Business group affiliation in rural contexts: Do small firms grow faster through working capital management?

Lefebvre, Vivien

doi:10.1111/grow.12545

Cited by 3 publications

(7 citation statements)

References 80 publications

(120 reference statements)

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“…These findings reinforce the previous result: the higher the amount of NWC financed by suppliers, the higher the firm's growth, emphasizing the role of the working capital financing policies, particularly spontaneous financing, in enabling firm sales. Again, these results are in line with those of Ferrando and Mulier (2013) and are contrary to those of Abuhommous (2017) and Lefebvre (2021), who using the conventional definition of NWC found a positive impact on firm sales growth.…”

Section: Multivariate Analysissupporting

confidence: 59%

“…Specifically, we used accounts receivable ( receiv_ta it ), inventories ( invent_ta it ), and accounts payable ( pay_ta it ) scaled by total assets. In this way, our results can be compared with those of Abuhommous (2017), Ferrando and Mulier (2013), Hanif (2019), Huang et al (2019), Lefebvre (2021), and Megaravalli and Sampagnaro (2019). It should be noted that the “conventional” measure of NWC implicitly establishes a negative relationship between accounts payable and sales growth.…”

Section: Methodsmentioning

confidence: 84%

“…According to Abuhommous (2017), investment in working capital is more likely to lead to higher growth rates in the case of smaller and younger firms. Lefebvre (2021) also concludes that this positive relationship is stronger for small (retail) companies pertaining to a business group, especially when they are in rural areas and in crisis periods. We should underline that both authors use the “conventional” measure of NWC; that is, accounts payable are subtracted from the sum of accounts receivable and inventories.…”

Section: Literature Reviewmentioning

confidence: 98%

“…Despite the above-mentioned arguments in favor of a positive relationship between the items of NWC and firm sales growth, the studies have yielded mixed results. Abuhommous (2017) and Lefebvre (2021) analyze this relationship explicitly and find a positive impact of NWC on firm sales growth. According to Abuhommous (2017), investment in working capital is more likely to lead to higher growth rates in the case of smaller and younger firms.…”

Section: Literature Reviewmentioning

confidence: 99%

See 3 more Smart Citations

Working capital management and firm sales growth: Evidence from fish processing industry

et al. 2023

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Working capital management (WCM) is a critical matter for the growth of firms, especially small and medium‐sized manufacturing companies faced with liquidity shortages whose current assets account for a significant part of their investments. These characteristics describe most companies in the fish processing industry. Using a sample of more than 1050 European fish processing companies during the period 2013–2020 and applying dynamic panel data methods, this paper analyses the extent to which working capital investment and financing policies affect firm's sales growth. The empirical evidence reveals that the trade credit channel (i.e., accounts receivable and accounts payable) enhances sales growth, while the opposite effect is found for investment in inventories. Additionally, the findings insist on the importance of financing current assets with positive working capital to boost sales growth. [EconLit Citations: C23, G31, L25, L79, Q22].

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Section: Multivariate Analysissupporting

confidence: 59%

Section: Methodsmentioning

confidence: 84%

Section: Literature Reviewmentioning

confidence: 98%

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

Working capital management and firm sales growth: Evidence from fish processing industry

et al. 2023

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“…Recent papers have highlighted that SMEs face significant opportunity costs when they fail to adjust their financial management and trade credit practices. For instance, sales can be lost when payment duration is too short, especially for financially constrained firms (Baños-Caballero et al, 2012 ; Lefebvre, 2021 , 2022 ).…”

Section: Theoretical Framework and Hypotheses Developmentmentioning

confidence: 99%

Trade credit, payment duration, and SMEs’ growth in the European Union

Lefebvre

2023

Int Entrep Manag J

Self Cite

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Long payment durations are commonly considered a major drag on small- and medium-sized enterprises (SMEs) growth by public policies and practitioners. At the same time, long payment durations mean that customers have more time to assess to product quality, which reduces information asymmetries and thus facilitates the establishment of strong business relationships. Building on these conflicting views, we investigate the relationship between payment duration and two dimensions of firm growth, namely growth in sales and growth in employment. Our results, based on a large sample of SMEs located in the European Union, show a positive relationship between payment duration and growth. Moreover, we observe that in countries characterized by a strong quality of payment conditions, the positive relationship between payment duration and growth is amplified. We interpret our findings as evidence that SMEs, by accepting long payment durations, act positively upon their ecosystem by facilitating other SMEs financing conditions, thus creating a “virtuous cycle” in environments characterized by supportive institutional context.

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Volatility and Firm Growth: Do Firm Size and Age Matter?

Rauf,

Rashid,

Imran

et al. 2023

JAEBS

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The impact of different types of volatility on the growth of Pakistani-listed non-financial firms is examined by using annual unbalanced panel data over the period 1988–2017. The differential effects of volatility conditional on firm size and age are also explored. The results indicate that the influence of firm volatility on firm growth is positive for small firms and negative for medium, large, young, and mature firms. The impact of market volatility is positive (negative) for small, young, and mature (large) firms. Industrial volatility has a negative impact on mature firms’ growth, but the impact on young, small, medium, and large firms is positive. Finally, the results indicate that the impact of macroeconomic volatility is positive for small firms but negative for large, young, and mature firms.

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Business group affiliation in rural contexts: Do small firms grow faster through working capital management?

Cited by 3 publications

References 80 publications

Working capital management and firm sales growth: Evidence from fish processing industry

Working capital management and firm sales growth: Evidence from fish processing industry

Trade credit, payment duration, and SMEs’ growth in the European Union

Volatility and Firm Growth: Do Firm Size and Age Matter?

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