Does Working Capital Affect Family Firms’ Decision-Making in Laos? Evidence from a Two-Wave Cross-Lagged Approach

Hanvedes Daovisan and H. L. Shen
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Hanvedes Daovisan: Center for Research on Plurality in the Mekong Region, Faculty of Humanities and Social Sciences, Khon Kaen University, Khon Kaen 40002, Thailand
H. L. Shen: College of Management, National Taiwan University, Roosevelt Rd., Taipei City 106, Taiwan

Sustainability, 2020, vol. 12, issue 7, 1-16

Abstract: Family firms are the backbone of the socialist transition to a market-oriented economy in Laos. Working capital is an important area of finance that has not been widely studied in relation to family firms’ decision-making. We hypothesize that working capital has a positive cross-lagged effect on decision-making. The hypotheses were tested on a sample of 779 Laotian family firms from 2016 to 2017 ( t 1 ) and from 2018 to 2019 ( t 2 ) . The analysis was performed using a two-wave cross-lagged model under structural equation modelling. Our results confirm that working capital (access to finance, cash, debt financing, inventory, growth, and profitability) has a positive cross-lagged effect on decision-making. In addition, the findings also suggest that family firms’ early-debt financing could have a vital influence on decision-making. The practical implications of the results are discussed.

Keywords: working capital; decision making; family firms; two-wave cross-lagged model; Laos (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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