The Focus of Working Capital Management in UK Small Firms

Posted: 16 Jul 2003

See all articles by Carole Howorth

Carole Howorth

University of Bradford School of Management

Paul Westhead

University of Warwick - Warwick Business School

Abstract

Working capital management routines of a large random simple of small companies in the UK are examined. Considerable variability in the take-up of 11 working capital management routines was detected. Principal components analysis and cluster analysis confirm the identification of four district 'types' of companies with regard to patterns of working capital management. The first three 'types' of companies focused upon cash management, stock or debtors routines, respectively, whilst the fourth 'type' were less likely to take-up any working capital management routines. Influences on the amount and focus of working capital management are discussed. Multinomial logistic regression analysis suggests that the selected independent variables successfully discriminated between the four 'types' of companies. The results suggest that small companies focus only on areas of working capital management where they expect to improve marginal returns. The difficulties of establishing causality are highlighted and implications for academics, policy-makers and practitioners are reported.

JEL Classification: G31, M40, M41, M46

Suggested Citation

Howorth, Carole and Westhead, Paul, The Focus of Working Capital Management in UK Small Firms. Management Accounting Research, Vol. 14, No. 2, June 2003. Available at SSRN: https://ssrn.com/abstract=414820

Carole Howorth (Contact Author)

University of Bradford School of Management ( email )

Emm Lane
Bradford, West Yorkshire Bd9 4JL
United Kingdom

Paul Westhead

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom
+44 0 24 7652 2073 (Phone)

HOME PAGE: http://www.wbs.ac.uk/faculty/members/paul/westhead

Register to save articles to
your library

Register

Paper statistics

Abstract Views
4,275
PlumX Metrics