.org/10.1186/s13731-025-00532-6
Hadjielias, E., Christofi, M., & Tarba, S. (2022). Contextualizing small business resilience during the COVID-19 pandemic: Evidence from small business owner-managers. Small Business Economics, 59(4), 1351–1380.https://doi.org/10.1007/s11187-021-00588-0
Hair, J.F., & Alamer, A. (2022). Partial least squares structural equation modeling (PLS-SEM) in second language and education research: Guidelines using an applied example. Research Methods in Applied Linguistics, 1(3), 100027.https://doi.org/10.1016/j.rmal.2022.100027
Hair, J.F., Astrachan, C.B., Moisescu, O.I., Radomir, L., Sarstedt, M., Vaithilingam, S., & Ringle, C.M. (2021). Executing and interpreting applications of PLS-SEM: Updates for family business researchers. Journal of Family Business Strategy, 12(3), 100392.https://doi.org/10.1016/j.jfbs.2020.100392
Hair, J.F., Sarstedt, M., Ringle, C.M., Sharma, P.N., & Liengaard, B.D. (2024). Going beyond the untold facts in PLS-SEM and moving forward. European Journal of Marketing, 58(13), 81–106.https://doi.org/10.1108/EJM-08-2023-0645
Hanoum, S., Palalic, R., Durman, T.Y., & Shubbak, M. (2025). Enhancing SME performance through e-business: The interplay of ambidexterity and entrepreneurial orientation in technology parks. Journal of Innovation and Entrepreneurship, 14, Article 72.https://doi.org/10.1186/s13731-025-00556-y
Hasan, R., Ashfaq, M., Parveen, T., & Gunardi, A. (2023). Financial inclusion: Does digital financial literacy matter for women entrepreneurs? International Journal of Social Economics, 50(8), 1085–1104.https://doi.org/10.1108/IJSE-04-2022-0277
Jidda, D.J., Zhen, L., Ashraf, S.F., Nasir, A., & Amoako, T. (2025). Value of enterprise risk management integration and supply chain performance: Mediating role of firm's resilience capability. SAGE Open, 15(1).https://doi.org/10.1177/21582440241305618
Ministry of Creative Economy/Creative Economy Agency of the Republic of Indonesia. (2026). Infographic of the gross domestic product of the creative economy in 2024.https://ekraf.go.id/infografis/infografis-produk-domestik-bruto-ekonomi-kreatif-tahun-2024
Kumar, P., Pillai, R., Kumar, N., & Tabash, M.I. (2023). The interplay of skills, digital financial literacy, capability, and autonomy in financial decision making and well-being. Borsa Istanbul Review, 23(1), 169–183.https://doi.org/10.1016/j.bir.2022.09.012
Legate, A.E., Hair, J.F., Chretien, J.L., & Risher, J.J. (2023). PLS-SEM: Prediction-oriented solutions for HRD researchers. Human Resource Development Quarterly, 34(1), 91–109.https://doi.org/10.1002/hrdq.21466
Manogna, R.L., Dharmaji, V., & Sarang, S. (2025). Enhancing agricultural commodity price forecasting with deep learning. Scientific Reports, 15, 20903.https://doi.org/10.1038/s41598-025-05103-z
Padi, A., Musah, A., Blay, M. W., & Okyere, D. O. (2025). Small and medium scale enterprise (SME) owner financial literacy, entrepreneurial competencies and financial performance: The role of corporate governance. Future Business Journal, 11, Article 160.https://doi.org/10.1186/s43093-025-00585-9
Rahayu, SK, Budiarti, I., Firdaus, DW, & Onegina, V. (2023). Digitalization and informal MSME: Digital financial inclusion for MSME development in the formal economy. Journal of Eastern European and Central Asian Research, 10(1), 9–19.https://doi.org/10.15549/jeecar.v10i1.1056
Ratmono, D., Frendy, & Zuhrohtun, Z. (2023). Digitalization in management accounting systems for urban SMEs in a developing country: A mediation model analysis. Cogent Economics & Finance, 11(2), 2269773.https://doi.org/10.1080/23322039.2023.2269773
Ringle, C. M., Sarstedt, M., Sinkovics, N., & Sinkovics, R. R. (2023). A perspective on using partial least squares structural equation modeling in data articles. Data in Brief, 48, 109074.https://doi.org/10.1016/j.dib.2023.109074
Sarstedt, M., Adler, S. J., Ringle, C. M., Cho, G., Diamantopoulos, A., Hwang, H., & Liengaard, B. D. (2024). Same model, same data, but different outcomes: Evaluating the impact of method choices in structural equation modeling. Journal of Product Innovation Management, 41(6), 1100–1117.https://doi.org/10.1111/jpim.12738
Shcherbak, V., Dorokhov, O., Dorokhova, L., Vzhytynska, K., Yatsenko, V., & Yermolenko, O. (2026). Financial risk management and resilience of small enterprises amid the wartime crisis. Journal of Risk and Financial Management, 19(1), 37.https://doi.org/10.3390/jrfm19010037
Supramono, S., Damayanti, TW, & Adhitya, D. (2025). Dynamic capabilities and financial behavior to accelerate MSME performance recovery and its impacts on business sustainability. Journal of Innovation and Entrepreneurship, 14, Article 10.https://doi.org/10.1186/s13731-024-00456-7
Suryawanshi, P., & Dutta, P. (2022). Optimization models for supply chains under risk, uncertainty, and resilience: A state-of-the-art review and future research directions. Transportation Research Part E: Logistics and Transportation Review, 157, 102553.https://doi.org/10.1016/j.tre.2021.102553
Ul Akram, M., Islam, NU, Chauhan, C., & Yaqub, MZ (2024). Resilience and agility in sustainable supply chains: A relational and dynamic capabilities view. Journal of Business Research, 183, 114855.https://doi.org/10.1016/j.jbusres.2024.114855
US Department of Agriculture, Foreign Agricultural Service. (2024). Indonesia: Coffee annual (GAIN Report No. ID2024-0016).https://www.fas.usda.gov/data/indonesia-coffee-annual-8
Uthaileang, W., & Kiattisin, S. (2023). Developing the capability of digital financial literacy in developing countries: A case of online loans for small entrepreneurs. Heliyon, 9(12), e21961.https://doi.org/10.1016/j.heliyon.2023.e21961
Xiao, J., Wen, Z., Jiang, X., Yu, L., & Wang, S. (2024). Three-stage research framework to assess and predict the financial risk of SMEs based on hybrid method. Decision Support Systems, 177, 114090.https://doi.org/10.1016/j.dss.2023.114090
Yadav, M., & Banerji, P. (2024). Systematic literature review on digital financial literacy. SN Business & Economics, 4, Article 142.https://doi.org/10.1007/s43546-024-00738-y
Zhu, D., Li, Z., & Mishra, A. R. (2023). Evaluation of the critical success factors of dynamic enterprise risk management in manufacturing SMEs using an integrated fuzzy decision-making model. Technological Forecasting and Social Change, 186, 122137.https://doi.org/10.1016/j.techfore.2022.122137
Published
2026-10-02
How to Cite
Fachri Aditya, & Friscila Purba. (2026). Financial Risk Management Strategy in Facing Fluctuations in Raw Material Prices at Modern Coffee Shops in Bogor City: Initial Empirical Evidence. International Journal of Economics, Business and Innovation Research, 5(05), 5631-5658. https://doi.org/10.63922/ijebir.v5i05.6693
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